INTEGRATED REPORT 2023
For more information on this Integrated Report, or to obtain
additional copies, please contact:
Public & Investor Relations Section, Finance Department,
Kanematsu Corporation
7-2 Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-7017, Japan
Tel: 81-3-6747-5000

Sustained Growth throughValue Creation

SINCE 1889

Editorial Policy
On the Publication of the Kanematsu Integrated Report 2023

Contents

In the Kanematsu Integrated Report 2023, in order to highlight our particular features as a trading company, we have particularly focused on 1. Reinforcing Groupwide management and 2. Human capital management, seeking to communicate the organizational strength of the Kanematsu Group and the strength
provided by all the individuals within the Group.
In terms of reinforcing Groupwide management, the report focuses on the Group’s redoubled
efforts—spurred by the recent addition of Kanematsu Electronics Ltd. and Kanematsu Sustech
Corporation as wholly owned subsidiaries—to work as one toward solving social issues, in particular
accelerating digital transformation (DX) and green transformation (GX), and highlights initiatives aimed
at the achievement of future 135 and beyond. As for human capital management, the report explains thecharacteristics and strengths of our human capital, the Group’s greatest asset, as well as challenges in thisarea, in light of the Group’s newly established Human Capital Policy.
In preparing this report, we referenced various relevant guidelines and responses to surveys regarding previous reports, with cooperation from departments across the Company and discussion at theBoard of Directors to ensure a proper 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 and increase enterprise value.

2 Opening Feature
Strengthening Groupwide
Management
The Origins of Value Creation

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

The Kanematsu Group’s Value Creation

Our Organizational Strength
Reinforcing Groupwide Management
Management oriented around creating shared value / Completion of future 135• Business aimed at solving social issues• Reinforcing Groupwide management

Message from the Chair of the
Sustainability Management Committee• DX strategy

p34

Opening Feature: Strengthening
Groupwide Management

Message from the Digital Transformation Committee Chair• GX strategy
p30

Dialogue between the Chairman and Outside Directors

Business Model and Business Development

Message from the CFO
Message from the Chief Officer of Human Resources
Message from the Digital Transformation Committee Chair
Message from the Green Transformation Committee Chair
Special Feature: Innovation Investment

p28

p80〜

• Expanding our role in the supply
chain
p14

Motor
Vehicles &Aerospace

Steel,
Materials &
Plant

p24

Investment in innovation(seeds)• Market creation
Message from the President
& CEO

p16

Special Feature: Innovation
Investment

p32• Business expansion through M&A
and business alliances future 135 Medium-Term Vision

Editorial Policy
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, the Guidance forCollaborative Value Creation of the
Ministry of Economy, Trade andIndustry, and ISO 26000. We hopethat the report will help readersdeepen their understanding of theKanematsu Group.

p9• President Miyabe’s Passion

Meat
Products• Investment in new businesses• Promoting awareness of the
Corporate Principle
Corporate Principle

Grain,
Oilseeds &Feedstuff

Foods

Human capitalmanagement

p16• Human Capital Policy
p26

Human Capital Management

p49

p50

Scope of Report
September 2023
April 1, 2022 to March 31, 2023 (fiscal 2023)(Includes some information about events outside
the period covered)
Scope of coverage:
Kanematsu Corporation and the Kanematsu
Group
Accounting standards: JGAAP for the year ended March 2014 andearlier and IRFS for the year ended March 2015
and after, unless otherwise noted
Published:
Period covered:

36 The Key Issues and Our Activities /65

Sustainability Management Committee

the Chairman and an Outside Director

38
40 Addressing the Five Key Issues
40		 Building a Sustainable Supply Chain
40 The Kanematsu Group’s Supply Chain Management
42 Initiatives to Ensure Respect for Human Rights
45		 Decarbonization Initiatives
Progress on Key Issues

66
76
78

49		 Creating an Environment That Enables Diverse Work Styles
49 Human Capital Management
50 Human Resource Development
54 Work Environments for Employees

Non-financial
information

Corporate GovernanceCorporate Officers
Business Segments

80
82
84
86
88
90

Social Contribution through Our Operations

Kanematsu’s
Disclosure

Messages from the Outside Audit & Supervisory Board
Members

The Process of Identifying Key Issues

48		 Mutual Development with Local Communities

Message from the Chief
Officer of Human Resources

Human Resource Development / Work Environments
for Employees

62 Dialogue between

Disclosure based on the TCFD Recommendations• Increasing engagement throughhuman resource development
and work environment
improvement

p22

Forward-Looking Statements
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 the Group’s
projections due to changes in the economic
and market environment surrounding theGroup’s business areas, such as exchange rate
fluctuation.

Message from the President& CEO

34 Message from the Chair of the

92
94
96
97

Electronics & Devices
Foods
Meat Products
Grain, Oilseeds & Feedstuff
Steel, Materials & Plant
Motor Vehicles & Aerospace

Financial and ESG Highlights
Management’s Discussion and Analysis
Major Group Companies
Corporate Profile

IR Disclosure

Financialinformation

The Kanematsu Group strives to ensure transparency
and foster dialogue through prompt, accurate, andfair disclosure to all stakeholders.

Corporate website

https://www.kanematsu.co.jp/en/• Corporate Governance Report(Japanese only)• Integrated Report• Corporate Profile• Shareholder Newsletter(Japanese only)

Kanematsu’s Foundations

Kanematsu
Group'sStrength• Robust financial base andgrowth investment

Kanematsu’s Foundations

p62

The Kanematsu Group’s Value Creation

Electronics& Devices• Network expansion

Message from the CFO

future 135 Medium-Term Vision

Value Creation Processp2

Strength fromindividuals

Stable earnings base / Added value /Expansion of scale

Business Model andBusiness Development

22
24
26
28
30
32

The Kanematsu Group’s History• Reinforcing corporate governance

Message from the Green Transformation
Committee ChairBusiness Segments

The Kanematsu Group’s Origins / Who We Are

The Origins of Value Creation

16 Message from the President &CEO

8
10
12
14

• Financial Statements /Quarterly Reports• Financial Summary• Financial Highlights/
Supplementary Materials• Financial Overview (briefing
presentation materials)• General Meeting of Shareholders (once a year)• Financial Results Briefing (twice a year)• Meetings of institutional investors and analysts
with the President & CEO and/or CFO
KANEMATSU Integrated Report 2023

1

Opening Feature: Strengthening Groupwide Management

Groupwide
Management
Aimed atLong-Term Synergy
Generation

Yoshiya Miyabe

Akira Watanabe

Koichi Koizumi

President & CEO
Kanematsu Corporation

President & CEO,
Kanematsu Electronics Ltd.

President,
Kanematsu Sustech Corporation

We are heightening enterprise value by
further realizing synergies within the Group.

Kanematsu

With the aim of promoting Groupwide management to generate long-term synergies, we made takeover bids
(TOB) for Kanematsu Electronics (KEL) and Kanematsu Sustech (KSU) executed from January to March 2023. These
TOBs were aimed at creating new added value by strengthening digital transformation (DX) and green transformation (GX) as future growth drivers for the Kanematsu Group.

Kanematsu Electronics Ltd.

Kanematsu Sustech Corporation

Kanematsu Denshi Service Ltd. (currently Kanematsu Electronics Ltd.)was established in 1968 as a subsidiary of Kanematsu-Gosho, Ltd.
(currently Kanematsu Corporation).

Kanematsu Sustech Corporation was established in 1934 as Nihon
Sangyo Gomu Co., Ltd., and entered into a capital alliance with
Kanematsu-Gosho, Ltd. (currently Kanematsu Corporation) in 1989. The
company name was changed to Kanematsu Sustech Corporation in 2016.

Capital:¥9,031 million
Net Sales:¥85,430 million (as of March 31, 2023)
Number of Employees: 1,483 (consolidated, as of March 31, 2023)
Main Business:
KEL designs and implements information systems and provides operationand consulting services for businesses based on expertise in information
technologies. KEL retails, leases, maintains, and develops IT systemproducts and software, and also send loan engineers.

2

KANEMATSU Integrated Report 2023

Capital:¥3,326 million
Net Sales:¥13,990 million (as of March 31, 2023)
Number of Employees: 286 (consolidated, as of March 31, 2023)
Main Business:
Construction and sale of ground improvement works, various groundinspections, sinkage repair, etc. Timber drying, wet preservative and antitermite treatment (wood preservation treatment) and sale, sale of woodpreservative treatment equipment and chemicals, etc. Sale of warranty
services and installation works for security cameras, recorders, othersecurity equipment, and related equipment.

Kanematsu
Electronics
Background and Goals of the TOBs
Miyabe: The Kanematsu Group is composed of about 130
Group companies with over 20,000 business partners. The
business and industry knowledge, experience, and network gained from this broad business foundation constitute tremendous management resources. To grow in the
future, we must raise the enterprise value of the entire
Group by applying these strengths effectively and efficiently across the Group.
In our ongoing efforts to work with companies within the Group, KEL and KSU have been limited by theirposition as listed companies. We decided to proceed withthese TOBs to bring these companies fully into theKanematsu Group with the aim of taking advantage of
their respective expertise in DX and GX, thereby achieving
growth for each company and for the Group as a whole.
We aim to leverage digital technology to create beneficial relationships between Group companies andKanematsu
Sustechsynergies that transcend the barriers separating theKanematsu Group’s many individual businesses anddivisions.

Challenges and Initiatives to Groupwide
Management
Miyabe: We held repeated discussions on what weshould do to work towards our overarching goal of having not just these two companies but all of our Group
companies act as a united Kanematsu Group.
Watanabe: My company, KEL, works within the fastpaced IT industry, so we thoroughly considered its integration into the Kanematsu Group to determine whether
it would be an optimal solution for future management,
five or ten years from now. There were some concerns
about the impact on the KEL brand, but we determinedthat there would be significant benefits from joining up,
KANEMATSU Integrated Report 2023

3

Opening Feature: Strengthening Groupwide Management

Watanabe: For KEL to promote the DX of the KanematsuGroup, I think many measures will be required, such as
personnel exchange through collaborative projects,
employee reskilling, and sharing knowledge that can leadto proposals for customers. We have about 1,000 engineers at KEL. To demonstrate KEL’s value as part of theKanematsu Group, our employees will leverage their practical experience and ability to make proposals in the ICT
solutions and DX fields. We have started talks with
Kanematsu to expand this beyond Japan.

Koizumi: Like President Watanabe, I also considered our
employees’ feelings when I provided internal explanations on the TOB. KSU transitioned to the Standard
Market of the Tokyo Stock Exchange in April 2022, andthe TOB came right after we had encouraged our employees to shoot for the Prime Market, so I think that some ofthem were probably disappointed. However, since wewere concerned about the extent to which we could
grow on our own, I explained to our employees thatworking with Kanematsu would be just as valuable as
being listed on the Prime Market.
The “Sustech” in KSU’s name refers to our corporate
principle, “Support our society with technology,” which issimilar to the principles that form Kanematsu’s so-called
DNA. Going forward, we will aim to create synergies andachievements through collaborative GX projects, expand
our business to solve global issues, and work on a bigger
scale than ever before.

Taking on Global Business in DX and GX

Koizumi: We are also collaborating in security. KSU has
business in security cameras, and we have been supplying
our products to customers of other Kanematsu Group

KEL’s Business Model

pp

l

tio

nV

KANEMATSU Integrated Report 2023

end

ors

Pursue directbusiness withend usersin mindFinancial Industry

Excellent Customer Base

Service Industry

dV

/A

e
le m nsCo

arent
tru a tio
cti n a n donors

All-inclusive service frominformation system design, sales,
and construction to maintenanceand operational support

end

One-Stop
Service

S al

es

ou

Imp

S oft w

ic a

4

t
or

Manufacturing
Industry
Distribution
Industry

Education andPublic Services

Cl

Sy
Opera
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Maintenan n an
d
ce
Su
pp

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ato
Cre

Multi-vendor solutions unbiased towards
any specific manufacturer

ner
art
nP
ification
tio
Ver

em

SystemCon
struc
DesignTechnical capabilities tohandle customer needs andextreme changes in the IT industry

Medical Industry

Akira Watanabe
1991 Joined Kanematsu Electronics Ltd.
2003 Manager, Solution Sales Dept. 2-Manufacturers, Solution Sales
Div. 2, Kanematsu Electronics Ltd.
2008 General Manager, Solution Sales Div. 2, Kanematsu Electronics Ltd.
2011 Executive Officer, Kanematsu Electronics Ltd.
2013 Director, Kanematsu Electronics Ltd.
2017 Managing Director, Kanematsu Electronics Ltd.
2019 President & CEO, Kanematsu Electronics Ltd.

1984 Joined Kanematsu-Gosho, Ltd. (now Kanematsu Corporation)2007 Manager of Chicago Head Office, Kanematsu USA Inc.
2013 General Manager of Motor Vehicles and Parts Department
No. 1, Kanematsu Corporation2014 Manager of Chicago Head Office, Kanematsu USA Inc.
2018 Executive Officer, Deputy Manager of Motor Vehicles &Aerospace Division, General Manager of Motor Vehicles andParts Department No. 1, Kanematsu Corporation
2021 President, Kanematsu Sustech Corporationcompanies, including KEL. We plan to work together inthe future with Kanematsu’s drone businesses to expand
into such fields as diagnosing the degradation of medium- to high-rise wooden buildings. Until now, workers
have had to conduct large-scale investigations fromdangerous aerial work platforms, but by utilizing drones,
we are able to reduce the risk of occupational accidents
along with the cost and time required. Going forward,
we will continue to test this technology with the aim ofcommercialization. In addition, KSU is using its extremely
extensive collection of ground inspection data to develop e-soil, an all-in-one system to handle every stage fromsales proposals to design and construction management.
Going beyond use within our company, we aim to makethis system into a platform for the entire industry.

Kanematsu’s Foundations

Miyabe: One of KEL’s strengths is its expertise in the ICT
solutions and DX fields. If we can further expand KEL’s
strengths and apply them throughout the Group, we will
be able to increase the Group’s strengths and added
value. This will require Groupwide reforms via a variety ofmeasures, such as personnel exchanges to acquire anddevelop digital talent. Kanematsu Group employees haveinherited the Company’s founding spirit of “for the Earthand for people” as part of their professional DNA. We willdevelop human resources who take this spirit to heart toprovide even greater value to our customers.

Watanabe: In terms of collaboration, we are making
progress on a number of projects. One of these isstrengthening solutions in the security field. In 2019,
Kanematsu Ventures Inc. (KGV), established byKanematsu in Silicon Valley in 2018, joined Cyber
Innovation Partners II, a fund created by the venture capital firm AllegisCyber Capital. KEL participated as a partnerand started working as a team with three or four othercompanies. This kind of global operation is a strength ofKanematsu that is very helpful for KEL, given its in-houseglobal professionals.

Koichi Koizumi

The Kanematsu Group’s Value Creation

Koizumi: I think joining the Kanematsu Group will provide
many advantages for KSU. We are a unique company thatuses proprietary technology in the ground improvement
and timber businesses. I believe that, as part of theKanematsu Group, we will be able to further expand ourvalue as a manufacturer in such areas as R&D at our technology development centers and manufacturing at ourfactories. KSU and Kanematsu still need to get to knoweach other better, but we have made progress in building
mutual understanding through several collaborative projects over the past two years. And, as a manufacturer, we
will need to take advantage of the Kanematsu Group’s
strengths to add value to our traditional business modeland grow further. In concrete terms, there are many things

for us to do, such as utilizing Kanematsu’s global network
to expand our international business, especially that in
Asia, as well as advancing business investment and M&A
along with human resource development and exchange.

The Origins of Value Creationsuch as access to the Kanematsu Group’s customer baseof over 20,000 enterprises and accelerating decision making. Once we decided our response to the TOB, we carefully explained both the concerns and benefits of themove to our employees.
The Kanematsu Group has held meetings of Group
company presidents for over 20 years, but there are also
newer forums, such as the Digital Transformation
Committee launched in 2021, in which the Group canhave discussions in the course of regular operations. To
demonstrate Groupwide synergies, I believe we need anenvironment where everyone can discuss a wide variety
of topics on equal footing.
KEL has established an organizational culture withrelationships of equality. We encourage our employees tobuild such relationships both within the company andwhen communicating with customers. By doing so, weare better able to understand the true nature of our customers’ problems and derive the right solutions. To realize
frank discussions from positions of equality within the
Kanematsu Group, it will be necessary to build a communication environment that leverages DX, change the way
our employees think, and reform the corporate culture.

Groupwide Management Aimed at Long-Term Synergy Generation

Miyabe: Through these TOBs, we are now able to see apath forward for the united Group to take on global
challenges in both the DX and GX fields.
In the short term, we are examining how to improve
operational efficiency through collaboration with KEL as
well as how to expand KSU’s environmental businesses
into other parts of the value chain. In the long term,
these two companies will have a huge impact on the
Kanematsu Group’s DX and GX. A decade from now, DX
and GX will be a standard part of how things are done,
and there may even be no need to put these concepts
into words. In their place, food transformation—or FX—
could become the next important movement, such that
Kanematsu’s Foods, Meat & Grain Division would
become a new source of added value for KEL and KSU.
Therefore, it will be important to look at the entire Group
as a whole and execute management aimed at effectively
utilizing each company’s strengths over the long term.

KANEMATSU Integrated Report 2023

5

Opening Feature: Strengthening Groupwide Management

Groupwide Management Aimed at Long-Term Synergy Generation

Significance and Purpose of Making KEL and KSU Wholly Owned Subsidiaries

Kanematsu Sustech Corporation’s Eco Wood Pile Construction Method

Priority initiatives and strategies of each company

The Eco Wood Pile in Use
Shared facilities

Parking lot and park

Effective use of domestically
produced materials
Check dam

Processing forhigh durability

Shared facilities
Box culvert• Strengthen competitiveness of service
business• Acquire knowledge of industries and businesstypes to establish our position as a strategic
partner for customers• Strengthen the management base throughinvestment in human capital and digitalization

Priority Initiative 1:

DX

Conduct DX across the supply chain
and reduce the burden on business
partners, Group companies, andother areas of the supply chain• Allocate medium- to long-term management resources to the growing IT
field and expand businesses targeting demand for security measures,operational efficiency, and potential demand for supply chain DX

Optimally allocate
management
resources• Use M&A to strengthen and expand application areas that complement ourstrong infrastructure construction business and secure IT human resources

Utilizing M&A

Miyabe: Kanematsu has been trading in these fields formany years, and our strengths in these areas make us aunique trading company. We believe it is important tobalance trading and business investment and by, adding
together our GX and DX-related strengths, we will
advance in a way that allows us to respond flexibly tochanges in the external environment. The KanematsuGroup, in line with its philosophy of “for the Earth and forpeople,” has a tremendous amount of non-financial capital. We will continue to carry this capital forward, and I
will take the lead in management that leverages synergies
across the entire Group and contributes to the improvement of enterprise value, thereby contributing to society
as a whole.

• Promote business collaboration through personnel exchange and information
sharing within the Group and restructure business using digital technology• Formulate a new medium-term business plan focused on digital transformation

Corporate initiatives• Strengthen and expand the customer base and R&D through M&A• Promote Groupwide GX and strengthen sustainability initiatives through thepromotion of DX

Improve the Group’s enterprise value by promoting DX, GX, and Groupwide management
1) DX: Utilize data and digital technology to create new business models and transform existing businesses
2) GX: Transform the entire socioeconomic system to realize carbon neutrality (reduce greenhouse gas emissions, including CO2, and subtract avoided emissions to reach net zero total emissions)3) Applications: Refers to tools, such as internet browsers and email, in contrast to infrastructure, which refers to hardware, such as servers

Deepening Group GovernanceKaoru Tanigawa

Kazuhiro Tanaka

Chairman(Presiding Officer of theBoard of Directors)

Outside Director(Chair of the Nominating
Committee)

I believe that making Kanematsu Sustech Corporation
and Kanematsu Electronics Ltd. into wholly owned subsidiaries has significantly enhanced governance, thereby improving the value of the entire Group.
Previously, both companies strove to enhance theirgovernance as listed companies, but as listed subsidiaries, some aspects of their governance were insufficientin terms of independence, such as the appointment
and proportion of independent outside directors. Suchissues were difficult for them to resolve on their own.
Since making these companies into wholly owned subsidiaries, the Group has further evolved by maximizing
the various business synergies their integration enables,
as well as unifying Groupwide governance and internal
controls.
I believe that this will further increase the Group’s
credibility from the perspectives of all stakeholders,
including investors and business partners, and encourage them to invest and do business with us. I hope you
will look forward to the continued growth of theKanematsu Group.

Undoubtedly, we need strong governance systems, forboth individual companies and the Group. However, corporate culture is even more important than systems, andthe foundation of a company’s culture is its management philosophy.
Developing and nurturing corporate culture by disseminating the management philosophy is necessary forgood Group governance. This is because each Group
company, while fully demonstrating its own individuality, plays a major role in realizing discipline and synergy
at the Group level.
Kanematsu Group employees share the philosophyof “for the Earth and for people,” which is based on our
founding purpose. The Kanematsu Group’s philosophy
and culture consist of reliability and integrity as built up
by our predecessors. Our employees continue to takepride in these today. To strengthen Groupwide management, we will have to reaffirm and redefine these principles and work to ensure that they truly permeate theentire Group through strong leadership from both theBoard of Directors and the management team.
KANEMATSU Integrated Report 2023

Kanematsu’s Foundations

KANEMATSU Integrated Report 2023

year, thereby expanding our “underground forests.”
With the improvement of our proprietary Eco Wood
Pile technology, we have started expanding its use
beyond single-family homes to include large buildings. In
recent years, we have increasingly been using this technology for civil engineering applications related to disaster prevention, such as reinforcing the embankments oferosion control dams and reservoirs.

• Invest in R&D that contributes to expanding business areas and developing
new technologies and construction methods• Medium- to long-term investment and business reforms to strengthen the
non-residential sector

The Kanematsu Group’s Value Creation

6

Promote GX, build a stable andsustainable supply chain, andcontribute to decarbonization• Position sustainability as a priority initiative• Realize an environmentally friendly society
through business activities

The Origins of Value Creation

Koizumi: One of KSU’s visions is to “create undergroundforests through GX.” In 2022, we provided Eco Wood Pile,
which uses timber preservation treatment technology, formore than five thousand buildings. By replacing cement
or steel ground improvement materials with timber, thistechnology reduces CO2 emissions by 10 tons per building. We therefore calculate that, across the 43,000 buildings where we have used Eco Wood Pile since introducing
it 10 years ago, we have avoided emissions totaling
430,000 t-CO2. Going forward, we plan to increase theuse of these materials to 10,000 to 15,000 buildings per

GX

Measures and expected synergies after the TOBs

Sluice gate

Eco Wood Piles

Watanabe: Recently, we have been receiving an increasing number of consulting-related inquiries from customers who want us to provide solutions or connect theircompanywide infrastructure through DX. To meet thisdemand, we need to quickly secure, cultivate, and invest
in digital talent. Planning is also under way for a project
to develop digital talent both within the Group and forJapanese society as a whole. By creating educational content and developing digital human resources in stages(through training lasting three months, six months, and oneyear), we will contribute to the DX of society as a whole.

Priority Initiative 2:

7

The Origins of Value Creation

The Kanematsu Group’s Origins
Corporate Principle“Let us sow and nurture the seeds of global
prosperity”

The aspiration of founder Fusajiro Kanematsu lives on today as
the core heritage of Kanematsu.

“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, atime 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.

In 1889, Fusajiro Kanematsu founded Kanematsu. Over the 134 years since its
beginnings as an importer of wool 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 to changes in international society and the economic
environment over the decades, overcoming numerous obstacles andtransforming itself. While the Group continues to change and evolve, theentrepreneurial spirit valued by our founder and his aspiration to contributeto international society live on in the Kanematsu Group today.

https://www.kanematsu.co.jp/en/company/history/roots.html

Fusajiro Kanematsu
1845–1913“CREATING SHARED VALUE”
Who We Are

1.	Reflecting the pioneering spirit of our predecessors, we believe thatfairness and justice should guide our business dealings and the wiseuse of creative imagination and ingenuity will bring prosperity.
2.	Our purpose as a Company is not only to build a sound andflourishing 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 asrepresentatives of that organization and as such we are bound byCompany rules and attendant loyalties and must work together witha spirit of cooperation while cultivating mutual understanding andrespect for fellow members.

The Origins of Value Creation

The Sayings ofFusajiro Kanematsu

Our Beliefs: Kanematsu’s Guiding Principles

Working toward ourlong-term vision

CSV-oriented management*

Human capital managementDX

GX

The Kanematsu Group’s Value Creation

Reinforcing Groupwide Management
Innovation*CSV: Creating shared value

Main Business Opportunities

Main Business Risks

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 and business portfolio that are resistant to changes in commodities andfinancial markets
Core heritage of Kanematsu passed down from our founder: Acting based on the founder’s aspirations and guidance
against thinking that any kind of business practice is acceptable as long as it is profitable
Risk management and investment management expertise supporting solid and stable business

Expanding opportunities for business investment
and M&A due to market structure changes

Slowing growth in trade businesses due to peaking
of domestic markets

The Strengths We Have Built
Strength 1

Strength 2Strength 3

Strength 4

Robust customer baseand know-how
cultivated throughbusiness

Stable financialbase and revenue
structure

Management
prioritizing capitalefficiency

Human capital andinvestment system toadvance businesscreation

Priority Initiatives

8

KANEMATSU Integrated Report 2023

Sustainable growth in fundamental businesses and expansion of the revenue
base through business investment

future 135

Electronics &DevicesMarket expansion due to 5G

Foods, Meat
& Grain

Asian market expansion, consumer taste
diversification

Electronics& Devices

Shortage of digital talent

Foods, Meat
& GrainGrowing risks to stable procurement, growing
demand for human rights protection in the
supply chain

Steel, Materials &Plant

Changes in energy markets

Steel, Materials &Plant

Tightening regulations due to decarbonization

Motor Vehicles &Aerospace

Next-generation mobility market expansion

Motor Vehicles &Aerospace

Rapid industrial structure changes, logistics
disruption

Kanematsu’s Foundations

Sources of Strength

External Environment
Economic growthin emerging
economies

Paris Agreement
SDGs

GX

Response to technical innovation

DX

Globalpopulationboom

Low birth rate
and graying inJapan

Pandemic

Establishment of management infrastructure forachieving sustainable growth
KANEMATSU Integrated Report 2023

9

The Origins of Value Creation

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

2013–

Founding

Development into a general trading company

Restructuring

Aggressive management

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

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

Following the expansion and collapse ofJapan’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.

In step with Japan’s rapid economic growth, Kanematsu proactively
developed third-county trading as well as importing and exporting
between companies in Japan and overseas. At the same time, theGroup promoted infrastructure development in developing countries.

Responding to the rapid uptake of IT
throughout society, Kanematsu advanced
business development in line with theneeds of the digital age, entering themobile business and reinforcing information and communication technology (ICT)functions.

Shift toward aggressive management through M&A in highly specialized fields and business expansion

Solving Social Problems

1889

Fusajiro Kanematsu Shotenof Australian Trading
founded by Fusajiro
Kanematsu in Kobe

1890

1918

Company name changed toKanematsu Shoten Company

1935

Kanematsu Wool ResearchInstitute established (now
KANEYO Co., Ltd.)1936

Branches opened in New Yorkand Seattle

1943
1951

Overseas affiliate establishedin New York, the first overseas office established by aJapanese trading company
after World War II

1973

1989

100th anniversary of the Company’s
founding

1990

Listed on the first section of theTokyo Stock Exchange

Company name changed toKanematsu Corporation

Electronics & Devices

1968

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

1972

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. established (now Kanematsu Communications Ltd.)

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.)

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

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.)

1993

Kanematsu Electronics Ltd. becamea subsidiary

Steel, Materials & Plant

1959

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

1974

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

Donation and endowment
to what has grown into the
Kobe University ResearchInstitute for Economics andBusiness Administration(Kanematsu Memorial Hall)

2014•Expanded the executive officer system•Established business investment standards•Acquired a majority stake in Kanematsu-NNK Corp.
(now Kanematsu Sustech Corporation)

2015

Completed disposal of commercial real estate holdings

2016•Carried out an absorption-type merger with
Diamondtelecom, Inc. aimed at expanding the mobile
business•Issued first series of straight corporate bonds (return tothe straight bond market)

April 2013–March 2016

KANEMATSU Integrated Report 2023

2018

•Formed the Technologies and Business
Collaboration Team to advance innovation
investment•Established Kanematsu Ventures Inc.

2019

2021

•Revised and determined five issues of high materiality•Took over Seiko Epson Corporation’s IC test handler
business (now NS Technologies Inc.)

2022

Received A- rating from Japan Credit Rating Agency,
Ltd. (JCR)•130th anniversary of the Company’s founding•Formed strategic partnership with France-based
Dawex Systems, entering the data business

2023

Made tender offers for Kanematsu Electronics Ltd.
and Kanematsu Sustech Corporation, turning theminto wholly owned subsidiaries

April 2014 – March 2019

April 2018–March 2024

“VISION-130”– future 135 –• 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” through coexistence 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—Jump to next stage leading to
the future—• 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

Net Interest-Bearing Debt Reduction

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

543.8

1927

Construction andendowment of
the Hitotsubashi
University
Kanematsu
Auditorium• 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

Positive Effects of Restructuring

1929

Endowment of construction funds for the
Sydney Hospital
Kanematsu Memorial
Institute of Pathology

Greatly
improved andstrengthened thefinancial base

150
100
50

86.4
2000
(Years ended March 31)

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

Began trading with Steel Service
Oilfield Tubular, Inc.

1985 Kanematsu Aerospace Corp. established
1919

2017

Resumed dividend payments

1985

Motor Vehicles & Aerospace

Major examples of social
contribution and management oriented aroundcreating shared value

2013

2005

Foods, Meat & Grain

1954

1991

Kanematsu’s Foundations

Company name changed toKanematsu Corporation

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

Kanematsu focused on developing products and services that take into account sustainability in such areas as food resources and the environment.
The Group worked to create new, high-value-added business models, with an eye to responding to such technological innovation as AI and IoT.

The Kanematsu Group’s Value Creation

Branch opened in Sydney
Direct importing of Australianwool began

1967

The Origins of Value Creation

Kanematsu expanded its international trading beyond
Australia, opening overseas
branches and building a foundation for the development oftrade with Japan.

2013

0

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

(Years ended March 31)

KANEMATSU Integrated Report 2023

11

The Origins of Value Creation

Value Creation Process
CapitalHuman
CapitalDeep and broad product andindustry expertise
New business creation know-how
Risk management

Invested capital and growthinvestment

Evolving traditional
businesses

Foods, Meat & Grain
Steel, Materials & Plant

Relationships with diverse
stakeholders

Stable earnings
base

Strength

Robust customer
base and know-how
cultivated throughbusiness

Business
investment

Virtuous
cycle

Digitaltransformation(DX)

Monitoring/managementGreentransformation(GX)

Human capitaland investment
system to advancebusiness creation

Employees

Employee-friendly corporate culture

Local communities and governments

Financial

Non-financial

Free cash flow

Management by Objectives (MBO)

ROIC

Employee satisfaction surveys

D/E ratio

GHG emissions

Regional revitalization

Environment

Strength

Stable financialbase and revenue
structure

Corporate Principle

Human Resource Development

Kanematsu’s Foundations

Contribution to a carbon-neutral
society
Strength

Management BaseManagement
prioritizing capitalefficiency

Governance, risk management,compliance

KANEMATSU Integrated Report 2023

Shareholders and investors

StrengthGroupwide Management

12

Expansion ofscale

Maximizing shareholder value

Trade

Contribution to the environment
and environmental development
in all communities involved in ourbusinesses
Contribution to a low-carbon
society

1. Average hours of training for Kanematsu University participants
2. Average over the five years since the launch of future 135
3. Figure for fiscal 2022
4. Cumulative new investment in the first five years of future 135

Products and services useful tosociety
Stable, ongoing procurement

Customers • Markets • Share

Domestic: 5; Overseas: 35
Group companies: 134

p78

Added
value

Motor Vehicles &Aerospace

Offices

Business Segments

Investment ininnovation (seeds)

Creating new businesses

Shareholders’ equity: ¥107.1 billion
Interest-bearing debt: ¥147.9 billion
Growth investment: Approx. ¥129.2
billion4

Business partners: Over 20,000
companies

Customers and suppliers

Creating a Future-Oriented Portfolio

Electronics & Devices

Social and Partnerships
Relationship Robust customer base (business
Capitalpartners of several decades, etc.)

NaturalCapitalFour Segments with Unique Strengths

The Kanematsu Group’s Value Creation

Manufactured
Capital

Basic Policy

Society

The Kanematsu Group will help realize sustainable global economic growth and solve social issues through the pursuit of expansion of scale, acquisition ofadded value, and quality improvement and through the evolution of its traditional businesses and the creation of new businesses, aiming to advance into thenext stage of growth.

The Origins of Value Creation

Financial
Capitalfuture 135 Medium-Term Vision

People who take on businesscreation
Consolidated employees: 7,866
Annual average training: Approx. 47hours/person1
Total annual training: Approx.
20,403 hours
Diverse human resource hiring rate(women and non-Japanesenationals): 27.1%2
Engagement score: 61%3

Value Produced

FunctionsIntellectual
CapitalBusiness Model

Kanematsu Group
Profit for the year attributable toowners of the Parent
ROE
Total return ratio

Heritage handed down since our founding

p50

KANEMATSU Integrated Report 2023

13

The Origins of Value Creation

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.

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

Business Model and Vision for the Future

Procurement

Logistics

Sourcing

Securing new functions and roles

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.

Creating a new portfolio

Development

Added value

Downstream

Manufacturing

Processing

Procurement

Logistics

Expanding Upstream and Downstream from Trading to Add Value

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

Downstream

Manufacturing

Processing

Procurement

Logistics

Market, product, andcustomer expansion

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

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.
Special Feature: Innovation Investment

Customers • Markets • ShareBusiness Investment Process

The Kanematsu Group’s businesses are mainly in the Group’s areas of strength, where it possesses insight and knowhow. We do not invest in businesses that are easily swayed by commodity or financial markets, such as fossil fuels, realestate, or financial businesses, and our stable revenue structure sets us apart from other general trading companies.
Kanematsu’s Revenue Structure
Non-resource: 100%
Other
Other 1.5%%
Electronics
Electronics && Devices
Devices

31.0%%

FY2023
FY2023
Foods, Meat
Meat && Grain
Grain
Foods,

37.4%%

Other Trading Companies’ Revenue Structures
Company
CompanyAA

Company
CompanyBB

Resource: 27%%

Resource: 38%%

p32

Kanematsu’s Foundations

Business Composition (Compared with Other Trading Companies)

21.2%
%

Maintenance

Sale

Innovation Investment: Creating Next-Generation Businesses Centered on Advanced Technologies

Stable earnings base

Steel,
Steel, Materials
Materials &&
Plant
Plant

Storage

Recycling

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

Scale Expansion Business Investment: Investing Resources in Areas of Insight and Strength

The Kanematsu Group’s Value Creation•Insights into market needs andsocial issues•Create business opportunities
using advanced and digitaltechnologies•Utilize accumulated management
know-how

ジ
メー
年イ
30
20

0
203
for
ion
Vis

Innovation investment

ets
targ
24
20

Functions

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

8.9%%

MaintenanceSale

Recycling

Seeds

Motor
Motor Vehicles
Vehicles &&Aerospace
Aerospace

Storage

The Origins of Value Creation

Upstream

Planning

Non-resource: 73%%

Non-resource: 62%%

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
Thoroughly examine thesoundness of the businessplan (including
responsiveness)

Alignment withinvestment criteria
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

Investment
Company
CompanyCC
Company
CompanyDD

Resource: 36%%

Resource: 52%%

Non-resource: 64%%

Non-resource: 48%%

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

Note:
Note:Data
Dataaccording
accordingto
toKanematsu’sKanematsu’sresearchresearch

14

KANEMATSU Integrated Report 2023

KANEMATSU Integrated Report 2023

15

The Kanematsu Group’s Value Creation

Message from the President & CEO

The Origins of Value Creation

By returning to our fundamentals andadvancing Groupwide management,
we will spark innovation unique to theKanematsu Group.
President & CEO

Yoshiya Miyabe

16

KANEMATSU Integrated Report 2023

The Kanematsu Group’s Origins

Kanematsu’s Foundations

Since taking office as President & CEO in 2021,
I have brought up the importance ofreturning to our fundamentals on a varietyof occasions.
Kanematsu’s founding purpose, “Letus sow and nurture the seeds of global
prosperity,” bids us to take action to benefit
people around the globe. The values of thispurpose permeate all that we do. They arealigned with today’s Sustainability
Development Goals and serve as compass
to guide us on the right path forward. Amid
the rapid changes of the modern world,
I think it is more necessary than ever toreturn to these fundamentals. At the sametime, it has become more than apparent tome through experience in a variety of settings that the founding purpose has truly
taken root in the minds of the people of theKanematsu Group. For example, our business partners often remark on the warmthand care they feel from Kanematsu, or theirsurprise at how attentive the service theyreceive is. Such comments are extremely
gratifying for us and naturally reinforce ourattachment to the Company while encouraging greater engagement. Furthermore,such reactions demonstrate how our people are unconsciously putting into practicethe sayings of our founder, Fusajiro
Kanematsu—“belief in the value of work,”“profit is just a by-product of business,” and“customers come first.” Indeed, Kanematsu
is full of people working this way. This isalso the reason why the Kanematsu Group
has such outstanding intangible assets.
Given the current emphasis placed onsustainable growth, companies must, ofcourse, work toward growth in terms ofnumbers and volume. However, I believethat we must also remember the importance of qualitative growth. One of the reasons that I keep bringing up returning toour fundamentals is to remind the peopleof the Kanematsu Group that we alreadyhave in place the kind of conditions neededfor qualitative growth and improvement.

The Kanematsu Group’s Value Creation

Returning to Our Fundamentals andValuing Our Intangible Assets

p8

KANEMATSU Integrated Report 2023

17

The Kanematsu Group’s Value Creation

Message from the President & CEOGroupwide Management

future 135 Medium-Term Vision

p2

p22

Message from the Digital Transformation Committee Chair

p28

Message from the Green Transformation Committee Chair

p30

Reinforcing Digital Talent and Innovation
In our main business of trading, humanresources are our most important management resource and the source of value creation. In particular, digital talent is key tosuccess in new businesses centered on such
advanced technologies as IoT and AI, which,going forward, are expected to only increasein importance as growth areas for Kanematsu.
Around 60% of our employees work in areas
related to the Electronics & Devices Division,and digital literacy is high throughout theGroup. To further increase digital literacy, we
have now made having all employees obtain
the IT Passport qualification an official part ofour Human Capital Development Policy.
Furthermore, through the proactive
exchange of personnel with Kanematsu
Electronics, we will advance the development
of digital talent Groupwide, rolling out digitaltechnologies to businesses that have not mademuch use of them to date. Specifically, we plan
to dispatch personnel selected from each business division to Kanematsu Electronics as a wayof developing human resources equipped toapply digital technologies in their respective
businesses. We are starting these efforts witharound 10 employees, but plan to step them up
as we go forward. Our business divisions haveexpressed their eagerness to select and send
staff. We have great expectations for these
efforts as a test of the fruits of our Groupwide
management.

KANEMATSU Integrated Report 2023

Kanematsu’s Foundations

KANEMATSU Integrated Report 2023

Opening Feature: Strengthening Groupwide Management

Part of our medium-term vision is to create
a new business portfolio through innovation
investment. To this end, we need to collaborate
with startups that are producing innovativetechnologies and business models. I think wemust be proactive in this area, given that mostof the movers and shakers in the world today
are companies that were startups just a few
years ago. Trading companies engage with theentire value chain, from end to end, so we are
well positioned to partner with startups. At
the same time, exercising discerning judgement regarding technologies is an area of difficulty for many trading companies, so
partnering with venture capital firms (VCs)
familiar with that ecosystem can be very effective. For VCs, meanwhile, such partnerships
offer the benefit of access to a trading company’s business partner network. In other words,
the combination of a VC’s technological discernment with a trading company’s businessnetwork can result in a win-win relationship,enabling the creation of a business model only
possible with a trading company.
The Kanematsu Group includes
Kanematsu Ventures Inc., a Group company
located in the United States that specializes infinding promising startups in Silicon Valley.
Kanematsu Ventures has invested in VC funds
in Silicon Valley and is building a network withpowerful VCs. These connections have led to abusiness tie-up with WERU INVESTMENT Co.
Ltd., a major Japanese VC. Kanematsu
Electronics and other Group companies haveexpressed interest in dispatching staff toKanematsu Ventures. Making effective use ofKanematsu Ventures will thus be significant interms of human capital development, as well.
Our innovation investment is currently
still in the sowing stage, but going forward,
we intend to focus efforts on cybersecurity,
the space business, and environmental businesses. A Silicon Valley VC we have partneredwith since 2019 has built relationships withstartups boasting world-leading cybersecurity
technologies. By combining such constantly
evolving cutting-edge technologies with theKanematsu Group’s business network, mainly
though Kanematsu Electronics, we will expand
new security businesses. In addition,

The Kanematsu Group’s Value Creation

18

businesses worldwide.
As publicly listed companies, both had
ample growth potential even as they were
before, but they share Kanematsu’s DNA, andwe felt that integrating them fully into theGroup would generate greater synergies at theGroup level. This conviction led us to the decision to make the tender offers.

The Origins of Value Creation

Another thing I have been emphasizing repeatedly is the need to do away with the barriers
separating divisions and Group companies. The
Kanematsu Group does business with some
20,000 companies in and outside Japan, andour staff visit our business partners every day.
The information, insight, and experience that
this contact provides constitute valuable assets
for Kanematsu. This is the basic form of thetraveling sales model, i.e., going to where thepotential customers are and finding a way togenerate business where there is nothing, noteven an order. Kanematsu’s main business is in
optimizing trading—the buying and selling ofthings—to increase added value across thevalue chain. The traveling sales mindset lives on
as a strength of this trading business, and wewill continue to reinforce and take pride in it.
Going forward, we will work to make explicit
the implicit knowledge our staff have in theform of this information, insight, and experience so that it can be shared across the Groupand woven into existing and new businesses
and business models to impart added value. To
this end, we will build infrastructure and systems to facilitate the sharing and linking ofsuch implicit knowledge in order to comprehensively reinforce the Group’s strengths.
To reinforce the business foundations of
our Groupwide management, we madeKanematsu Electronics Ltd. and Kanematsu

Sustech Corporation, which had been listed
Group companies, into wholly owned subsidiaries via tender offers. The current fiscal year
(ending March 2024) is the final year of the
future 135 medium-term vision, which includes
the key measures of promoting DX and GX. We
plan to keep DX and GX as priority initiativesof the new medium-term business plan slated
to begin next year. As we advance DX and GX
initiatives, both of the newly acquired companies will be essential partners in the
Kanematsu Group’s growth—Kanematsu
Electronics, which operates in the ICT businessdomain, brings with it abundant insight, experience, and human resources in the area ofdigital technologies, and Kanematsu Sustech
employs proprietary technologies to contributeto decarbonization through such businesses
as ground improvement and wood materials.
Until now, we have worked in partnershipwith these companies, but they were not wholly owned subsidiaries and were both publicly
listed, which imposed a variety of limits onwhat we could do. Now that they have been
consolidated into the Group, we will be able tofreely allocate Group management resources tothem while further advancing cooperation andenhancing overall Group enterprise value. In
particular, given the current pressing importance of digital technologies and sustainability
across all industries, I think that the expertise of
these companies will contribute to the added
value and expansion of scale of the Group’s

19

The Kanematsu Group’s Value Creation

Message from the President & CEO

Special Feature: Innovation Investment

p32

Message from the Chief Officer of Human Resources

p26

Enhancing Enterprise Value byReinforcing Global GovernanceLooking back on the business environment of
the past few years, in addition to rapidly
advancing technologies, such as digitalization
and AI, as well as the increasing importance of
decarbonization efforts, there have been
many major factors that we did not expect at
all, such as the pandemic and the RussiaUkraine situation, all of which have had amajor impact on Kanematsu’s businesses. This

20

KANEMATSU Integrated Report 2023

p62

Message from the Chair of the Sustainability
Management Committee

p34

Initiatives to Ensure Respect for Human Rights

p42

Kanematsu’s Foundations

p61

Dialogue between the Chairman and an
Outside Director

The Kanematsu Group’s Value Creation

Human Capital Targets and Results

rising uncertainty has made steering management more difficult, but trading companies
are by their nature skilled at adapting tochange.
Our networks with business partners andthe vast volume of information they provide
make us better able to respond to change. In
addition, trading companies have few major
physical assets, like factories, that have to beshed when change comes. This allows trading
companies to be light on their feet, facilitating
adaptation. Furthermore, Kanematsu is notengaged in resource businesses, so we areexposed to relatively little volatility, enabling
us to maintain stable revenue and financial
soundness. In times of uncertainty and ofchange, Kanematsu’s ability to stably secure
funds for growth investment is a major
strength.
To further solidify our footing, we areworking to reinforce global Group governance and internal control. In Japan, the tender offers for Kanematsu Electronics andKanematsu Sustech have strengthened Group
governance. Overseas, as we acquire overseas
companies, we are working to build an efficient global governance system. However, thereality is that there are limits to the measures
we can take to prevent deliberate misconduct
by individuals, and I think this is an area where
it is crucial to ensure that the spirit ofKanematsu’s founding purpose permeates
the Group. Amid calls for strengthening internal control, merely ticking off items on astrengths of and issues faced by each of ourdivisions and businesses as we formulate thenext medium-term business plan to broadly
leverage the Kanematsu Group’s strengths insociety. Taking pride in our roots in the shoeleather business of traveling sales, we will further strengthen our ties with business
partners with a focus on digital technologies
and sustainability as we aim even higher.
“Sow a seed now,” and take action tobenefit people around the globe. These are
our fundamentals.
We ask ourselves what the KanematsuGroup can do for the Earth and for people,
and we seek to make such contributions areality by engaging in dialogue with stakeholders and working to meet their expectations. As we do so, I ask for your continued
support and understanding.

The Origins of Value Creation

Kanematsu Ventures is increasingly partneringwith startups in the new space and green techarenas, which offer potential for new developments in the space and environmental businesses going forward.
Proactive investment in the most important form of capital for value creation—
human resources—is essential to innovation.
To maximize this capital, we have establishedthe Human Capital Policy and set metrics andtargets from the perspectives of human capital development and working environment
improvement. As we work toward these targets, we will enhance the value of our intangible assets in line with the philosophy that a
trading company is its people.

checklist is not enough. We must return to ourfundamentals and get creative to reinforce
governance.
In order to achieve sustainable growth,which is also the purpose of strengthening
global governance, we signed the United
Nations Global Compact (UNGC) on March 12,2023, endorsing its 10 principles in the four
fields of “human rights,” “labour,” “environment,” and “anti-corruption.” These are areasin which we had already been working, mainly though the Sustainability Management
Committee, but we took this step as anopportunity to exercise creative leadershipwithin the UNGC’s global framework andreinforce the global business operations of
the Kanematsu Group as a whole. By committing to the UNGC, we seek to level up oursustainability-oriented management andincrease the depth of our intangible assets. In
this way, we aim to increase our enterprise value.
We are now in the final fiscal year of the
future 135 medium-term vision. By reinforcing
Groupwide management, we believe that we
can achieve the vision’s targets. We aim toreach even greater heights in the next stage.
To this end, we are taking a fresh look at the

KANEMATSU Integrated Report 2023

21

The Kanematsu Group’s Value Creation

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.

Quantitative Targets
Final year target(The fiscal year ending March 2024)

Fiscal 2023 results

Fiscal 2024 forecast¥20 billion¥18.6 billion¥23.5 billion

ROE

10% – 12%

12.9%

17.2%

Total return ratio

30% – 35%

33.7%

32.0%

Consolidated net income(Profit for the year attributable to ownersof the Parent)

The Origins of Value Creation

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.

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

25
20

Essentials

15

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%.

18.6

16.6
14.4

13.8%

5

13.3

11.2%

10

6.4%

17.2%

16.0

5.3%

9.7%

12.9%
10.5%

4.9%

5.6%

5.6%

2021

2022

2023

The Kanematsu Group’s Value Creation

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.

23.5

0

2019
Consolidated net income

2020
ROE

ROIC

2024
(Forecast)(FY)* Profit for the year attributable to owners of the Parent*Profit for the year attributable to owners of the Parent

Approximately ¥129.2 Billion in New Investment in Fields Where We Have Strengths and Insight (Five-Year Cumulative Total)

Priority Initiatives

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

p24

Promote 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
Message from the Digital Transformation Committee Chair

p28

Special Feature: Innovation
Investment

p32

Build a framework for global strategy, including the reinforcement of the overseas
earnings base

Message from the Chief Officerof Human Resources

p26

Invest in human resources, including the cultivation of management-level human resources

Human Capital Managementp49

Human Resource Development /Work Environments for Employees

p50

Promote Groupwide DX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

Improve operational efficiency and employee satisfaction (ES) through continued work
style reforms

22

KANEMATSU Integrated Report 2023

Motor Vehicles & Aerospace:
Approx. ¥8.9 billion

Electronics & Devices:
Approx. ¥103.2 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 and manufactures dashboard cameras(U.K.) Entered capital and business alliance with startup that operates Advanced
Air Mobility vertiports(Japan) Invested in emerging manufacturer aiming for the practical applicationof carbon nanotubes(Japan) Invested in Waseda Innovation Fund 3 Limited Partnership(Japan) Acquired additional shares in CARBON FLY, Inc.

(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(Germany) Established KIS Global GmbH
(Japan) Acquired semiconductor manufacturing (marking)equipment trading company(Japan) Acquired semiconductor manufacturing equipment(IC test handler) manufacturing business(Japan) Entered capital and business alliance with Keyware Solutions Inc.
(Japan) Acquired all shares of Kangawa Shoji Co., Ltd.
(Japan) Acquired mobile phone sales agency Kinkitelecom CO., LTD.
(Canada) Invested in a company engaged in the sale of passport photo
printing systems and related services(Japan) Entered capital and business alliance with total security solution
company(Singapore) Acquired semiconductor depaneler manufacturer(Japan) Acquired additional shares in GLOBAL SECURITY EXPERTS Inc.
(Japan) Acquired NIPPON ACCESS, INC.
(Japan) Made Kanematsu Electronics Ltd. a wholly owned subsidiary(Japan) Made Kanematsu Sustech Corporation a wholly owned subsidiary

Steel, Materials & Plant:
Approx. ¥11.6 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 and bridge fabricator(U.S.) Established second steel tubing processing factory(South Korea) Made additional equity investment in steel plate processing company(Australia) Invested in startup that manufactures and sells plastic raw materials

Foods, Meat & Grain:
Approx. ¥5.5 billion(China) Established beef primary processing and sales company(China) Established feedstuff material production plant(Indonesia) Increased investment in processed food product manufacturer(Uruguay) Invested in Uruguayan beef producer

Main
new business
investment(The last five years)(Japan) Invested in soy plant-based meat producer(Canada) Invested in hexane-free soy processing company(Indonesia) Invested in general food product manufacturer thatowns dairy product, food processing, and logistics companies

Kanematsu’s Foundations

Sustainable growth in fundamental businesses and expansionof the revenue base through business investments(Hong Kong) Invested in Soul Logic Partners Limited(Japan) Invested in Foods-i Co., Ltd.
(Japan) Acquired shares in The Monogatari Corporation
KANEMATSU Integrated Report 2023

23

The Kanematsu Group’s Value Creation

Message from the CFO

Rating and Investment Information, Inc. (R&I) and Japan
Credit Rating Agency, Ltd. (JCR) credit ratings haveremained at A- after the tender offer announcements. Bysteadily enhancing our financial base going forward, we
aim to maintain and improve our ratings.

ROE

Shuji Masutani
Director, Executive Officer, CFO

In fiscal 2023, Kanematsu made successful tender offers
for the listed subsidiaries Kanematsu Electronics (KEL) and
Kanematsu Sustech (KSU). The funds required to acquire
KSU came from cash on hand, while those for KEL camefrom ¥58.4 billion in new loans from financial institutions.
As of March 31, 2023, net interest-bearing debt stood at¥147.9 billion, up ¥96.7 billion from the previous year-end
due in part to an increase in operating capital as result of
the depreciation of the yen and rising commodity prices.
Furthermore, in making the tender offers for the abovementioned consolidated subsidiaries, the difference
between the book value of non-controlling interests andthe tender offer price, including premiums, led to adecrease in capital surplus. As a result, total equity attributable to owners of the Parent stood at ¥128.5 billion,
down ¥31.0 billion from the previous fiscal year-end.

24

Because the above tender offers changed the balance ofshareholders’ equity and interest-bearing debt, we havemade improving our financial base an immediate
management issue.
In fiscal 2023, core operating cash flows after deducting changes in working capital came to an inflow of ¥42.3
billion, as we maintained stable cash generation. Over the
coming four years—into the period of the next mediumterm business plan—we will direct cash generated into
investments while controlling interest-bearing debt, striking a balance between investment and financial soundness. Over these four years, we will first improve the net
D/E ratio to around 1.0 to ensure the stability of thefinancial base. Even assuming the required level of financial discipline, we still expect to be able to invest around¥80 billion over the four-year period.
In addition, we have added KEL and KSU to our centralized cash management system, and we will work tofurther improve Group capital efficiency.
As for the impact of the tender offers on ratings, ourFigure 1. Consolidated Net Income*/Payout Ratio(Billions of yen)

(Yen)

25

150

The Kanematsu Group has laid out basic guidelines forcontrolling and managing risk in its Risk Management
Guidelines. Based on said guidelines, we classify anddefine risks, then respond to each appropriately, aiming
to minimize losses to the Kanematsu Group and achievesound business growth and development.
The Group monitors quantifiable risks (market risk,
credit risk, investment risk, country risk, etc.) by regularly
measuring such risks and reporting the results to management. Specifically, to measure 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, 2023, risk assets stood at ¥55.5 billion andtotal equity attributable to owners of the Parent at ¥128.5
billion, for a risk asset ratio of 0.43. Although this is higher

Our Share Price and Price-to-Book Ratio

Figure 2. ROE/ROIC/WACC

Figure 3. Total Shareholder Returns

(%)

(%)

140

13.8
20

37.6%
34.8%

15

60
14.4

60

34.0%

100

18.6 33.7%

65

75

6

13.3

10

0

2020

12

2021

Consolidated net income (left)
Payout ratio

2022

2023

11.2

90
32.0%

50

16.0

Kanematsu‘s five-year total shareholder return at March
31, 2023, was 134.2%, slightly exceeding the 131.8% of
the TOPIX Total Return Index (Figure 3).
As of March 31, 2023, the price-to-book ratio stood
above 1.0, at 1.1. We will continue working to increase
enterprise value in order to further improve this ratio sothat we can fully meet investors’ expectation of mediumand long-term growth.

150

18

23.5

2024
(FY)
(Forecast)
Annual dividend (right)*P rofit for the year attributable to owners of the Parent
KANEMATSU Integrated Report 2023

Risk Asset Measurement

Kanematsu’s Foundations

Financial Impact of Tender Offers for Listed
Subsidiaries

Financial and Capital Strategy Going Forward

For fiscal 2023, in light of business performance and theoperating environment, we raised the annual per-share
dividend ¥10 to ¥75 (an interim dividend of ¥37.5 and a
year-end dividend of ¥37.5). This resulted in a consolidated dividend payout ratio of 33.7%, within the total dividend ratio range of 30%–35% targeted in the future 135
medium-term vision.
For fiscal 2024, we forecast consolidated net income of¥23.5 billion and plan to increase the annual dividend pershare another ¥15 to ¥90 (an interim dividend of ¥45 anda year-end dividend of ¥45). As a result, the consolidated
dividend payout ratio is forecast at 32.0%, remaining
within the 30%–35% range (Figure 1).
In light of our financial balance following the tender
offers, for the time being we plan to provide returns toshareholders in the form of dividends, rather than sharebuybacks.
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.

The Kanematsu Group’s Value Creation

Fiscal 2023, the year ended March 2023, was the fifth
year of the future 135 medium-term vision (covering fiscal
2019 to fiscal 2024). Profit for the year attributable toowners of the Parent (consolidated net income) came to¥18.6 billion, up ¥2.6 billion year on year, approaching
our highest ever. This result was driven by the strong
performance of security- and network-related projects in
the ICT solutions business; growth in orders as a result ofrobust semiconductor demand in the semiconductor
parts and equipment business; increased energy investment within the United States in the steel tubing business; and strong performance on the back of improved
market prices in the energy business.
Looking ahead, we forecast consolidated net incomeof ¥23.5 billion for fiscal 2024, exceeding our target of¥20.0 billion for the final year of future 135 (Figure 1).

Reflecting the above factors, the net D/E ratio rosefrom 0.32 at March 31, 2022 to 1.15.

Shareholder Returns

The Origins of Value Creation

Progress of and Outlook for the future 135
Medium-Term Vision
Fiscal 2023—Among Our Strongest Ever Results

In fiscal 2023, ROE improved 2.4 percentage points year
on year to 12.9%, reflecting the increase in consolidated
net income and decrease in shareholders’ equity due tothe tender offers. It has thus already exceeded the rangeof 10%–12% targeted in future 135. ROIC, an indicator ofGroup capital efficiency, came to 5.6%, level with theprevious fiscal year. The weighted average cost of capital(WACC) was below 3.5%, so we were able to secure an
excess return (EVA spread) of more than 2%.
ROIC is taken into account in deliberations of potential
investment and financing projects, reflecting a strong
internal awareness of cost of capital, but we will consider
formulating more detailed operational policies, including
operational and management indicators, in the next
medium-term business plan. By making every employee
aware of ROIC, we will work to expand our enterprisevalue.

than the ratio of 0.31 at the previous fiscal year-end, reflecting
an increase in risk assets due to the cheaper yen and risingcommodity prices as well as the decrease in shareholders’equity, it is still well below the upper limit we have set of 1.0.
We will continue working to ensure a sound balance ofrisk assets and risk buffer (shareholders’ equity) while
increasing enterprise value through business creation andrevenue expansion.

6.4

12.9
9.7

134.2

130

10.5

122.1

120
110

5.3

4.9

5.6

5.6

0

100

100.0

90

100.0

80

2019
2020
2021
ROE
ROIC
WACC

2022

2023

(FY)

124.6

131.8

114.0
108.5

95.0
85.9
90.6

84.1

2018
2019
2020
2021
Kanematsu
TOPIX Total Return Index

2022

2023

(FY)

Note: The values above show fiscal year-end total shareholder returns
relative to the values at March 31, 2018, which have been set at 100
KANEMATSU Integrated Report 2023

25

The Kanematsu Group’s Value Creation

Message from the Chief Officerof Human Resources

Basic Policy on
Human Capital

Policy Increase our human resources, which are the source of value creation, and build organiza-

tions that effectively utilize our human resources’ abilities to continuously create value andincrease enterprise value.

Kanematsu’s Values• Sense of purpose and responsibility for solving issues faced by customers, business partners, and society• Imagination, ingenuity, and ambition to sow new seeds• Sincerity in valuing mutual prosperity with customers and business
partners• Enthusiasm for work and team spirit to work toward common goals
Overview		
Kanematsu believes that human resources are the

HUMAN CAPITAL STRATEGY
Empower, Enlarge, Excel
Our Human Capital Management Fuels Growth

KANEMATSU Integrated Report 2023

Hiroshi Yamashina
Senior Executive Officer,
Chief Officer, Human Resources,
General Affairs, and Logistics & Insurance

Gain and expand
added value

Directionof Growth

Sow seeds to create
new business portfolios

Advance DX acrossthe entire Group

Human capital

Organization/company leveraging
personnel abilities

The values we uphold at Kanematsu

Policy Kanematsu believes that human resources are the source of value creation. Even as our fun-

Human Capital
Development Policy

damental belief in valuing human capital remain the same, the knowledge and experience
required by the direction of the Company’s growth change. We therefore engage in hiring,training, and providing education to increase the ranks of our human resources who canmore sustainably create value.

Overview		To embody the above values, we believe that ourpeople must demonstrate outstanding character, encompassing the ability to act under any conditions, the determination to responsibly carry tasks through to the end,
and the ability to communicate appropriately with business partners and others within the Company.
Kanematsu’s human resources value a robust spirit ofadventure that includes an enthusiasm for developing

Kanematsu’s Foundations

26

Capital Development Policy and Work Environment Policy
shown at right. Examples of specific initiatives under thesepolicies are provided on pages 50 to 61.
An experience I had in connection with my hobby ofplaying the piano drove home for me the power that interpersonal connections can impart in business. After meetingwith a business partner, I happened to discover that he wasalso a violinist. I proposed performing a duet together andhe gladly accepted. We practiced together, and eventually
put on a little performance. This experience strengthened
our relationship, leading to more vibrant discussions about
our businesses. Working together toward a common objective based on a shared passion had forged a bond of trust
between us, paving the way for new opportunities. By
connecting with people and building deep bonds, we areable to engage in business that transcends mere transactions and produces more fulfilling outcomes.
Our goal at the Kanematsu Group is not simply to chaseprofit, but to enrich lives through our business and exert apositive force in society. By building trust with our customers
and partners and providing products and services thatinspire them, we will continuously create value and contributeto society.
I sincerely ask our stakeholders for their understanding
and support of the Human Capital Policy, and I hope thatyou will share in our passion and sense of purpose as we
implement initiatives under this policy. I promise that we will
strive to grow and build the future with you.

Continuous creation of value

The Kanematsu Group’s Value Creation

We have recently established the Human Capital Policy,
which lays out our approach to human capital, a profoundly
important asset for the Kanematsu Group. Here,I would like to explain our approach to human capitalmanagement and my own thoughts as the leader ofKanematsu’s efforts in this area.
It is our belief that business is more than transactions
and economic activity; at its base, it is built on deeper interpersonal connections. This belief has been passed down
since Kanematsu’s founding, and is a fundamental valuethat informs all we do. I have keenly felt the truth of thisbelief through my own business experience at Kanematsu
spanning more than three decades, and it is etched deeply
into my mind.
With an eye toward ongoing value creation, we aim toincrease our human capital and build organizations thatwill use our people’s abilities to the fullest. Just as
Kanematsu has innovated its business models in step withthe rapidly changing wider world, in developing humancapital, we focus on equipping our people with the knowledge and experience required by the direction of theCompany’s growth. To that end, we review our training andteaching methods on an ongoing basis, striving to develop
human resources who will create greater value.
We also respect diversity and proactively bring in people
with different perspectives and experience. This is because
we believe that by valuing each individual’s unique abilities
and passions, and by bringing these individual strengths
together, we can nurture excellence and creativity andgenerate new innovation. Our organizations are places
where diverse human resources can shine as they help andrespect one another.
We have organized this approach into the Human

Under the future 135
medium-term vision,
Kanematsu aims forsustainable growth in fundamental businesses and is advancing business investment aimed at generating added value andscale expansion in its areas of business strength. Furthermore,
to establish a new business portfolio, we are working topromote and expand new businesses centered on advanced
technologies, such as IoT and AI. We have made Groupwide
DX promotion a priority initiative and are working to build
stable and sustainable supply chains and establish management infrastructure for realizing ongoing growth. Goingforward, to continuously create value over the medium tolong term, we have designated three directions of growth:
Acquire added value and expand in scale, sow seeds to create
new business portfolios, and promote Groupwide DX.

The Direction of Our Growth

The Origins of Value Creation

source of value creation. Each individual strives to embody
the above values, which we have cherished since ourfounding, to enable ongoing value creation.

Kanematsu is constantly altering its business models inline with changes in society at large. Even as our values
remain the same, the knowledge and experience requiredby the direction of the Company’s growth change. We
therefore review our training and teaching methods on an
ongoing basis, striving for human capital development thatwill contribute to greater value creation. We also believethat creating organizations that effectively utilize each individual’s abilities is important. To maximize each person’s
abilities, we work to build organizations that offer a wide
range of options, allow each individual to make the most of
their abilities, and are united by mutual respect.

new businesses and taking on challenges, as well as theability to think in innovative ways needed to build new
business models and develop new ideas not bound by
existing concepts. In pursuit of ongoing value creation, we
advance human capital development from a foundationof excellent character in line with the Company’s directionof growth.

Policy To maximize each person’s abilities, we aim to build organizations that offer a wide range ofWork Environment Policy

options, allow each individual to make the most of their abilities, and are united by mutual
respect. In addition, we promote the maintenance and promotion of employee health andsafe working environments as the foundation of these efforts.

Overview In order to effectively utilize and support humanresources, who are the source of value creation, it is necessary to enhance the organizational environment.
Specifically, we believe that it is necessary to create environments where diverse human resources respect andcooperate with each other as equals, where they can build

diverse careers, where taking on challenges is encouraged,
and where those who do so are rewarded. We believe thatdiversity, equity and inclusion (DE&I) are fundamental tocreating organizations that effectively utilize the abilities of
their human resources.
KANEMATSU Integrated Report 2023

27

The Kanematsu Group’s Value Creation

Message from the Digital Transformation Committee Chair

DIGITAL
TRANSFORMATIONSTRATEGY

General Meeting of Shareholders
Audit &
Supervisory Board

Board of Directors

Advisory committees

Digital Transformation Committee (launched July 2021)
Chair

Members

Expert members

Kanematsu Corporation

Kanematsu
Corporation

Kanematsu
Electronics Ltd.

Two executive officers

System Engineering
Division General
Manager

Masahiro Harada
Managing Executive Officer
and COO Electronics &Devices

AdvisorGroupwide DX sectional meetings
Sectional
meeting

Sectional
meeting

Sectional
meeting

Secretariat

Kanematsu Corporation

Secretariat
Coordination• IT Planning Department
DX Project Office28

Accenture
Japan LtdKANEMATSU Integrated Report 2023

Kanematsu
Electronics Ltd.
• DX Promotion Office

Masahiro Harada
Managing Executive Officer
Digital Transformation Committee Chairstrengthening security services for manufacturing industries and accumulating related knowledge.

Technical Knowledge Guardian
OT security and network integrated support service,possible only through co-creation

Solutions&

Consulting/training

Security&

Network

Tools&

Services

Audit &
Supervisory

MasahiroManaging
and Chief O
Electronics

The Kanematsu Group’s Initiatives to Solve Logistics Industry Issues Expected in 2024
Kanematsu Group company Datatec Co., Ltd. provides the
Safety Recorder® (SR) driving recorder for the logistics
industry. Driving data from the SR is fed into work hour
management software to track performance by automatically calculating total work hours, break times, and drive
times. Furthermore, in November 2022, Datatec implemented a joint pilot project with NTT DATA Corporation
aimed at reducing the burden placed on delivery drivers.
The service they have developed, MiseNAVI™, analyzes
vehicle and driving data recorded by the SR to automatically generate guidance for delivery drivers, such as where
and how to park at each delivery destination, which itGcommunicates via単一企業では実現できない
voice prompts to help solve delivery「OTセキュリティ＆ネットワーク」
relatedissues. In addition, Datatec isの総合支援サービス
developing a driving
safety diagnostic
smartphone
app
aimed
at fostering
Technical Knowledge Guardian
awareness of safe driving techniques. Kanematsu andDatatec will continue to advance logistics DX to help solve
logistics personnel shortages expected as a result of regulatory changes coming into effect in Japan in 2024.
ソリューション

&コンサル / 教育

セキュリティ

&ネットワーク

ツール

&

サービス

Se
m

• DX Project• IT Planning

continue to support customers in their efforts to realize
operational DX.

Integrated web ordermanagement

Wait line management

Inventory management

Kanematsu
SaaS
Ecosystem

Customer call management

POS registers

Mobile ordering

Image search AI

KANEMATSU Integrated Report 2023

Secr

Kanematsu

DX through Open Innovation with SaaS Startups
Kanematsu’s Business Co-Creation Center (BC3) has partnered with startups that develop B2B SaaS to advance
support for DX in store operations. Among BC3’s offerings
are a service for managing customer wait lines, a service
for advance payment using smartphones, a point-of-sale(POS) register app, and an inventory management service,
all of which help stores facing serious staffing shortages
improve their operational efficiency. BC3 is promoting theformation of a Kanematsu SaaS Ecosystem, encompassing
multiple SaaS DX support products, as well as one-stop
service. For example, by linking services within the SaaS
ecosystem, such as connecting the POS register app with
the inventory management service, BC3 is creating services unique to Kanematsu. Going forward, we aim not only
to market these services to stores but to broaden theirrange to include Kanematsu’s existing businesses andbeyond while expanding the lineup of services in the
Kanematsu SaaS ecosystem. Through such efforts, we will

Dig

Kanemats

Kanematsu’s Foundations

Management Committee

KEL, a Group company in the ICT business, has createdTechnical Knowledge Guardian for OT Security, a newservice for industrial control operational technology (OT)systems, in a co-creative effort with GLOBAL SECURITY
EXPERTS Inc. (GSX), with which it has an equity relationship, and Terilogy Holdings Corporation (Terilogy HD). This
service was launched in 2023. By pooling their pastachievements, insights, and management resource
strengths, the partners are offering an integrated OT security and network support service not possible through any
one company alone. Recently, security risks have been
rising in step with the advance of manufacturers’ efforts
to increase competitiveness through DX. Furthermore,security-related standards and guidelines are expected to
be increasingly finely segmented among and within
specific industries going forward. KEL, GSX and Terilogy HD
will work to realize a safe and secure OT environment by

The Kanematsu Group’s Value Creation

DX Promotional Framework

Under the future 135 medium-term vision, we havemade “Promote Groupwide DX” a part of the priority
initiative “Response to technical innovation, ” in linewith our aim to accelerate business transformation.
The Digital Transformation Committee was launched
in July 2021. As COO Electronics & Devices, I chair thecommittee. The DX Project Office of Kanematsu
Corporation’s IT Planning Department and the DX
Promotion Department of Kanematsu Electronics Ltd.
(KEL) are serving as secretariat for the committee, while
sectional meetings with specific themes, such as centralized ID management, enhancing data analysis platforms, and integrating IT assets, are advancing
Groupwide DX promotion.
One cross-divisional initiative is the digitization offood and meat product supply chain operations. In thisarea, we are working to incorporate and utilize digital
data, and we plan to expand these efforts to other businesses in the future. At the same time, in response to anincreasing number of cyberattacks, we are focusing on
enhancing cyber security and providing security education to employees. And, to raise the level of IT literacy
across the Group, we are supporting employees working toward public certifications, such as the IT Passport,
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 a place tointeract with SaaS startups. We are building a data
marketplace platform and advancing efforts to enter
the next-generation data trading market throughinvestment in data management companies.
As a trading company, Kanematsu is highly adaptable to technological innovation. We will continue towork together as a Group to improve internal and external productivity, create next-generation businesses, andstrengthen governance.

One-Stop OT Security Installation Support via Co-Creation by KEL, GSX, and Terilogy HD

The Origins of Value Creation

Creating NextGeneration KanematsuGroup Businesses
through DX

Initiatives

29

The Kanematsu Group’s Value Creation

Message from the Green Transformation Committee Chair

Initiatives

Kanematsu Sustech’s Eco Wood Pile Construction

GX Committee
Board of Directors

GX Committee
Chair

Eiji Kan

Expert members
Senior Operating Officer,
Head Office Sales Division;
managers and staff ofdivision planning offices;
directors and managers ofrelated companies

Secretariat

Steel, Materials and Plant Planning Office
Project Office for Climate Change

GX Accelerator Team
2 full-time members
Core members 5 part-time members (with concurrent positions inbusiness divisions/administrative departments)

Accelerators

Approx. 50 part-time staff (with concurrent
positions in business divisions/administrative
departments/Group companies)

New business creation[Innovation]• Proposing and executing
GX businesses

30

Internal GX initiatives[Incubation]• Building internal GX momentum• Knowledge-based support for GX
projects• Promoting Groupwide GX
businesses

KANEMATSU Integrated Report 2023

Eiji Kan
Senior Managing Executive Officer
Green Transformation Committee Chair

Investment in Australia-Based Samsara Eco
In 2023, Kanematsu invested in Samsara Eco, an Australianenvironmental technology startup.
Samsara Eco possesses an original enzyme recycling technology that can break down plastic into its original components (monomers) in a short time frame. One example of thepossibilities this offers can be found in the familiar product of
PET bottles. PET bottles that are unclean or contain coloring
agents cannot be recycled via conventional processes. In
contrast, Samsara Eco’s technologies can break down evenplastics containing impurities and additives.
Furthermore, this breakdown process uses no fossil
fuels whatsoever, dramatically reducing greenhouse gas
emissions.

Samsara Eco’s laboratory

Agricultural and Food Supply Chain GX
Kanematsu boasts strengths in food supply chains anddoes business with a vast number of companies, including
farmers, animal feedstuff producers, meat packers, foodproduct manufacturers, retailers, and food service companies. We are advancing efforts to add value through GX byleveraging these strengths. For example, we are working
with our wide-ranging business partners to promote sales

Kanematsu’s Foundations

Senior Managing
Executive Officer(COO Steel, Materials& Plant)

Members
Executive officers(COO or Chief
officer)

In 2022, Kanematsu established the Green Transformation
Committee (GX Committee), creating an integrated framework forthe management and support of environment-related businesses
within the Group. There has been a marked increase in environmental awareness among employees and customers lately, andthe number of projects brought to us has increased dramatically injust the past year.
Beneath the GX Committee is the GX Accelerator team,comprising employees from across the Company’s segments whoare highly knowledgeable about their respective industries. These
employees carry out wide-ranging support activities to promote
environment-related businesses within the Group, from planningand proposing new projects to building internal GX momentum.
The GX Committee facilitates the smooth advancement of all suchprojects by centrally monitoring their status through the GX
Accelerator team and conducting periodic reviews.
In addition to projects in the energy, chemicals, plant, andother existing fields, there have been numerous undertakings that
contribute to the global environment in such wide-ranging fields
as agriculture and food, reaffirming for us the importance of GX.
As just one example, Kanematsu Sustech Corporation, which
Kanematsu made a wholly owned subsidiary via tender offer atthe end of fiscal 2023, has developed a ground improvement
technique using piles made from wood treated with proprietarypreservation technology. This technique greatly reduces carbon
emissions compared with the typical use of cement or steel forsuch applications.
The core of a trading company’s business lies in creating businesses and making them economically sustainable. I believe that
our role with regard to environmental conservation parallels this.
By adding environmental value wherever we can to the excellent
products that the Group offers, we aim to simultaneously satisfy
our customers and contribute to the environment, thereby building environmentally sustainable businesses.

Ground improvement using lumber that has undergone preservation treatment

The Kanematsu Group’s Value Creation

Creating Enterprise
Value by Addressing
Environmental Issues

Kanematsu Sustech will continue to work with Eco
Wood Pile (S) Society companies across Japan to reduce
CO2 emissions though the use of the environmentallyfriendly technology of Eco Wood Pile.

The Origins of Value Creation

GREEN TRANSFORMATION STRATEGY

By making effective use of timber produced in Japan,
Kanematsu Sustech Corporation is helping to revitalize
the Japanese forestry industry and expand demand fordomestically produced materials. Construction using Eco
Wood Pile stores the CO2 absorbed by wood during its
growth in the ground for decades, realizing a reduction in
CO2 emissions compared with conventional construction
methods using cement or steel.
Used for ground improvement, Eco Wood Piles are
made from wood that has undergone high-quality pressure treatment to prevent rot and termite damage,enhancing its durability, a process that Kanematsu
Sustech has been using since its founding. Through the
Eco Wood Pile (S) Society, to date, 225,514 m3 of Eco
Wood Pile material has been used in ground improvementfor 44,526 buildings, reducing CO2 emissions by 129,820
tons (as of June 30, 2023).

in Japanese markets of low-carbon coffee and low-carbon
pork products created through the efforts of overseas
farmers, the uptake of plant-based meat and other meat
substitutes, and the use of burp-reducing cattle feed andlow-carbon meat raised on such feed, while working tofacilitate carbon storage in the soil of food- and feedstuffproducing regions.

Kanematsu Petroleum’s GX Strategy
Kanematsu Petroleum Corp. is engaged in the supply ofthermal energy, a business that has a major impact ongreenhouse gas emissions. Aiming to offer decarbonization solutions to customers and promote their uptake, in
2021 Kanematsu Petroleum established a Decarbonization
Promotion Office and joined the Japan Climate Leaders’Partnership. As a result, the company has become eligible
for subsidies from the Ministry of Economy, Trade andIndustry and the Ministry of the Environment for efforts to

identify ways to save energy and is promoting efforts at
its factories to find energy-saving opportunities, switch toeco-friendly fuels, and install energy-saving equipment, as
well as operating a business that provides biodiesel forships and automobiles. Going forward, while advancing
collaboration with other companies, Kanematsu Petroleum
will continue to deepen its initiatives, including those
aimed at decarbonization, as an energy solution company.

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The Kanematsu Group’s Value Creation

Special Feature: Innovation Investment

One of the priority initiatives under medium-term vision future 135 is to promote and expand new businesses thatboast advanced technology. Accordingly, in order to drive initiatives toward new business development, in October
2021 we established the innovation investment system. This system supports ambitious efforts to take on new businesses by establishing investment standards suitable to high-uncertainty new businesses. To date, we have used thesystem to invest in a U.K.-based startup involved in the development and operation of Advanced Air Mobility infrastructure, an emerging Japanese manufacturer that develops and produces carbon nanotubes, and an Australianstartup with proprietary plastic recycling technology. Working to build our future business portfolio, we will continue to advance innovation investment as we seek to create next-generation core businesses and enhance enterprise value.

Investment in Samsara Eco: Using Proprietary
Enzymes to Break Down Plastics into Monomers

Investment in Advanced Air Mobility via Skyports
LimitedKanematsu has entered an investment andbusiness alliance with Skyports. Through thisalliance, we are working to develop and operate takeoff and landing infrastructure (vertiports) for Advanced Air Mobility as well as tocommercialize drone delivery services.
In 2022, Kanematsu was selected for funding under a project of the Osaka prefectural
government to promote urban businesses in
the Advanced Air Mobility field. Working with
Skyports, we have implemented feasibility stud-Investment in CARBON FLY, a Startup Making
Advanced Carbon Nanotubes
In 2022, Kanematsu invested in CARBON FLY,
Inc., an emerging manufacturer of carbon
nanotubes (CNT), and launched efforts aimed
at the practical application of CNT.

CNT filament

CARBON FLY boasts proprietary CNT manufacturing technology and has successfully
manufactured advanced CNT. The use of CNT asa conductive additive in lithium ion batteries is

ies of potential vertiport sites within Osaka. The
upcoming Expo 2025 Osaka Kansai is expected
to jumpstart the practical application ofAdvanced Air Mobility in Japan. By commercializing vertiports, which are essential to suchapplications, we will help realize a revolution in
air transport.
In the area of drone delivery, Kanematsu
and Kaga City in Ishikawa Prefecture haveentered a comprehensive partnership agreement for the promotion of regional revitalization using flying vehicles and drones. Under thisagreement, in March 2023, working with
Skyports, we completed a proof of concept
blood transportation trial using fixed-wing
VTOL drones in Kaga City. The use of drones toenable the rapid transportation of vital supplies
is a promising approach to solving issues in the
medical field and a wide range of other areas.
Leveraging the abundant track record andknow-how of Skyports in drone delivery services, we will continue to advance efforts tocommercialize drone delivery services in Japan.

Kanematsu’s Foundations

Samsara Eco CEO Paul Riley (left) and technical developer
Vanessa Vongsouthi (right)

CNT film

The Kanematsu Group’s Value Creation

Plastic waste, a serious social issue

and the recycled plastic can be discolored orcontain residual impurities. Samsara Eco’s technologies solve these problems, meeting userneeds via a new method of recycling.
This technology also helps reduce greenhouse gas emissions, enabling high-quality plastics to be recycled virtually indefinitely without
the input of fossil fuels.
In addition to PET resin, Samsara Eco has
developed enzymes for breaking down nylonand other plastics and is steadily advancing
toward commercialization.
By investing in Samsara Eco, Kanematsu
aims to reduce plastic waste, which has become
an important social issue in recent years, and toestablish circular businesses through the plastic
recycling business.

begun studying the possibilities of developing
technologies to generate CNT from the CO2
emitted by chemical factories as well as ofestablishing an open carbon recycling framework with Kanematsu as the hub. Through such
efforts, we are focusing efforts on environmentally friendly activities with the aim of realizing asustainable world.
With this investment, we aim to achieve
results in terms of both innovative technologies
and sustainability and thereby help create social
value. We will continue proactive efforts in thisarea, working to create new business opportunities and build a sustainable world.
The Origins of Value Creation

In 2023, Kanematsu invested in Samsara Eco, anAustralian environmental technology startup.
Samsara Eco is working to commercialize
technologies that can revert plastic to its basic
building blocks (monomers) using proprietary
enzymes that it designs.
One example of a plastic that can beprocessed using Samsara Eco’s enzyme technology is PET resin, a general-use plastic commonlyused in plastic beverage bottles, synthetic fleece
fibers, and food packaging. Until now, somerecycling of PET resin has been possible using anapproach based on the mechanical recycling ofsorted and collected PET bottles, but there areproblems with this technology: waste PET resinthat is colored or unclean cannot be recycled,
the quality of the recycled plastic is degraded,

rapidly expanding, and, in this and other areas,
we are expanding development focused mainly
on functional and structural materials thatleverage the mechanical and chemical properties of CNT. By doing so, we will help realize
higher-performance batteries and innovative
new products.
Kanematsu’s investment in CARBON FLY wasmade using the innovation investment system,
because practical applications of CNT are still
being developed worldwide and CARBON FLY
was in its seed round of fundraising.
In addition, through its alliance with
CARBON FLY, Kanematsu will advance initiatives
aimed at carbon neutrality using CNT. We have

A Skyports vertiport terminal

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Kanematsu’s Foundations

Sustainability
For more details, please visit our website.

Message from the Chair of the Sustainability Management Committee

Targets for 2050 and Improving our ESG
Scoresbenchmark for passive management since March 2022
by Japan’s Government Pension Investment Fund(GPIF). Japanese companies may be selected for inclusion in this index if they have excellent ESG rating fromFTSE Russell and meet certain criteria with regard togreenhouse gas emissions per unit of net sales. In addition, Kanematsu has been selected for inclusion in thefollowing three other ESG indices used by the GPIF.

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 2022 were 1,066
million t-CO2,* meaning that we are aiming to contribute to society through a net negative amountequivalent to around 0.1% of current national emissions. This target is aligned with Principle 8 of the UN
Global Compact, “Undertake initiatives to promote
greater environmental responsibility.”
In recognition of such initiatives, our ESG scores
have been steadily increasing year after year (seetable below).
Furthermore, in 2023, we were selected for the
first time for inclusion in the FTSE Blossom Japan Sector
Relative Index, an environmental, social, and governance (ESG) index of domestic stocks used as a

Director,
Senior Executive Officer
Chair of the Sustainability
Management Committee• MSCI Japan Empowering Women Index (WIN)• S&P/JPX Carbon Efficient Index• Morningstar Japan ex-REIT Gender Diversity Tilt Index

The Origins of Value Creation

Tetsuro Tsutano

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

The Kanematsu Group’s ESG scores still haveroom to rise higher, and we are confident that we can
improve them further. By continuing to advance ESG
activities in line with our management philosophy, we
will work toward corporate sustainability in this, thehuman rights century.

The Kanematsu Group’s Value Creation

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

Kanematsu Group ESG Scores

Working toward Corporate Sustainability in the
Human Rights Century
Establishment of Kanematsu Group’s
Human Rights Policy

2021

2022

1.4

1.4

2.8

S&P Global

14

27

32

MSCI

BB

CDP
(Climate change)–

FTSE Blossom Japan Sector Relative Index = 2.0 or higher

Upgraded・IR室）
in April 2023 to the middle of seven ranks.
BB
BBB
事務局（サステナビ
リティ推進室、広報–

B

Evaluation started with the 2022 reorganization of the Tokyo Stock Exchange
markets. Kanematsu is currently at the third highest of eight ranks.

Kanematsu’s Foundations

In 19th century Japan, there were numerous ambitious business people that fought their way out ofpoverty to success. Few of them, however, chose apath that deliberately steered away from building aplutocratic empire and amassing capital for themselves, electing instead to contribute to the advanceof society through business and to leave their markon social development, even in fields peripheral totheir businesses. Kanematsu’s founder, Fusajiro
Kanematsu, was one such man of business.
The Japanese Wikipedia page for “Japanese
ESOP” presents the employee stock option plan
(ESOP) devised by Fusajiro Kanematsu Shoten as an
early example of a Japanese ESOP. During his lifetime, Fusajiro liked to say that he belonged first to
Kanematsu Shoten, not the Kanematsu family, andafter his death, the shares of Kanematsu Shoten
were distributed among the employees, rather thanhis relatives, passing on the aspiration to contributeto society through business to the members of theCompany.
Our founding purpose, “Let us sow and nurturethe seeds of global prosperity,” expresses a way of
thinking aligned with contributing to the public
interest, society, the international community, andhumanity. Based on these principles, in February
2023, we established the Kanematsu Group’s Human
Rights Policy, clarifying our approach to initiatives
related to ensuring respect for human rights to all
stakeholders. Furthermore, in March, we endorsed
the United Nations Global Compact (UNGC), whichcalls on its members to uphold and practice its 10principles in the four fields of “human rights,”“labour,” “environment,” and “anti-corruption.”
By fulfilling our responsibility to respect humanrights, we will carry on the aspiration of our founderand ensure the sustainability and resilience of ourbusinesses.

2020
FTSE Russell

Sustainability Promotion Framework
Board of Directors

Sustainability Management Committee
Chair
Director,
senior executive
officer(chief officer ofcorporate planning)

Members

Expert members

Executive officers(COO business divisions or chief officers)

Managers of business division planning offices

Electronics & Devices
Division
Foods Division
Meat Products Division

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

Electronics
Planning Office
Foods & Grain
Planning Office

Steel, Materials & Plant
Planning Office
Motor Vehicles & Aerospace
Planning Office

General Manager, Finance Department(Public & Investor Relations)

Secretariat (Sustainability Management Section, Public & Investor Relations Section)(As of April 1, 2023)

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Kanematsu’s Foundations

Sustainability

The Key Issues and Our Activities

Decarbonization
Initiatives

In 2021, Kanematsu revised its issues of high materiality, identifying five new key issues.
We made these revisions in light of the global increase in awareness of the importance ofsustainability and ESG management as well as such major trends as the shift toward
decarbonization following the original designation of issues in 2018.
When revising the key issues, we considered Kanematsu’s Corporate Principle, importance to management, and stakeholder expectations. Furthermore, the Sustainability
Management Committee, which we changed to mainly include the top management ofour business divisions, discussed our current projects and future direction.
The three key issues linked by the circle at right are issues to address through business activities, while the two below are key to the management base supporting saidbusiness activities.

Alliance with The Norinchukin Bank to reduce GHG emissions in the
agriculture and food industries
Business alliance with Asuene Inc., which provides cloud services
used to reduce CO2 emissions
Pilot testing of Datatec Co., Ltd.’s Misenavi
Delivery of EV chargers in Brazil

Start of sale of electricity from a small-scale
wind-power generation project

Sustainable coffee plantation

Major Initiatives

Building a
Sustainable Supply
Chain

Down comforter recycling businessMutual Developmentwith Local
Communities

p42

Creating an Environment
That Enables Diverse
Work Styles©UMITO Partners

Delivered hospital boat for the Marshall Islands
Raising awareness and offering guidance on safe internet use
Supporting the Vun Art employment support
association for disabled persons by ordering
canvas bags (Kanematsu Vietnam)

Implementation of new activity-based work (ABW)
work style
Implementation of “Hello Baby” leave system
Participation in the Human CapitalManagement Consortium

Enhancement ofGovernance andCompliance

p57

Kanematsu’s Foundations

Business selling Miracle Meat plant-based meat made fromsprouted soybeans
Aircraft rotable parts business and part-out businessBusiness supplying heat reflective paint to combat global
warming
Business selling biomass fuels (woodchips, Palm Kernel Shell)
Lumber preservation treatment technology helping reduce
global warming
Business promoting the transition to LP gas fuelSecuring traceability in marine products
Acquiring certification from the Round Table on Responsible
Wood that has undergone
Soy Association (RTRS)

Proof-of-concept trial of blood transportation by drone

The Kanematsu Group’s Value Creation

Establishment of Kanematsu Group’s Human Rights Policy
Acquisition of Carbon Credits via the Joint Crediting Mechanism (JCM)
Cloud-based farm management systems for chicken farming
Business supplying high-value-added health foods for healthier living
Security business to guard against cyber attacks
Project to improve Hokkaido Japanese sardine fisheriesp41

The Origins of Value Creation

Sustainable coffee plantation-related initiatives
p40
Forest conservation initiatives (REDD+)
Eco Wood Pile environmentally friendly ground improvement using
domestically produced timber

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

preservation treatment used
in a train station ceiling

The Process of Identifying Key Issues
STEP

01

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

STEP

02

Evaluate the importance of each issue
to the company and to society
Considering Kanematsu’s Corporate Principle,
individual divisions’ strengths, and the needs
and expectations of society, we plotted theissues identified in step 1 on a materiality
matrix,* with importance to external stakeholders on the vertical axis and importance to theKanematsu Group on the horizontal axis.

* The materiality matrix is disclosed on Kanematsu’s website.

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KANEMATSU Integrated Report 2023

STEP

03

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

STEP

04

Identify key issues
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

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Kanematsu’s Foundations

Sustainability

Progress on Key Issues

Electronics & Devices

Materiality / Related SDGs

Steel, Materials & Plant

Motor Vehicles & Aerospace

Companywide

Risks

Opportunities

Notable Initiatives (Fiscal 2023)

Building a Sustainable Supply Chain• Business continuity risk in existing businessmodels due to inadequate response

We will respect the environment and human rights, communicate with diverse
actors in society, and realize stable and sustainable procurement, supply,
distribution, and services together with our partners and customers.

• Decreased competitiveness and trust due todelay in addressing human rights issues inthe supply chain• Growing demand for sustainable andenvironmentally friendly products, creation of
new markets and services

Launched sales of environmentally friendly labels made with LIMEX Sheet
p40
Kanematsu Sustech Corporation’s Eco Wood Pile won the Minister of the Environment Prize in the
30th Global Environment Awards
Buildings constructed: 5,131 (up 1.5% year on year; cumulative total: 43,348)
		 Material used: 26,970 m3 (up 10.0% year on year; cumulative total: 218,840 m3)
Increased sustainable coffee sales volume (up 2% year on year)
Received certification from the Round Table on Responsible Soy Association (RTRS)
Kaneyo Co., Ltd. launched a down comforter recycling business (material recycled: 8,934 kg)
Established human rights policies and began to conduct human rights due diligence• Unbalanced food supply and demand due toglobal population increase

Aiming to achieve net zero greenhouse gas emissions, we will promote ourclean fuel and renewable energy business to contribute to the mitigation of
global warming.

• Decrease in sales of related products
alongside decrease in demand for fossil fuels• Increased burden of carbon pricing andcarbon border taxes• Factory damage and supply chain disruption
due to increasingly severe extreme weather
events• Changes in food-producing regions due toaverage temperature increases

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

We will create a work environment that encourages each individual to leverage
his or her unique talents and qualities, supporting diverse work styles.
Furthermore, we will improve training programs to develop managers capableof creating and expanding businesses.

Enhancement of Governance and Compliance
We will maintain a robust supervisory system to prevent accidents and fraud
and aim for sustainable growth through the transparent disclosure of
information to stakeholders.

KANEMATSU Integrated Report 2023

• Introduction of new products and services
alongside development and popularization of
new and low-carbon technologies• Increase in new climate change-conscious
applications and products• Creation of new commercial channels
alongside the development of foodproducing regions• Regulatory changes and business continuity
risk due to legal or political changes• New business creation based on initiatives tosolve social issues• Decline in relationships of trust due to defects
in infrastructure or services provided•Building relationships of trust and stabilizing
businesses through operations aligned with
the needs of local communities• Business continuity risk due to human rights
issues in business regions• Declines in efficiency and productivity due todelays 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 to legal
violations• Reinforcing competitiveness and establishinga foundation for stable growth throughdiversity-oriented management• Creation of new value and innovation• Clarification of decision-making processes
through the creation of a robust governancesystem• Increase in enterprise value through highly
transparent disclosure

Distributed DAIZ Inc.’s plant-based meat made from sprouted soybeans
Kanematsu Petroleum Corp. selected as a supporting organization of the Ministry of the Environment’s
SHIFT Program
p41
Joint Crediting Mechanism (JCM) projects:
		 1 new project; 8 projects in operation; 1 project in application process
Started the sale of electricity from a small-scale wind-power generation project (total capacity: 96 kW)
Kanematsu Yuso Co., Ltd.’s Kokura Oil Depot transitioned to the use of LP gas boilers with support from
Kanematsu Petroleum Corp., for an estimated 200 t/year CO2 emissions reduction
Entered an alliance with The Norinchukin Bank to reduce GHG emissions in the agriculture and foodindustries
Entered a business alliance with Asuene Inc., which provides cloud services used to reduce CO2 emissions
Implemented GX accelerator activities (Groupwide decarbonization project team)Core members: 8; registered members: 48 (20 in fiscal 2022)
Entered an agreement to provide inspection and analysis supplies to a quality inspection, verification, and consulting center for agricultural, forestry, and fishery products in Vietnam
Implemented a proof-of-concept trial of blood transportation by drone in Kaga City, Ishikawa
Prefecture
p41
Cooperated in anti-terrorism grant program as part of the Japanese government’s ODA in theMaldives and Sri Lanka
Kanematsu Vietnam supported the Vun Art employment support association for disabled persons
by ordering 400 canvas bags

Launched D&I promotion project team directly under the President & CEO
Held D&I web training on adapting to cultural differences (682 participants)
Kanematsu University (July 2022–June 2023)
p50
Basic course (161 participants)
Advanced course (101 participants)
Professional course (53 participants)
Business plan training (September 2022–March 2023; 52 participants)
Executive management training (August 2022–March 2023; 58 participants)
Implemented new activity-based work (ABW) work style
Full flextime system usage: 81.8%

Kanematsu’s Foundations

Creating an Environment That Enables Diverse Work Styles• Food demand expansion and diversification
due to population rise

The Kanematsu Group’s Value Creation

Mutual Development with Local Communities• Gaining customer trust and create new
businesses based on approach that addresses
sustainability and human rights issues

The Origins of Value Creation

Decarbonization Initiatives

38

Foods, Meat & Grain

p51

Nominating Committee and Compensation Committee: Each comprise four members, of which
three, including the committee chairs, are independent outside directors
p68
Percentage of independent outside directors: 43% (three of seven total directors)
Held compliance-related e-learning classes
Implemented management DX, fully digitized and improved transparency of meeting operations• Strengthening relationships with stakeholders

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Kanematsu’s Foundations

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 based on our mission ofcontributing 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 recognizethat 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 theinsight and know-how accumulated over Kanematsu’s long 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 the Kanematsu Group.

Business Highlights

Electronics & Devices

Foods

Meat Products

Grain, Oilseeds & Feedstuff

Aiming for a Sustainable
Aquaculture Supply Chain

Kanematsu is developing and selling environmentally friendly labels made with
LIMEX Sheet, a material developed andmanufactured by TBM Co., Ltd. that is
made mainly from limestone. LIMEX Sheetcontains no wood pulp, and the amountof water used in its production is much
lower than that used in making paperlabels, helping to conserve forestry andwater resources.
Not only does LIMEX Sheet offer superior durability and water resistance in comparison to paper, but compared with othersynthetic papers commonly used for labels,
such as polypropylene (PP) or polyethylene
terephthalate (PET) sheets, the use of
LIMEX Sheet for labels produces lower
emissions of CO2 and other greenhousegases and reduces petroleum-derived plastic usage.

Kanematsu recently celebrated 20 years ofbusiness with Daterra Coffee, a producerof what are considered to be the highest
quality coffee beans in Brazil. As a sustainable coffee pioneer that emphasizes both
quality and environmental factors, Daterra
Coffee was the first coffee plantation in
Brazil to be certified by the Rainforest
Alliance, which aims to protect tropicalrainforests and improve labor
environments.
When we initiated our business with
Daterra Coffee in 2003, considerations ofsustainability in the food supply chain
were still unusual. However, Kanematsu
saw the value in Daterra Coffee’s ethos ofsustainability and has worked with Daterra
Coffee as a partner ever since. Together,
we will continue working as pioneers ofsustainable coffee, further contributing tolocal communities and the natural environment while providing safe and delicious
coffee to consumers.

As a long-time pioneer in the meat product industry boasting a leading market
share, Kanematsu has amassed a wealth of
insight and a robust product lineup.
Upstream, we are working to reinforce
relationships and diversify supply sources
through equity investment in and businesstie-ups with suppliers, while downstream
we are building frameworks for the stablesupply of safe, reliable products that offer
high added value and meet customer
needs.
As part of these efforts, we are currently advancing an initiative to have beef
tongue imported by Kanematsu processed
at a facility operated by the social welfare
corporation Harakara in Miyagi Prefecture.
Harakara’s aim of making communities
more livable by creating work opportunities for people with disabilities aligns with
Kanematsu’s key issue of “Mutual development with local communities,” which is
aimed at contributing to sustainable community growth and development. The
beef tongue processed at this facility has
been well received by customers.

Kanematsu, UMITO Partners Inc., Ikeshita
Sangyo, and Hamahei Gyogyo have jointly
established the Hokkaido JapaneseSardine Fishery Improvement Project (FIP)
with the aim of obtaining MSC
certification.*As the world’s population increases,
the global consumption of marine products is expanding, and fish farm production volume is steadily increasing, as are
the importance of and needs for aquaculture products as a source of protein.
However, aquaculture also presents issues
related to reducing the burden on ecosystems and the global environment. For
example, the production of the fish mealused as feed in aquaculture can lead to theoverexploitation of fishery resources, anduneaten feed left in the water at farms cannegatively affect local water quality.
Through the FIP, Kanematsu is working
to build a business while solving environmental and social issues, such as thoserelated to water pollution and biodiversity.
By doing so, we aim to help increase thesustainability of domestically produced
animal feedstuff ingredients and enhance
the competitiveness of Japan’s overallaquaculture supply chain.
*M arine Stewardship Council certification is given
to marine products, such as fish, shellfish, shrimp,
and crab, that meet certain conditions related tothe sustainable use of natural marine products
and protection of the marine environment.

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Support for High-efficiency
Installations for Facilities withTargets (SHIFT) Program

Proof-of-Concept Trial of Blood
Transportation by Drone

Based on its track record to date, in 2023
Kanematsu Petroleum Corp. was registered as a supporting organization for formulating decarbonization plans under the
Ministry of the Environment’s SHIFT
Program. The SHIFT Program aims to create leading examples of decarbonization
practices at factories and workplaces,
widely publicize and horizontally apply
such knowledge, and thereby contributeto achieving Japan’s 2030 target for greenhouse gas (GHG) emissions reduction and2050 target of carbon neutrality. Subsidies
are granted for projects in the following
two categories.
1. Formulating decarbonization promotion plans
2. Reducing CO2 emissions through theintroduction of high-efficiency equipment, fuel conversion work, or operational improvements based on suchdecarbonization promotion plans; calculating emissions volumes; and retiring emission allowances
Kanematsu Petroleum Corp. will use
the subsidies from the national government to provide a wide range of proposals
to customers through activities that
include the identification of energy-saving
opportunities and the subsequent introduction of high-efficiency equipment andfuel conversion work. Aiming to contributeto the accelerating tide of decarbonization
across society, the Kanematsu Group will
begin by steadily implementing energysaving measures close at hand to help customers reduce their carbon emissions.

In cooperation with Kaga City in Ishikawa
Prefecture, Kanematsu implemented a
proof-of-concept trial of blood transportation by drone. Kanematsu and Kaga City
have entered a comprehensive partnershipagreement for the promotion of regional
revitalization using flying vehicles anddrones, and Kaga City is implementing
activities aimed achieving an “industrial
revolution in the sky” to attract and retain
businesses in the Advanced Air Mobility
industry. The trial was implemented aspart of these efforts with the aim of establishing a practical medical drone delivery
network in the future.
Skyports Limited, with which
Kanematsu has an equity and business alliance, took part in the trial as its operator,
verifying factors related to temperature
control, temperature management, andthe number of deliveries possible using
drone transportation. The trial featured
the first flight in Japan of the Kookaburra
drone made by Swoop Aero, flying along
two delivery routes of 6 km and 10 km
between medical facilities in Kaga City.
By combining the functions and experience of Skyports and the KanematsuGroup’s network, we will continue working toward the practical implementationof drone businesses in Japan and contribute to the creation of a sustainable society.

KANEMATSU Integrated Report 2023

Kanematsu’s Foundations

Beef Tongue Processing at
Harakara

The Kanematsu Group’s Value Creation

20 Years of Supplying Sustainable
CoffeeMotor Vehicles & Aerospace
The Origins of Value Creation

Contributing to Sustainability withEnvironmentally Friendly Labels

Steel, Materials & Plant

41

Kanematsu’s Foundations

Sustainability

Building a Sustainable Supply Chain

Initiatives to Ensure Respect for Human Rights
Overview of Efforts to Respect Human Rights in Business
At Kanematsu: Completed

Establishment and publication
1. of human rights policy

Frequency of Human Rights Issues by Sector according to an External ESG Databaseand Similarity to the Company’s Businesses

Management-level commitment

Technology Hardware
Electronic andand Equipment
Electrical Equipment

SectorKanematsu’s
Businesses

2. Human rights due diligence

Human rights issues

Identification and assessment ofadverse human rights impacts

Identify business to survey for human rights risks
and assess their degree of impact to prioritize them

2.

Prevention and mitigation ofadverse human rights impacts

Implement measures to prevent human rights abuses
and mitigate risks

3. Tracking of activity effectivenessMonitor activities and evaluate their effectivenessCommunication and information
disclosure

Publish information on the Company’s initiatives

4.

Software andComputer Services

Telecommunications

Food and Beverage

Industrial Metals

Semiconductor
Components,
Semiconductor
Equipment

Industrial Electronics,
Electronic Materials

ICT Solutions

Mobile

Foods

Steel

Oil and Gas

Chemicals

Construction andMaterials

Industrial
Engineering

Aerospace andDefenseAutomobiles andParts

EnergyFunctional Chemicals

Plant andInfrastructure

Machine Tools &Industrial Machinery

Aerospace

Motor Vehicles andParts

Poor employment conditions(Appropriate working hours)
Poor employment condition(Appropriate wage)

Dialogue withstakeholders

Social discrimination /Discrimination in employment
Occupational health and safetyissuesFreedom of association andcollective bargaining

Child labor
Local participation issues /Impacts on communities
Privacy rights

Establishment of Kanematsu Group’s Human Rights Policy

For more details, please visit our website.

contribution to society, to the international community,
and to humanity. The starting point for all of Kanematsu’s
corporate activities, we carry this purpose forward with us
in our Corporate Principle. The Kanematsu Group’s Human
Rights Policy is based on the Corporate Principle and clarifies our measures to ensure respect for human rights inorder to fulfill our responsibilities to all stakeholders.

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

identifying businesses to survey for human rights risks
from among our wide-ranging businesses. Next, we
assessed the impact of the potential human rights issues
anticipated in the identified businesses in terms of likelihood of occurrence and severity of impact.

Human rights issues

Kanematsu’s
Businesses

Poor employment conditions(Appropriate working hours)
Poor employment condition(Appropriate wage)

Occupational health and safetyissuesFreedom of association andcollective bargaining
Forced labor

Identifying Businesses to Survey for Human Rights Risks
To begin the human rights risk survey, we first utilized an
external database on ESG issues to compare our businesses against sectors that have a high frequency of humanrights issues in order to estimate the frequency of eachtype of human rights issue in each of our businesses. As aresult of this process, based on the number of issues ineach sector in the broader economy and the degree ofSectorSocial discrimination /Discrimination in employment

Human Rights Due Diligence
The Kanematsu Group has established and continuously
operates a system of human rights due diligence to identify and assess adverse human rights impacts on stakeholders involved with its business activities in order toprevent or mitigate such adverse impacts. We began theprocess of identifying and assessing adverse impacts by

OverallKanematsu’s Foundations

In February 2023, the Kanematsu Group’s Human Rights
Policy was established, with the approval of the Board of
Directors, based on United Nations Guiding Principles on
Business and Human Rights and international norms related to human rights. Our founding purpose, “Let us sow andnurture the seeds of global prosperity” aligns with our contemporary conceptions of the public good and

The Kanematsu Group’s Value Creation

If a human rights abuse has occurred and thus cannot be
prevented by taking appropriate measures, apologize,
provide restitution and financial or non-financial compensation, and implement measures to prevent recurrences

Note: Diagram prepared by Kanematsu based on a diagram created by the Ministry of Economy, Trade and Industry

KANEMATSU Integrated Report 2023

Large

Forced labor

3. Remedy

42

MediumThe Origins of Value Creation

At Kanematsu: Still to do

Periodically repeat

1.

Small

similarity of our businesses with these sectors, we determined that the energy and food businesses should be thesurvey targets. Note that we determined that the Group’s
plant and infrastructure business is dissimilar to the database’s construction industry sector as it handles facilities
and equipment specific to ODA-related projects.

Child labor
Local participation issues /Impacts on communities
Privacy rights
Overall

Selected as businesses to survey for human rights risk
KANEMATSU Integrated Report 2023

43

Kanematsu’s Foundations

Sustainability

Building a Sustainable Supply Chain

Decarbonization Initiatives

Initiatives to Ensure Respect for Human Rights

Disclosure based on the TCFD Recommendations
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 iteasier for stakeholders to learn about and understand the climate change-related 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.

Human Rights Issue Impact Assessment
Next, we assessed the impact by stakeholder* of the potential human rights issues anticipated in the energy businessand foods business in terms of likelihood of occurrence andseverity of impact. Based on these assessments, we plotted ahuman rights issue impact map for each of these businesses.

Likelihood of
occurrence
How likely or
unlikely humanrights issues areto occur

Impact severity
How severe the impact of issues is when they occur
1. Degree of adverse impact (scale)
2. Number of people affected (scope)
3. Possibility of restitution (possibility of remedy)* Stakeholders included in assessments: Employees, Group companies, contractors, suppliers, local residents, and consumers

Please visit our website for details.

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

Governance and Risk Management

Energy Business
Human Rights Issue Impact Map

Occupational health andsafetyImpact on local residents

Discrimination
Payment of appropriate wages/
living wages
Right to form and join labor unions

Excessive labor/
working hours


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 COO (executive officers)

Forced labor

Governance System

Child labor

Monitoring/
Supervision

low

Severity of impact
Group companies

Suppliers (oil-producing countries)

Suppliers

Local residents (oil-producing countries, etc.)

Execution

Suppliers

Likelihood of occurrenceP ayment of appropriate
wages/living wages
Impact on local residents

Describe the organization’s processes for identifying and assessing
climate-related risks

Forced labor

Severity of impact
Local residents (residents near factories, etc.)

High
Consumers

Through the human rights issue impact assessment, we identified and prioritized the salient human rights issues and impacted
stakeholders in each of our businesses (human rights issues in red are those of particular priority in that particular business).
Procurement

EnergyContractors

Foods

R&D, production
Suppliers
Suppliers(overseas)(domestic)• Forced labor
Occupational• Discrimination health and safety

Sales
Suppliers(Kanematsu Group)

Shipping

Distribution
Employees

Use bycustomers
Consumers

Disposal/
recycling• Forced labor•Child labor•Discrimination

Initiatives Going Forward
The next step will be to compile information on current initiatives in each business and develop a human rights due diligence plan. We will also investigate the potential and actual impact of each human rights issue and begin to consider
prevention and mitigation measures.
44

KANEMATSU Integrated Report 2023

Executive Officer
Steel,
Materials &Plant

TCFD recommended disclosures

Identifying Salient Human Rights Issues

Local
residents
Impact on
local residents

Foods

Meat
Products

Executive Officer
Grain,
Oilseeds &Feedstuff

Executive Officer
Motor
Vehicles &Aerospace

Secretariat•Sustainability Management Section•Public & Investor Relations Section

Risk Management

Child labor

Note: Human rights issues affecting multiple stakeholder types are plotted with reference to the stakeholder assessed to present the most severe impact.

SectorExecutive Officer

Our initiatives (summary)
Identification andassessment

Business divisions

Describe the organization’s processes for managing climate-related risks

Management

Describe how processes for identifying, assessing, and managing climaterelated risks are integrated into the organization’s overall risk management

Integration (reporting,monitoring and supervision)

Sustainability Management Committee
Business divisions → Sustainability Management Committee →Board of Directors

Kanematsu’s Foundations

Contractors

Electronics &Devices

Executive Officer

The Kanematsu Group’s Value Creation

Priority issues for Kanematsu

User health and safety
low

Chief Officer of Corporate Planning
Executive Officer

High

Occupational health and safety
Excessive labor/working hours
 Right to form and join labor
unionsReportSustainability Management Committee
Management

Human Rights Issue Impact Map

Discrimination

Board of Directors

High

Foods Business (sesame, coffee, food products processed in China)

Group companies

Our initiatives (summary)Strategy
The promotion of investment in environment-related
business areas is one of the priority initiatives under our
medium-term vision, future 135, and we consider addressing climate change to be a business opportunity.
We have conducted a scenario analysis on the Groupbusinesses selected as subject to significant impact fromclimate change. As a result of the analysis, we believe thateven though both risks and opportunities exist in all the
scenarios, the impact from opportunities surpasses thatfrom risks.

Selection of Businesses for Scenario Analysis
To evaluate the qualitative impact of climate change on
the Group’s businesses, we first classified them into highrisk sectors and non-high-risk sectors as per the TCFD recommendations. Next, we categorized the impact on theGroup from the quantitative perspective of sales. Of thefour businesses that showed a large qualitative impact
and quantitative impact, we selected the businesses that
account for a relatively large portion of our sales on aconsolidated basis (IFRS revenue) for scenario analysis.
•Continued from fiscal 2022: North American beefbusiness, steel tubing business•Selected in fiscal 2023: Corn business, kerosene business

Quantitative aspect (sales)

Likelihood of occurrence

High

TCFD recommended disclosures

The Origins of Value Creation

Priority issues for Kanematsu

Non-high-risk sectors

High-risk sectors• Mobile• ICT Solutions• Industrial Electronics, Electronic
Materials• Semiconductor Components,
Semiconductor Equipment• Meat Products (North American
beef business)• Steel (Steel Tubing Business)• Grain, Oilseeds & Feedstuff(Corn Business)• Energy (Kerosene Business)• 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
KANEMATSU Integrated Report 2023

45

Kanematsu’s Foundations

Sustainability

Decarbonization Initiatives

Disclosure based on the TCFD Recommendations
TCFD recommended disclosures

Our initiatives (summary)

Climate change drivers• Performed scenario analysis of four businesses with a large impact on the Group on the basis of climate-related impacts(qualitative aspect) and sales/profit (quantitative aspect)• Analyses of the corn business and kerosene business, which were newly included in fiscal 2023, are shown below
For the analyses of the North American beef business and steel tubing business, please visit our website

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

Categorize into large/medium/small

Describe the resilience of theorganization’s strategy, taking into
consideration different climate-related
scenarios, including a 2°C or lower
scenario• Potential risks and opportunities exist for the North American beef business, steel tubing business, corn business, and kerosene
business in all 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 medium-term vision, future 135→Achievement in fiscal 2023: Investment in Australian environmental technology startup Samsara Eco

Impacts

Analysis results

Special Feature: Innovation Investment

p32

Risk
Opportunity

Small

MediumLarge

Adoption of plant-based
meat alternatives

Reputation

MarketChanges in consumerawareness and preferences

4°C scenario
2030

Increased carbon pricing burden on
processing facilities•Increase in procurement costs as aresult of higher local operational costs
caused by rising fuel prices•Increase/decrease in transportation
costs resulting from rising fuel prices
Decline in demand for feed as result of
decreased demand for beef and othermeats caused by the adoption of plantbased meat alternatives

̶Establish feed mills for chickens and pigs,
which will see relatively small declines indemandDecline in demand for feed as a resultof decreased demand for beef andother meats
̶Growth in demand for raw materials for
low-GHG emission products̶Fluctuations in electricity
costs

Increase in electricity costs at
processing and storage sites

̶

Reputation amongcustomers, consumers,
and investors

Changes in reputation amongcustomers, consumers, and investors
based on process of climate-change
measures

KANEMATSU Integrated Report 2023

•Sell raw materials for DAIZ Inc.’s Miracle
Meat (plant-based meat)•Begin supply of grain for use in plantbased meat alternatives

̶̶

Revise sales prices

̶

Cultivate demand for bioplastics

Financial impact

4°C scenario
2030

2050

2°C or lower
scenario
2030
2050

Measures•Revise sales prices•Sell low-carbon products

Tightening CO2 regulations•Stricter energy-saving standard
regulations•Decline in sales resulting from reduced
demand for kerosene caused by a shift
toward low-carbon energy•Increase demand for renewable energy

Expand renewable energy businesses, suchas the biomass fuel business

Development andadoption of low-carbon
technologies

Increase in investment in thedevelopment of new technologies,
such as EOR and CCS

̶

̶

̶

̶

Develop and sell products related to EOR
and CCS in the steel tubing business

Replacement with lowGHG emission products

Decrease in sales due to the adoptionof electrical power

̶

̶

̶

̶

Expand renewable energy business

Rising raw material costs

Increase in kerosene procurement costs
due to rising crude oil prices

̶̶

Revise sales prices

Reputation amongcustomers, consumers,
and investors

Changes in reputation amongcustomers, consumers, and investors
based on progress of climate changerelated measures̶̶•Conduct proactive stakeholder engagement•Continue transparent information disclosure

Intensification ofabnormal weather (e.g.
cyclones, floods)

Loss of sales opportunities due tosupply chain disruption

Rise in sea level•Processing site relocation costs•Increase in capital expenditure to
take measures against rising sea
levels (relocation of facilities, etc.)̶Select and develop production areas inneighboring regions with shorter transportdistances̶

Risk ( )Opportunity( )Increase in operational costs (use ofenergy, use of fuel for Group vessels
and cars, etc.) due to increase incarbon taxes

Measures

Revise sales prices

Increase in procurement costs as aresult of rising raw material costs
caused by increased demand for nonfeed uses, such as ethanol production

Technology development
and market expansion forrenewable energy fuels

2050

2°C or lower
scenario
2030
2050

Physical risks

Policy and legal
Technology
Transition risks

Tightening CO2 regulations

Demand is expected for low-GHG emission products, such as bioplastics.

※

̶

※

̶

Kanematsu’s Foundations

46

Increased adoption ofcarbon pricing

Financial impact

A significant decline in demand for corn feed is expected as a result of slowing demand for beef and othermeats in the 2°C or lower scenario.

MarketLarge•Revise sales prices•Develop new production areas̶Increased adoption ofcarbon pricing

Physical (chronic) Physical (acute) Reputation

Medium̶

Policy and legal

Risks

Transition risks

Opportunities

Risk ( )Opportunity( )•Increase in procurement costs
resulting from rising corn prices•Decline in corn harvest due toworsening droughts•Implement initiatives to strengthen supply
chain resilience•Diversify suppliers and domestic storage
locationsTechnology

Financial impact

Corn BusinessClimate change drivers•Rise in averagetemperature•Changes in rainfall andother weather patterns

Measures

The Kanematsu Group’s Value Creation

The financial impacts of climate-related risks and opportunities presented here are the impacts on the profits or expenses of the businesses selected for the scenario analysis, not on those of the Company as a whole. The impacts are classified into three categories: Large, medium, and small.

Small

Loss of sales opportunities due tosupply chain disruption

2050

2°C or lower
scenario
2030
2050

Kerosene Business

Impacts of Climate-Related Risks and Opportunities

Large: ¥1 billion or more
Medium: ¥500 million or more
Small: Less than ¥500 million—: Qualitative evaluation only

4°C scenario
2030

Intensification ofabnormal weather (e.g.
cyclones, floods)

Climate change drivers

Quantitative criteria

Financial impact

The Origins of Value Creation

Describe the impact of climate-relatedrisks and opportunities on theorganization’s businesses, strategy, andfinancial planning

Physical risks

Describe the climate-related risks andopportunities the organization has
identified over the short, medium, andlong term

Physical (chronic) Physical (acute)

Risks and opportunities

Risk ( )Opportunity( )•Ensure BCP measures in the supply chain•Build a framework for mutual support intimes of disaster with other companies in
the industry
̶

̶

̶

̶

•Relocate distribution centers•Revise sales prices* Based on the WEO 2022, the 4℃ scenario assumes an increase in crude oil prices as a result of increased demand, and the 2°C or lower scenario assumes adecline in crude oil prices due to decreased demand.

̶

̶

̶

̶

Revise sales prices̶•Begin supply of grain for use in plantbased meat alternatives•Sell raw materials for DAIZ Inc.’s Miracle
Meat (plant-based meat)̶

Risk
Opportunity

The 2°C or lower scenario forecasts a decline in demand for kerosene as a result of tighter regulations, andthe 4°C scenario forecasts an increase in procurement costs due to increased demand.
Expansion of the renewable energy business and sales of low-GHG emission products.
KANEMATSU Integrated Report 2023

47

Kanematsu’s Foundations

Sustainability

Decarbonization Initiatives

Creating an Environment That Enables Diverse Work Styles

Disclosure based on the TCFD Recommendations

Human Capital Management

Metrics and Targets
First, we will aim to quickly achieve carbon neutrality by
2025. We will reduce CO₂ emissions by shifting to renewable energy. Any remaining emissions that cannot be
reduced in this way 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 and renewable energy businesses, REDD+ projects, and Joint Crediting Mechanism projects to increase avoided emissions, aiming to becomecarbon negative with negative net emissions of 150,000
t-CO₂ and 1,000,000 t-CO₂ by 2030 and 2050, respectively,
and thereby contribute to the reduction of GHG emissions
both within Japan and internationally.

Our initiatives (summary)
MetricGHG emissions

CO2 emissions

Fiscal 2023: 28,321 t-CO2 (97 Group companies, including the Company)(Assured breakdown: Scope 1: 9,507 t-CO2 / Scope 2: 18,814 t-CO2)
Please visit our website for the independent verification report on these figures (Japanese)

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

https://www.kanematsu.co.jp/sustainability/files/Independent_Assurance_Report_jp_20230810.pdf
Fiscal 2022: 29,497 t-CO2 (95 Group companies, including the Company)(Assured breakdown: Scope 1: 9,772 t-CO2 / Scope 2: 19,725 t-CO2)
Fiscal 2021: 27,800 t-CO2 (94 Group companies, including the Company)(Estimated breakdown: Scope 1: 9,200 t-CO2 / Scope 2: 18,600 t-CO2)

Describe the targets used by the organization to
manage climate-related risks and opportunities andperformance against targets

2025 Carbon neutral1
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 through forest 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).

CO2emissions

Yuko Tahara
Outside Director
The Kanematsu Group’s Value Creation

Targets

Kanematsu’s human capital management initiatives are steadily evolving. In
November 2022, with the head office move, Kanematsu adopted an activitybased work system, realizing a flat approach to working that transcends thebarriers between divisions. The cheerful expressions on the faces of theemployees are the greatest testament to the success of the change to newwork styles. Employees can be seen spending their lunch time as they please at
Café The Perch, the café located in the center of the office, and quietly pondering new projects in the library area.
At the same time, Kanematsu recently announced a robust Human
Capital Policy, reflecting the evolution of its D&I—diversity and inclusion—initiatives to include equity, becoming DE&I. Indeed, Kanematsu has been conducting educational activities, such as Pride Week, a series of events topromote understanding of DE&I, including LGBTQ+ issues, held to coincidewith the promulgation of Japan’s LGBT Understanding Promotion Act.
Furthermore, the Company is engaged in active discussions aimed at creatinga new personnel system.
I see particular promise in Kanematsu’s implementation of human capitalmanagement leveraging its strengths as a trading company. Now in my fifth
year as an outside director, I feel that there is something remarkable about
Kanematsu’s intellectual capital, the core of the Group’s intangible assets.
Through the repeated creation of businesses from scratch, in and outside
Japan, Kanematsu has built up a wide-ranging wealth of expertise in businesscreation. At the same time, the Company’s invaluable bonds with its business
partners, based on relationships of trust, are an important intangible asset in
the form of social and relationship equity. Needless to say, intangible assets
are what investors focus on most, as they are essential to the creation of thetangible assets of businesses and their successes.
And, of course, the source of this intellectual capital is nothing other thanhuman capital.
In my role as an outside director, I will do my utmost to help Kanematsu
leverage its strengths as a trading company to the fullest in implementing
human capital management that leads to business creation.

The Origins of Value Creation

TCFD recommended disclosures
Disclose the metrics used by the organization toassess climate-related risks and opportunities inline with its strategy and risk management process

The Promise of Human Capital Management
Leveraging the Strengths of a Trading Company

Carbon negative
150,000 t-CO2

2020

2025

2030

Carbon negative
1,000,000 t-CO2

2050

Human Capital Management Initiatives

New personnel system
Third engagement survey

2024

Advanced Career (AC) support system implemented(Year)

Eruboshi (two-star) certified* Note: The above targets are for Scopes 1 and 2. Targets for Scope 3 will be established separately.

2023

Moved to new Tokyo Head OfficeSome human capital data disclosed online

2022

Mutual Development with Local Communities
2021

Social Contribution through Our Operations
Health Promotion Section launched

Every employee of the Kanematsu Group, as a good citizen, acts with an awareness of the importance of
their social responsibilities, proactively working to solve social issues through business and social contribution activities with the aim of realizing a sustainable society. At the same time, through volunteering,
employees broaden their horizons, learn new values, and gain new insights, helping to create richer andmore vibrant communities.
Please visit our website for details.

https://www.kanematsu.co.jp/en/sustainability/contribute/social_contribution.html

Kanematsu’s Foundations

Carbon neutral

AvoidedCO2emissions

Kanematsu University launched
D&I team launched

2019

2018
First engagement survey

New dress code (KG Biz)
implemented
Adoption of remote work andsatellite offices
Human capital policy established

Full flextime system implemented

2020

Second engagement survey
Health & Productivity Management
Outstanding Organization certified
Family care support enhanced
Platinum Kurumin certified
Remote work rules established
Diversity hiring implemented

Satellite office trial launched

48

KANEMATSU Integrated Report 2023

KANEMATSU Integrated Report 2023

49

Kanematsu’s Foundations

Sustainability

Creating an Environment That Enables Diverse Work Styles

Human Resource Development
Overall Approach to Human Resource Development

Human Capital Development Policy
In accordance with on the Human Capital Development Policy presented on page 27, we are implementing the following initiatives based on the key human resource development themes shown below.

Graduate School Program Goal for Human Resources
Concept

Learn advanced management expertise

Undergraduate Program Goal for Human Resources
Concept

Goal

Acquisition of Added Value and Expansion of Scale
Kanematsu University
training, depending on the content. The rich array of content ranges from the fundamental, such as business manners and foreign languages, to specialized knowledge andskills, such as business investment, legal matters, andanger management. Through Kanematsu University, weare developing the next generation of management-level
human resources.

Human Resource Development Programs and Participants (July 2022–June 2023)
Category

Concept

Key programs and results

Years 11–15

Executive Management Training
As part of Kanematsu University, a new executive management training system was created ahead of the startof classes in fiscal 2017 to foster the skills needed to operate businesses and organizations from an executive management perspective. Specifically, the targets of thistraining are to foster strategy formulation and human

Implemented: August 2022–March 2023
Participants: 58 (including 15 from Group
companies)

e-learning, group training, etc.

ProfessionalcourseYears 8–10

M&A and business investment training

e-learning, group training, etc.

Business plan training

Undergraduate

AdvancedcourseYears 4–7

Learn knowledge needed
as an organizational/
project leader

・Critical thinking
・Management strategy and business planning・Accounting and financee-learning, group training, etc.

Basic course
Years 1–3

Learn knowledge needed to
be a fully competentprofessional

KANEMATSU Integrated Report 2023

Implemented: September 2022–
March 2023
Participants: 52 (including 20 from Group
companies)

Yuki ShindoManager, Section No.2, Specialty Steel Foreign Trade Department

Monetary and Time Investment in Human Resource Development (Non-Consolidated)

Monetary investment

e-learning, group training, etc.

Training hours
Learn knowledge needed tolive as a fully-fledged adult50

Implemented: March 2023
Participants: 13

Training for new graduate hires

The six-month executive management training program
consisted of lectures by outside instructors and casestudies, providing comprehensive education in the practical knowledge and perspectives required in management-level human resources. In addition to classroom
studies, the program included self-analysis based on
360-degree evaluations, interviews with current management-level professionals, and group work with the othertrainees from a wide range of divisions. Through this widearray of stimulating inputs, the course prompted us toreexamine our own values and articulate our own visions
for our futures.
The executive management training enabled me to
not only increase my basic knowledge of management
but gain a more concrete understanding of what it willtake to reach the vision I have for my future, which I feel
was extremely valuable. Going forward, I will apply what I
have learned to my current work, continuing to engage infriendly competition with the other participants as I
leverage these insights in new business creation andorganizational operations.

Kanematsu’s Foundations

Learn basic knowledge
needed as a next-generation
management professional(global leader)resource management abilities and impart the basic
knowledge an executive manager must have. As we aim
for the acquisition of added value and expansion of scale,
we are working to develop human resources with theability to lead organizations and manage businesses.

The Kanematsu Group’s Value Creation

Graduate School・Strategy formulation skills
・Human resource management skills
・Management knowledge

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

Comment from an Executive Management Trainee’s Perspective

Executive Management Training

Learn advanced
management expertise

Goal

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

The Origins of Value Creation

Kanematsu University, a reinforced, more systematic version of previous training systems, was launched in July
2019 to develop management professionals who will create new businesses. The university curriculum comprises
three categories: 1. General education, 2. Interpersonal
knowledge and skills, and 3. Professional knowledge andskills. Courses are administered via e-learning or group

Gain comprehensive basic knowledge needed for management¥91.39 million; ¥110,000 per full-time employee1(Cost of Kanematsu University: ¥67 million; ¥150,000 per participant)
1. N umber of employees calculated based on full-time equivalent (FTE); does not include employees on leave, re-hired
retirees, or temporary employees
Total training hours2: 20,403; 25 hours per full-time employee(Kanematsu University training hours: 47 hours per participant)
2. T otal for Kanematsu University courses

Notes 1. Data for July 1, 2021 to June 30, 2022
2. Total training hours for the 43 Undergraduate program courses and Graduate School program (per-student basis).
. •Basic course (175 participants): 63 hours
		 •Advanced course (112 participants): 28 hours
		 •Professional course (47 participants): 19 hours
		 •Graduate School (102 participants): 50 hours
KANEMATSU Integrated Report 2023

51

Kanematsu’s Foundations

Sustainability

Creating an Environment That Enables Diverse Work Styles

Human Resource Development

Sowing Seeds to Create a New Portfolio
Diversity Hiring and Mid-Career Hiring
students with diverse backgrounds from around theworld, we are hiring international students graduatingfrom Japanese universities and Japanese students graduating from overseas universities. In addition, we are
expanding mid-career hiring to bring in knowledge andexperience that differs from what we have internally.

Taking advantage of the wide variety of businesses of the Kanematsu Group, we are deepening the diversity of ourhuman resources’ knowledge and experience through internal transfers and personnel exchanges with Group companies and portfolio companies. In addition, we have established a career consulting team of qualified career consultants
to provide an environment that supports employees’ autonomous career development.

Comment from a Member of the Career Consulting Team

Comment from a Non-Japanese Citizen Employee

Yoonwoo Kim
Section 1, Motor Vehicles & Parts Department No. 1

Wakaba Yokoo
Human Resources Planning Section, Human Resources Department

Promote Groupwide DX

The Kanematsu Group’s Value Creation

I came to Japan to from South Korea in 2015, and after
graduating from a four-year university here, I was hired asa new graduate by Kanematsu. Kanematsu caught myinterest and I chose it because, as a trading company withdiverse functions that operates in a wide range of business areas around the world, I got the sense that it would
offer me the chance to take the lead in blazing my own
path forward.
Currently, in parallel to my work in Kanematsu’s
existing motor vehicle and parts exporting business, I am
also engaged in new business creation efforts. Leveraging
my background, knowledge, and experience, I am
working with companies in South Korea to formulate a
new EV-related business.
Going forward, I hope to get this new business off theground, and eventually expand it globally.

Today, as life spans grow longer, it is more important thanever for individuals to autonomously develop theircareers. At the same time, companies are being called
upon to provide systems and environments that support
such efforts. In addition to support through a transfer
system that respects individuals’ career aspirations, we
also provide more intangible support by leveraging theknowledge we offer as a result of our professional qualifications. By providing career-related training, disseminating information, offering consultations, andconducting interviews, we will continue to provide
support for autonomous career development tailored toeach employee.

The Origins of Value Creation

To create a new business portfolio that goes beyond
merely iterating on our existing businesses, we believethat we will need to enter new markets with new products and customers that we cannot adequately approachwith our existing internal knowledge and experience. We
are therefore working to secure diverse human resources.
In our new graduate hiring, with an eye to recruiting

Fostering Experience through Transfers

Developing DX Business Personnel
In our supply chains, we are promoting DX in cooperation
with our business partners to aid them in overcoming thedifficulties they face in transforming their operations, withthe goal of utilizing digital and automation technologies
to transition to next-generation businesses.
We believe that our DX business personnel mustpossess both insight into digital technologies and theability to combine this with business acumen. We are
therefore not only implementing training to enhance IT
literacy, but implementing personnel exchanges withGroup companies that handle digital technologies todevelop professionals who can promote DX in step withour business partners’ levels of digitization.

Yoko Kaneko

I came to Kanematsu as a mid-career hire in 2020. My
work now is mainly in importing canola and other edible
oil raw ingredients and selling them to food productmanufacturers in Japan. I have many years of experiencein handling food ingredients at a trading company frommy previous job, and I apply that experience to businessevery day.
Looking at Kanematsu from the outside, before I was
hired, my impression was that it was a kind of collectiveof experts, one in which each individual was highly
knowledgeable about the products they work with. Inline with that idea, in my current work, I strive to exert apresence as a true professional for my customers.
Rather than merely concentrating on sales, I am awareof the importance of making proposals that connect withthe broader visions of customers, and I hope to take on
new challenges and widen my horizons in order to realize
such proposals.

Kanematsu’s Foundations

Comment from a Mid-Career Hire
Furatto, Degitaru?
From January 2023, the Company has operated the
DX data website called “Furatto, Degitaru?” for use
in-house and by Group companies. Centered on casesof internal DX initiatives, we distribute content every
other week in the form of articles, webinars, andcolumns on the topics of the vividness and realism of
the DX project based on the business format and situation of general trading companies.
In the six months since the announcement, over
80% of employees have viewed online videos, and theeffort has helped create specific uses for digital technologies. We nurture a DX mindset among every
Group employee and provide support for taking thefirst step toward utilizing digital technology. Goingforward, we will expand content, mainly themes
based on viewer data analyses and interview surveys,
as a part of our efforts to nurture grounded DX
personnel. (The illustration below is the internal declaration banner for content distributed in the past.)

A webinar for a dialogue about the Company’s case ofcentralizing

A participation report for an exhibition tour for employeesinterested in owned media

Oilseed & Processed Soy Products Section,
Food & Grain Materials Department

52

KANEMATSU Integrated Report 2023

KANEMATSU Integrated Report 2023

53

Kanematsu’s Foundations

Sustainability

Creating an Environment That Enables Diverse Work Styles

Work Environments for Employees
Support for Balancing Work and Childcare

Work Environment PolicyCore Values for Organizational and Corporate
Development Leveraging Human Resources

Since 2020, Kanematsu has received “Platinum Kurumin”
certification from the Ministry of Health, Labour andWelfare. This certification is granted to companies that are
implementing particularly high-level initiatives to support
their employees in balancing work and childcare. Aiming toenable employees to autonomously engage in their workand continue to fully participate professionally regardlessof the ups and downs of life events, we are expanding our

Women’s Participation and Advancement

Leveraging Individuality through Diversity, Equity and Inclusion (DE&I)

In August 2022, Kanematsu received “Eruboshi” certification from the Ministry of Health, Labour and Welfare. Thiscertification is granted to companies that have implemented excellent efforts to promote women’s participation and advancement in the workplace. Kanematsu wascertified as having attained the second of three levels(two stars), having met the certification standards in thefour categories of “recruitment,” “length of continuous
employment,” “working hours and work styles,” andComment from an Employee Working Overseas

Companywide Initiatives
information about the careers of diverse employees, andhold lectures. In fiscal 2022, we established a Companywide
project team for efforts in this area, and in fiscal 2023, under
the direct control of the President & CEO, this team implemented initiatives to accelerate inclusion.

Comments from DE&I Team Members

Tsuzumi Hirano

Kouta Ito

Tsuzumi Hirano

Section 2, Industrial Electronics
Department

Salary & Benefits Administration Section and
Human Resources Planning Section, Human
Resources Department

Motivated by a desire to enable all women
to be themselves and thrive, and toprovide opportunities to learn and think
about challenges related to health, career,and mental health, I organized an
International Women’s Day event with afocus on learning about these topics as
they directly impact employees.

Kumi Kawata
Board Member and Treasurer, General Manager, Accounting &General Affairs Department, Kanematsu Taiwan Corporation

General Employer Action Plan (Women’s Participation and Advancement)
Duration

KANEMATSU Integrated Report 2023

April 1, 2019 to March 31, 2024

Issues theCompany
Faces

Although Kanematsu hires a certain number of women every year,
the percentages of women among all new graduate hires,
employees in core 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 (from27 at the end of fiscal 2019)
2. Increase the percentage of women among new graduate hires
to 42% (from 34% in fiscal 2019).

Initiatives

54

Since December 2021, I have been stationed in Taiwan as
Treasurer of Kanematsu Taiwan Corporation. I am responsible
for overall administrative operations of Kanematsu Taiwan andother Group companies in Taiwan.
My work includes not only finance and accounting, in which
I have previous experience, but extends across personnel,
general affairs, legal, and IT, which take on every day throughtrial and error. It is often difficult, but getting to broaden thescope of my work and knowledge is also fun and satisfying.
I joined Kanematsu as a region specific employee that could
only be assigned to work within a specified area, and I had
never even been on an overseas business trip, so I feel very
fortunate to have had the chance to bring my family (myspouse and two children) with me on an overseas assignment,
and to have had the understanding of those around me necessary to do so. Making the decision to change to a career-track
position, which entails being stationed overseas, and pushingmyself in this way has broadened my horizons. I hope to use
this broader perspective to contribute to the Kanematsu Groupthrough my work.

Kanematsu’s Foundations

Kouta Ito
Motivated by a desire to make Kanematsu
a better company by utilizing thestrengths of diverse divisions and people,
through the DE&I team, I promoted theuse of more informal language between
employees of different levels and organized lunches for people interested incommon topics, aiming to foster a flatter
culture in which everyone can freely talkto one another regardless of rank orposition.

“diverse career development paths.”
Indeed, we have implemented systems
that allow employees to choose fromdiverse career paths, including a system
for rehiring employees who left theCompany to accompany a spouse who
was transferred to another location and a system thatallows region specific employees to take manager orassistant manager positions.

The Kanematsu Group’s Value Creation

The Diversity and Inclusion (D&I) Team (now the DE&I Team) was launched in 2019 to proactively incorporate manykinds of difference. We aim to grow in size and strength as a global company that will continue to contribute tosociety over the next century and, to this end, to be a flexible organization in which everyone is compensated fairly
and equitably and able to fully utilize their diverse abilities.

Kanematsu has formed a DE&I Team that is promoting
respect for and acceptance of diverse values and ways ofthinking in order to create environments that will make iteasier for all employees to work and utilize their abilities.
To encourage employees to take ownership of DE&I
issues, we provide Companywide e-learning, sharesystems of shortened work hours forchildcare, flextime, and discounts onbabysitting services. Furthermore, in
October 2022 we introduced a childcare leave system, “Hello Baby” leave,
aimed promoting childcare in a moregenderless way, and we are working to further improveconditions internally to support employees.
The Origins of Value Creation

We are implementing the following initiatives based on
the Work Environment Policy (see p. 27).
To enhance employee engagement, we have designated four core values for organizational and corporate
development, as shown in the diagram at right: Leverage
Individuality, Equality & Respect, Support Ambitious
Efforts, and Work Style Options. Going forward, we willrevise the core values as needed to maximize the abilitiesof all of our people.
The key themes of our Work Environment Policy are
as follows.

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

Years ended March 31

2019

2020

2021

2022

2023

Female career-track employees*
at fiscal year-end

52

54

64

66

68

3

4

5

7

9

27

28

31

31

38

34.0%

39.0%

51.0%

63.6%

43.9%

Female employees at manager
level or above at fiscal year-end
Female responsibility band
employees at fiscal year-end
Women among new graduate
hires

Note: Figures for Kanematsu Corporation (non-consolidated)* 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 Integrated Report 2023

55

Kanematsu’s Foundations

Sustainability

Creating an Environment That Enables Diverse Work Styles

Work Environments for Employees

Enhancing Engagement to Maximize Performance
Kanematsu has made improving employee satisfaction a priority initiative under future 135. As part of efforts inthis area, we carry out employee engagement surveys of all Kanematsu employees to understand where we standand the issues we face, verifying the effects of measures implemented as we work to enhance employee
satisfaction. We carried out the first employee engagement survey in fiscal 2019, followed by a second survey infiscal 2022, the halfway point of future 135. The second survey showed improvement in employee satisfaction
compared with the first (Figures 1 and 2).
Figure 1. Survey Results on Employee Engagement1

Figure 2. Survey Results on Effective Employee Utilization2

(%)
80

（%）
80

56%

61%

66%
56%

63%

60

51%

40

40

20

20

0

0

67%
55%

of creating a corporate culture within Kanematsu of ongoing business creation by embracing challenges and change,
the secretariat will formulate bottom-up proposals for new
projects and systems aimed at further developing our corporate culture.

Activity-Based Working
Reflecting Kanematsu’s founding purpose, “Let us sow
and nurture the seeds of global prosperity,” we believethat in order to sow the seeds of new businesses and flexibly change and adapt while continuing to create value,
we must go beyond conventional approaches ofoperating within organizational silos to generate innovation that spans business areas. To this end, coinciding
with the relocation of the Tokyo Head Office, we haveadopted activity-based working (ABW).

The Origins of Value Creation60

one has received final approval resulting in capital
expenditure.
To expand this project in fiscal 2024, five employees
volunteered to act as the club’s secretariat and have been
operating it since April of this year. With the stated mission

We believe the improvement in employee satisfaction reflects the effects of the measures we have implemented,
including the launch of Kanematsu University, workflow reform through systems and other infrastructure
improvement, and the promotion of DE&I and health and productivity management. However, the survey also
showed that our level of employee engagement is still below the global average, and multiple hurdles to increasing
employee satisfaction remain, such as organizational silos and the need to develop a culture that encourages
ambitious efforts. To address these issues, we are implementing the following initiatives.

Comment from the Head Office Relocation Project Managers

Hitotsubu ClubAs of June 2023, events have been held nine times,
providing a venue for ambitious efforts aimed at cultivatinga new culture. These included “Alumni Seminars” with former employees who have started their own businesses, aswell as lectures and discussions with executives of othercompanies, enabling participants to share diverse insights
and actively explore ideas. The club’s group chat has been
similarly active, with more than 80 participants.
Multiple proposals that have sprung from this initiative are now moving forward through further study, andKensuke Tanaka

Hisashi Kajiuchi

Human Resources Planning Section,
Human Resources Department

Manager, General Affairs Section,
General Affairs Department

ABW is a work style in which employees
can choose for themselves where towork with a sense of purpose in line withthe specific work they are doing that day
and their schedule, much like a freeaddress system. We decided to include alldivisions, without exception, in ABW,
with the aim of enlivening interaction
between employees of different divisions
and ages all throughout the Company.
By providing spaces that better enable
employees to communicate and collaborate or to concentrate on their work, I
think that we have been successful inproviding value that only such an officecan so that employees will want to comeinto the office, which is all the moremeaningful today.

Kanematsu’s Foundations

In light of the engagement survey finding that there is aneed for greater encouragement for those taking on new
challenges, in July 2022, we launched the Hitotsubu (“OneSeed”) Club as a cross-divisional community.
Employees take part in the Hitotsubu Club on a
voluntary basis, regardless of division, seniority or position,
to formulate and develop ideas and proposals for new
businesses through interactive events and chat. When proposals are deemed promising, the Company provides support to bring them to fruition.

The Kanematsu Group’s Value Creation

Global
2nd survey
Japan
Global
2nd surveyJapan
1st survey
1st survey
average4(FY2022)
average3
average4(FY2022)
average3(FY2019)(FY2019)
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 them utilize 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)

The new head office received the Minister of Economy, Trade and Industry Award in the 36th Nikkei New OfficeAwards, which recognize offices that provide outstanding comfort and functionality.
Press release

https://www.kanematsu.co.jp/en/press/20230915_003129.html

New Personnel System

Lecture event with Shigeharu Asagiri, President and CEO of Kyodoshoji Corporation, which sells COEDO Beer

56

KANEMATSU Integrated Report 2023

We are discussing revisions to the personnel system that will facilitate a climate in which each employee can set challenging
goals for themselves and thereby raise the level of the entire organization, as well as the establishment of systems that reward
such efforts and achievements.
KANEMATSU Integrated Report 2023

57

Kanematsu’s Foundations

Sustainability

Creating an Environment That Enables Diverse Work Styles

Work Environments for Employees

Diverse Work Styles

Childcare Support Systems

Flextime System
In fiscal 2022, we implemented a full flextime system to promote flexible work styles. In principle, employees can freely
adjust the times they begin and end their work in accordance with the varying demands of their own schedules, enabling
more individually optimized and efficient work styles.

Telework System

Comment from a Male Childcare Leave User

Encouraging the Use of Paid Vacation/Leave
Kanematsu has established the Bronze Week Plus System for encouraging the planned use of annual paid vacation days.
This is intended to make it easier for employees to take off the time they are entitled to and create workplaces that are
more comfortable and rewarding. We will continue working to create even more employee-friendly workplaces and aim
to help employees maintain a healthy balance between their work and private lives.
Bronze Week Plus System Outline

(%)
80

73.7%

73.8%
70.4%

70

62.4%
60

64.8%

50

2019

2020

2021

2022

2023
(Years ended March 31)

Definition: The Bronze Week Plus system makes it easier to take off abridge day between two ordinary days off, the day before
or after a three-day weekend, or two days before or after anormal weekend, effectively extending the number ofconsecutive days off for the individual to four or more.
Purpose: This system is aimed at helping employees have special
experiences that are difficult to realize with shorter breaks
so that they will feel refreshed and have new ideas thatthey can then put to use in their work.

Hiroshi AndoManager, Finance Section, Finance Department

Kanematsu’s Foundations

I took a month of childcare leave after the births of both myfirst and second children. As a parent, I wanted to take part inchildcare and felt that I should do so more. Neither the factthat I was the father, not the mother, nor my position within
the Company changed that.

When my first child was born, no managerial employees
within the Company had ever taken childcare leave.
However, thanks to the understanding and support of thosearound me, we were able to make it work, and I got tospend invaluable time with my child during the rapid growthof infancy. Even so, part of me felt like taking just one monthwould not make much a difference at the Company, especiallycompared with other parents who took longer childcare
leave, but when I returned to work, the positive response wasgreater than I imagined. It seemed that my proactive stanceon participating in childcare as a male manager had gotten
across without my having to say anything.
I feel that Kanematsu has cultivated an atmosphere thatmakes it easy to take childcare leave and has establishedconditions that enable all employees to autonomously
engage in their work and continue to actively participate ineach of their respective life stages. Leveraging my own experience and position, I hope to further advance efforts toimprove conditions for employees worried about theircareers or work styles after returning from childcare leave,
aiming to build an organization in which employees feelthey can work for a lifetime.

The Kanematsu Group’s Value Creation

Annual Vacation Usage Rate (All Kanematsu
Corporation Employees)

in the divisions in which they worked before. These measures
are taken to create a pleasant working environment.
Furthermore, on October 1, 2022, we launched a new
childcare leave system called “Hello Baby” leave. This system
grants employees up to eight weeks of special paid leave
within the eight-week period starting the day after their childis born. The maximum legal requirement for providing paternity leave after childbirth in Japan is four weeks, unpaid. By
offering leave that is up to double that length and paid, weare promoting employees’ active involvement in childcare andfostering a culture in which employees can actively participate
professionally regardless of gender.

The Origins of Value Creation

To promote employee well-being and to enhance work efficiency by, for example, reducing time spent in transit when
visiting sites out of the office, we established a telework system encompassing working from home and from satellite
offices in April 2023. Aiming to respect employees’ autonomous work styles while improving corporate performance, we
position telework as one work style option.

In addition to maternity and childcare leave systems, we havea number 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 care for 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 third year 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

Kanematsu Group Work Style Grand Prize
We held the Kanematsu Group Work Style Grand
Prize over the week of August 1–5, 2022, to sharepositive examples and model cases of flexible
work styles achieved using our internal systems
as well as the dreams and goals behind them,while also prompting employees to reexamine
their own work styles. An entry that included thetriple-threat of work, graduate school, and timewith family won the most votes from employees
and took the grand prize.
Kanematsu Group Work Style Grand Prize winner
Yuya Tani, Legal Section No. 1, Legal and ComplianceDepartment (right)
Yoshiya Miyabe, President & CEO (left)

58

KANEMATSU Integrated Report 2023

Family Care Support Systems
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 ofefforts to provide information to employees who have concerns about family care. In addition, we have not only contracted with an external family care consultation service
that employees can use at any time, but appointed a childraising and family care consultation officer, enabling oneto-one consultation on these matters. Information about
Kanematsu’s family care-related systems
is publicly available on the Ministry of
Health, Labour and Welfare’s Ryoritsu
Shien no Hiroba website. In recognition ofsuch systems, in 2021 Kanematsu was
granted “Tomonin” certification as acompany that provides work environments that enable
employees to balance work with family care.
Years ended March 31
Users of childcare leave“Hello Baby” leave(Launched Oct. 2022)

2019

2020

2021

2022

Women

18

20

24

31

29

Men

2

0

4

6

10

Women

–

–

–

–

0

Men

–

–

–

–

6

12

14

7

10

2

26

29

26

31

36

23

20

18

21

13

1

1

0

0

0

Women

11

13

11

12

13

Men

10

10

7

8

2

Users of special childbirthleave for spouse
Users of leave to care for Women
sick children
Men
Users of family careleave
Users of special familycare holidays

2023

KANEMATSU Integrated Report 2023

59

Kanematsu’s Foundations

Sustainability

Creating an Environment That Enables Diverse Work Styles

Work Environments for Employees
New Dress Code

Anti-Harassment Measures

We have updated our office dress code to enable employees to dress more appropriately for the season and climate.
This change is aimed at combating global warming and protecting the environment while also promoting greater independence, productivity, and creativity by allowing each employee to choose attire that is easier for them to work in.

To combat harassment, we have set up an internal consultation hotline, distribute a handbook to raise awareness, andconduct harassment prevention training.

Health & Productivity Management Focused on Employee Well-Being
and Employee-Friendly Labor Practices
Kanematsu was recognized as a 2023 Certified Health & Productivity Management Outstanding
Organization in the large enterprise category of the Certified Health & Productivity Management
Organizations Recognition Program organized by the Ministry of Economy, Trade and Industry
and Nippon Kenko Kaigi. This marks our third consecutive year of recognition under the program.

Human Capital Development Policy

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.

Establishment of the Health & Productivity Promotion System

Key theme

Acquisition of Added Value andExpansion of Scale

Executive management training participation rate

Sowing Seeds to Create a New
Portfolio

Diverse human resource hiring rate(women and non-Japanese nationals)

Promote Groupwide DX• IT Passport test pass rate
• DX-related training participation rate2• Personnel exchange with Group ICT/data businesscompanies

Health & Productivity Promotion System
Board of Directors
Management Committee

KPI

FY2023 Result

FY2027 target

72.2% of career-track employees 100% of career-track employeeswith Kanematsu for 11 years
with Kanematsu for 11 years
or moreor more35%(Four-year average)

27.1%1

100%
70%
60 employees(Four-year total)———

1. Average for the five years following the future 135 medium-term vision
2. The rate of employees who take part in either business process management training or DX project promotion training

Kanematsu Health
Insurance Society

Medical Center

Human Resources Department(Health Promotion Section)

Occupational HealthCommittee

Work Environment Policy
Key theme

KPI

FY2023 Result

FY2027 target

Leveraging Diverse Individuality
through DE&I

• Percent of management positions held by women• Childcare leave usage rate among eligible men

4.9%
88%

7%
100%

In fiscal 2024, Kanematsu plans to implement initiatives to improve the visibility of data on employee health using ahealth management system. Working with the Kanematsu Health Insurance Society, we will efficiently analyze data to
implement effective measures tailored to employee health status.

Enhancing Engagement to Maximize
Performance

Engagement score

61%1

The global average ofcompanies in the top 10%2

Lifestyle-Related Illness Prevention

Diverse Work Styles• Annual vacation usage rate
• Full flex system usage rate

70.4%
81.8%

75%
95%

Health & Productivity Management
Focused on Employee Well-Being and
Employee-Friendly Labor Practices• Rate of employees undergoing regular medical checkups• Rate of employees undergoing stress checks• Harassment prevention training participation rate

97.2%
98.1%
100%

100%
100%
Keep at 100%

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

Mental Health Measures
To promote the early detection and prevention of mental health problems, we implement annual stress checks for all
employees. For employees with high levels of stress, we provide counseling with industrial physicians and conduct group
analyses at the organizational level. We also provide training for managerial employees on supporting the mental healthof their subordinates as part of efforts to raise awareness of the importance of mental health.

Kanematsu’s Foundations

Industrial Physician

Health & Productivity
Management Promotion Officer(Chief Officer of Human Resources)

Monitoring Employee Health

KANEMATSU Integrated Report 2023

The Kanematsu Group’s Value Creation

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.

60

health managers, employees recommended by theCompany, and employees recommended by the labor
union. The committee meets once a month, with laborand management jointly discussing and promoting related measures while receiving advice from industrial
physicians.

Human Capital Targets and Results

Kanematsu Health & Productivity Management Declaration

Kanematsu is promoting health & productivity management based on a system comprising the Human
Resources Department, industrial physicians, the Medical
Center, the Occupational Health Committee, and thehealth insurance society, with the Chief Officer of Human
Resources designated as the Health & Productivity
Management Promotion Officer.
Furthermore, we have established a framework forreporting on health & productivity management initiatives to the Management Committee.

We have established the Occupational Health Committee
to protect employee health and foster a cheerful work
environment. Operating under the supervision of theGeneral Manager of Health and Safety (the General
Manager of the Human Resources Department), the committee comprises industrial physicians, occupational

The Origins of Value Creation

Initiatives for Health & Productivity Management

Occupational Health Committee

1. Result for the year ended March 31, 2022
2. Global average calculated across approximately 700 companies with approximately 7,000,000 employees (average score of global companies in the top
10% based on financial performance in their respective industries); this score was 66% in 2021

KANEMATSU Integrated Report 2023

61

Kanematsu’s Foundations

Dialogue between the
Chairman and an Outside
Director

The Kind of Trading Company
the Kanematsu Group Aims to
Be Following the Recent
Tender Offers

Kaoru Tanigawa

Hiroyuki Sasa

Chairman62

KANEMATSU Integrated Report 2023

Providing added value to address theneeds and issues faced by customers
is our key role. The Kanematsu Groupwill work as one to create systems
that will enable us to apply solutionsoriented business successes to otherfields and business units.

The Heart of Corporate
Governance
Tanigawa As a trading company,
Kanematsu has a vast number ofGroup companies, so making surethat the Group’s Corporate Principle
permeates the entire organizationand maintaining Groupwide internal
control through governance are
eternal challenges that lie at the heartof getting the Group to work as one.
While working to promote awarenessof the Corporate Principle at Group
companies, we review them for risk
through audit functions and provide
feedback—a process that I imagine
has been ongoing for the last century.
Sasa Group governance andmanagement are two sides of thesame coin. The business itself, its
support functions, and the unifying
force that accelerates business—all

three of these factors must operate inunison, and Group governance exists
to ensure that they do. At the core ofmanagement are the management
philosophy and the specific measuresnecessary to achieve it. However, themere presence of these core elements
does not necessarily provide clear
rules that the people of the Group on
the ground should follow day to
day—that’s where internal control
frameworks come in.
Tanigawa I think that awareness ofthe content of the KanematsuGroup’s Corporate Principle haspermeated the Group, but there is
still some ground to be covered interms of actually putting it into practice. I am responsible for the Internal
Auditing Department, and when aGroup company’s corporate principles are significantly out of step with
the Group’s, we identify that discrepancy as an issue. From there, we
work to rebuild relevant frameworks
through auditing, focusing onwhether the company has in place
the kind of rules and internal control
mechanisms that are important to
the Group in a process of repeatedevaluation and improvement over
several years. This ongoing processof review and monitoring is perhaps
similar to a PDCA cycle.
Sasa Yes, there’s really no other way.
Ultimately, there must be common
value standards that support orembody the Group’s principles, and it
is important to work to make surethat these are shared and understood
all throughout the Group.
Tanigawa I think that governance isthe core of effective corporate functioning. If governance is not firmly inplace, the company simply doesn’twork. However, I think that inevitably—and this is why we are talking
about this so much—as we expand
into manufacturing to bring new
added value to our businesses, thecharacter of the governance andinternal control needed will bedifferent and unlike those that weknow. This is an area in which we will
be depending on your help.
Sasa When I first came on as an
outside director, I did feel major differences between the manufacturer
where I worked before andKanematsu, a trading company.
However, I can certainly understandKanematsu’s desire to proactively

enter the manufacturing sector, which
is upstream in the value chain, in order
to expand the added value of its
existing businesses under future 135.
Tanigawa Nowadays, it is essential
to go beyond the category of trading,
and we must supply products withadded value that meets market andclient needs in such areas asprocessing. This is forcing us closer tothe manufacturing domain. For
example, the business of the Meat
Products Division has conventionallycentered on purchasing beef, but
processes that make it ready for saleby wholesalers or retailers can be agood way of further adding value.
I’m sure you must have noticed,
but Kanematsu’s business portfolio
has not changed over the past 20
years. In some ways, that’s just theway it is for us as a trading company,
but the world today is embracing
innovation and transformation, andso are we. The creation of new businesses now will drive growth for the
next generation. Indeed, I think thatcreating new businesses may be thetrue mission of management over the
medium to long term. And, it is thearea we have been having the mostdifficulty with.

The Functions and Mission of
the Board of Directors
Sasa As businesses expand, theimportance of risk management
increases. If the speed and scope ofrisk management are not calibrated
correctly, risks will grow. It’s impossible to guard against every possible
risk, so centralizing information andresponse methods for dealing withcrises when they occur is essential. In
addition to crisis management withineach business division, I believe that amatrix system should be implemented from the perspective of crossdivisional management functions.
The other issue will be achieving
globally centralized crisis response.

Kanematsu’s Foundations

Tanigawa Indeed, what I think of asa trading company professional isprecisely the kind of person who hascome up through that kind of work.

Chairman Kaoru Tanigawa, who is also the presiding officer of the Board of Directors, and Hiroyuki Sasa, who recently completed his first year as
outside director of Kanematsu, sat down to discuss the kind of governance needed in today’s rapidly changing business environment, efforts to achieve
such governance, and challenges going forward.

The Kanematsu Group’s Value Creation

Sasa I understand the idea that
upstream areas, including manufacturing, can be a way to provide added
value, and I think they will be important in the future. Olympus
Corporation, where I formerly served
as president, is a manufacturer,
carrying out everything from productplanning and technological andproduct development to manufacturing, and finally sales and service. In
this, an important focus for thatcompany is solving issues for doctors
and patients; in other words, it is asolutions-oriented business. I thinkthat Kanematsu is similar in thatregard, and this is where the sensethat Kanematsu needs to get involved
upstream comes from. Kanematsu
already has strong foundations andties with customers downstream. And
that’s the most important thing,because the issues that require solutions always come from the customer.

Building Frameworks to Take Us Toward Our Vision

Tanigawa I think that it will be
important to use DX to build such amethodology. The Kanematsu Group
includes the Electronics & Devices
Division, and we are now positioned
to deepen our relationships withsubsidiary Kanematsu Electronics Ltd.
to jointly create value, so I think wewill be able to quickly build mechanisms to create added value.

The Origins of Value Creation

Tanigawa In the near future, trading
companies will need to evolve structurally to add further added value,building on the base of trading, theirtraditional livelihood. One aspect of
the kind of trading company we aim
to be entails capturing greater added
value by expanding beyond that base,extending our business scope bothup- and downstream. By combining
this expansion with our new strength
in digital technologies, we will
provide added value. In this way, we
aim to provide greater abundance
and well-being for stakeholders,
including business partners andemployees. As we work toward thisgoal, I think that we should constantly
be building and improving
Groupwide governance and internal
control systems to ensure a foundation that will not waver, regardless ofthe management environment.

Outside Director

Sasa The Kanematsu Group encompasses a wide variety of businessmodels. As such, going forward, as amethodology for creating businesses
based on the Group’s unique systems
and challenges, it will be important tofinds ways to universalize andformalize new added value andestablish it as a strength of theKanematsu Group.

Tanigawa Yes, risk control is part of
the function and mission of the Boardof Directors. Namely, balancing
growth and risk management. The
Kanematsu Group has vertically organized businesses with a variety offunctions that connect across themhorizontally and diagonally, and we
aim to strengthen operations
throughout this matrix. We alreadyhave in place a quick response framework that establishes a committee tocentrally gather information and issue
instructions when an issue arises. In
terms of day-to-day business risks, I
think it is important to always be
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63

Kanematsu’s Foundations

Messages from the Outside Audit & Supervisory Board Members

Dialogue between the Chairman and an Outside Director

prepared to respond to emergencies,
for example, by ensuring that internal
control monitoring functions
effectively.

Issues and Measures Going
ForwardKANEMATSU Integrated Report 2023

Sasa I mentioned before that somethings at Kanematsu felt outdated. At

Olympus, we acted with speed,changing corporate systems andframeworks to be on par with global
competitors in just three years. I
would ask, then, since Kanematsu
marked a new start with restructuring
efforts in 1999, has the Company
really achieved transformationalchange? Although some of this comes
down to the mindsets of top management, management methods, and theexternal environment, I think that
Kanematsu should be more proactive.
I want to know if Kanematsu’s
management and executives areserious about changing. No matter
how much they exhort employees tochange, if they don’t change themselves, nothing will. I feel that it is myrole as outside director to speak mymind frankly on such matters.
Tanigawa In the Kanematsu Group’s
long history, there have been somevery difficult times, and the lesson we
took from these is the importance ofrock-solid, unerring management. To
this end, we have long worked toconstantly improve and evolve reliable
governance, internal control, and crisis
management systems. Now, while
maintaining a strong defense throughgovernance, I hope to see our executives be active and ambitious on
offense. We have many employees
who are passionate about creatingnext-generation businesses, and ourbusinesses are evolving in dynamic
ways. I believe that the challenge for
us going forward will be to maintaineffective management control while
respecting the individuality andfreedom of each employee to harness
that passion and dynamism as aGroupwide force for global change.

Audit & Supervisory Board
Member (Outside)

The Present and Future of the Kanematsu Group’s GovernanceNobuko Inaba
Audit & Supervisory Board
Member (Outside)

Before Board of Directors meetings, participants are provided with detailed materials
about each proposal. These include opinions from various standpoints, based on objective
evidence, about risks identified by related divisions as well as the conclusions reached bycommittees and data on relevant conditions. Ample time is allotted and effort expended
to the consideration and discussion of matters before they reach the Board of Directors,
and the Company’s approach to handling matters of internal control and defensive governance is outstanding. However, while the number of agenda items taken up by the Boardof Directors has been decreasing, it remains high, and the ample prior considerations anddiscussions can also be said to come at the expense of swift management decision making.
To survive and thrive going forward, Kanematsu is working to expand its business areas,develop globally, and advance M&A. The success of such efforts will require governancethat provides not only a robust defense, but also an offense with speed through the flexible transfer of authority. By incorporating this kind of perspective, I think that Kanematsu
will be able to enhance its enterprise value even further.

Message from the Chief Officer of the Internal Auditing Department

Kaori Kusuda
Executive Officer
Chief Officer, Internal
Auditing Dept.; General
Manager, Internal Auditing
Dept.

Kanematsu’s Foundations

64

Tanigawa That is an area where
Kanematsu needs to learn from
Olympus. The Kanematsu Group hires
and develops human resources inJapan and sends them overseas, andalso hires overseas personal for workand development in Japan. Goingforward, however, to step up businesses in other countries, and especially to expand our businesses
through M&A or other means, we willneed local overseas human resourcesin top management positions, andlocal hiring and development will beessential. I think that, a decade fromnow, a sizable portion of the Group’s
employees is likely to be non-Japanese nationals.

Yusaku Kurahashi

The Kanematsu Group’s Value Creation

Tanigawa The Kanematsu Group is a
trading company that began with thefounding purpose of sowing andnurturing the seeds of prosperity forJapan, so naturally, until now,importing foods, semiconductors,
energy, and other goods from overseas has accounted for the overwhelming share of our business.
However, as the Japanese market

Sasa The next step Kanematsu willneed to take is strengthening functions. This will depend significantly on
how the Company goes about linking
its horizontal functions globally, andhow quickly it seeks to evolve into a
global company. In the case of
Olympus, our competitors had, forexample, personnel systems designed
to put the best suited person in eachposition, regardless of nationality or
gender. We knew that if we took theconventional Japanese approach ofdeveloping only in-house humanresources without looking outward,
we would lose badly. We took the big
step of reforming our personnel
system to be like those of ourcompetitors and, as a result, many
important positions came to be filledby personnel from outside Japan. It
took work to make sure that ouremployees in Japan understood theintention and importance of thischange, but it ultimately led to anincrease in motivation for employees
Groupwide.

I feel that the Kanematsu Group’s governance has continued to evolve. The Board of
Directors has made system-related changes aimed at increasing independence, securing
diversity, and optimizing the skill matrix while also taking such steps as setting the agenda
to secure opportunities for strategic, big-picture deliberations of medium- to long-term
growth, resulting in lively, substantive discussions. It’s not uncommon for Board discussions to be lengthy and intense, requiring a degree of intellectual stamina—in a goodway—on the part of participants. The Audit & Supervisory Board, meanwhile, mainly
discusses matters designated for its deliberation and regular audits of operations carriedout by the non-outside members. Through meetings with executives, discussions with theoutside directors, and regular reports from the Internal Auditing Department andaccounting auditor, the Audit & Supervisory Board works to keep tabs on and understandmanagement issues and risks. Going forward, key governance issues will include
continuing to increase the effectiveness of the Board of Directors and Audit & Supervisory
Board, investing in human capital, promoting DX, generating Group synergies, offering
new added value as a trading company, and reinforcing internal control. I hope tocontribute to addressing these as an outside Audit & Supervisory Board member.

The Origins of Value Creation

Sasa Challenges also remain in termsof truly global operations. To be frank,
I think that some aspects ofKanematsu’s Group management are
outdated and seem to be stuck in auniquely Japanese style of conservative management. What it means tobe truly global is hard to define, but
it’s more than just having a highpercentage of sales from overseas
operations or establishing overseas
manufacturing bases. When I took
office as president of Olympus,
around 80% of the company’s sales
were from overseas, but it still hadthat uniquely Japanese management
style that lacked speed. So, we dug
deep to figure out what could give us
the edge we needed to compete on
an equal footing with global competitors. What we arrived at was amanagement framework to advanceinitiatives, speed in doing so, andsufficient driving force behindmanagement decisions and governance to withstand competition.

Further Evolving Group Governanceshrinks going forward, there will
come a time when this businessmodel alone is no longer viable. In
preparation for this, we are
expanding third-country trading andoverseas M&A. We assume that thiswill require forms of governance andnew approaches that are different tothose we have employed until now.

The Internal Auditing Department carries out audits of operations at Group
companies based on an annual audit plan formulated according to a risk-based
approach. As a result of the expansion of scale targeted under the medium-term
vision, the Kanematsu Group has grown to 134 companies; to handle the manufacturing operating companies, we have hired a staff with experience in auditing
manufacturers, ensuring that we can audit a diverse range of transaction types.
Also, we require consolidated Group companies to perform self-inspections forthe purpose of monitoring the development and operation of control activities at
the front lines of operations. We have included new initiatives related to social
issues, such as environmental and human rights considerations, into these inspections, and, if their effectiveness and utility is verified, we add them to our list ofaudit items and thereby enhance our auditing operations. As a new initiative, weare conducting audits along Group-wide themes to identify risks and management issues common across Group companies and are focusing on auditing theeffectiveness of group IT controls to assess the status of individual companies’ DX
promotion, including the use of AI, as well as risks related to the underlying information security.

KANEMATSU Integrated Report 2023

65

Kanematsu’s Foundations

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

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.

Corporate Governance Structure (as of July 2023)

Board of Directors

Male

Nominating Committee

Compensation Committee

Management Committee

Audit & Supervisory Board

Internal Control and Compliance
Committee

Sustainability Management
Committee

7 members

4 members

4 members

12 members

4 members

3 members

5 members

7 members• Presiding officer: Chairman of
the Board of Directors• Committee chair: Outside
director• Committee chair: Outside
director• Presiding officer: President & CEO• 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 directors: 3• Chairman of the Board of
Directors• President & CEO• Standing Audit & Supervisory Board
member: 1• Executive officers: 2 (chief officers offinance and accounting andcorporate planning)• Committee vice-chair: President &CEO• Executive officers: 6• Chairman of the Board of Directors• Executive officers: 10• Outside directors: 3•Outside directors: 2• Outside directors: 2

Composition• Outside Audit & Supervisory Board
members: 2• Executive officers: 3

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 thepresident.

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

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

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

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, thecompensation itself, and the necessary policy, rules, and procedures
for reaching related resolutions.
Based on these deliberations, thecommittee provides advice andrecommendations 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.

Kanematsu uses the audit & supervisoryboard system. The Audit & Supervisory
Board and its members act independently
to audit directors’ performance of theirduties.
The Audit & Supervisory Board works
with the Board of Directors to provide partof the Company’s auditing function andaudits the directors’ performance of theirduties as an independent body acting on
behalf of shareholders.

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.

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.

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 with therules on administrative authority
established by the Board of
Directors.

To help solve increasingly serious socialand environmental problems, including
climate change, Kanematsu establishedthe Sustainability Management
Committee, which deliberates on
climate-related risks identified andevaluated by the business divisions. The
committee also regularly calculates theGroup’s CO2 emissions and discusses
changes in emissions and policy for
related measures as part of implementing comprehensive risk
management.
Furthermore, the committee identifies and revises the Company’s key
issues and deliberates on overallsustainability initiatives, including
ensuring respect for human rights, aswell as the Company’s participation in
outside initiatives, such as support for
the United Nations Global Compact.

Meeting
Frequency

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

Held as needed

Generally twice a month
Extraordinary meetings held asneededRegular meetings: Once a month
Extraordinary meetings held as needed

Extraordinary meetings held as needed(About twice a month)

Generally held twice a year, in April andJuly

Held as needed

Meetings in
Fiscal 2023

20

5

4

28

13

27

4

5

KANEMATSU Integrated Report 2023

KANEMATSU Integrated Report 2023

Kanematsu’s Foundations

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

The Kanematsu Group’s Value Creation

66

Project Deliberation Committee

Female MaleThe Origins of Value Creation

Body

OutsideStanding

Role and composition of each body67

Kanematsu’s Foundations

Corporate Governance

The Evolution of Our Corporate Governance System (as of the end of the General Meeting of Shareholders
following each fiscal year-end)
2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Corporate Governance Structure (as of June 27, 2023)

Appointment/Dismissal

Expanded the executive officer system

SystemConsultation

Board of Directors

Advice/Suggestions

Seven Directors(including threeoutside directors)

Established the Nominating Committee and Compensation Committee

Committees

6

7

7

8

8

6

6

6

7

7

Standing directors

10

5

5

5

5

5

4

4

4

4

4

Outside director

0

1

2

2

3

3

2

2

2

3

3

Outside director ratio

0%

17%

29%

29%

38%

38%

33%

33%

33%

43%

43%

Audit & Supervisory Board members

4

4

4

4

4

4

4

4

4

4

4

Outside Audit & Supervisory
Board members

3

2

3

3

3

3

3

2

2

2

2

Standing

Standing

Standing

Standing

Standing

Standing

OutsideOutsideMembers

4

4

3

3

3

3

4

4

(Outside members)

3

3

2

2

2

2

3

3

Standing

Standing

Standing

Standing

Standing

Standing

OutsideOutside

4

4

3

3

3

3

4

4

3

3

2

2

2

2

3

3

Committee chair

Compensation Committee chair
Committee
Members(Outside members)

Appointment/
Dismissal

Appointment/Dismissal
Audit

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

Collaboration

Nominating Committee
Appointment/Dismissal/
Supervision

Compensation Committee

Audit

Collaboration

President & CEO
Management Committee

Accounting audit

Internal Auditing
Department

Project Deliberation Committee
Internal Control and Compliance Committee

Internal
controls

Sustainability Management Committee

Accounting Auditor
The Origins of Value Creation

10

Directors

Nominating
Committee

General Meeting of Shareholders

2023

Collaboration

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

Meeting Attendance (Fiscal 2023), Professional Background, and Skill Matrix
Board of Directors

Professional background

Overseas
workexperience

FY2023attendanceCompensation
Committee

FY2023attendance

FY2023attendance

Audit & Supervisory Board
Management
Committee

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

FY2023attendance

Corporate
management

Businessstrategyplanning

Human
resource
Governancemanagement

〇

◎

◎

〇

〇
Presiding
officer

◎

◎

〇

◎

◎

〇

〇

◎

〇

〇

◎

〇

〇

◎

◎

〇

◎

◎

◎

〇

◎

◎

U.S.A.
(15 years)〇
Presiding
officer

20/20

Yoshiya Miyabe

President & CEO

Deputy Chief Officer, Electronics & IT Division; Chief
Officer, Motor Vehicles & Aerospace Division;
President (incumbent)

U.S.A.
(10 years)

〇

20/20

Tetsuro Tsutano

Director

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

U.S.A.
(4 years)

〇

20/20

〇

Shuji Masutani

Director

Chief Officer, Finance, Accounting, BusinessAccounting (incumbent)

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

〇

17/17

〇

Yuko Tahara

Director (outside,
independent)

Outside director (incumbent)

〇

20/20

〇

5/5

〇
Chair

4/4

Kazuhiro Tanaka

Director (outside,
independent)

Outside director (incumbent)

〇

20/20

〇
Chair

5/5

〇

4/4

Hiroyuki Sasa

Director (outside,
independent)

Outside director (incumbent)

U.S.A.
(5 years)

〇

17/17

〇

5/5

〇

1/1

Motohisa Hirai

Audit & Supervisory
Board member

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

Germany(6 years)Hong Kong(3 years)

20/20

〇

13/13

◎

Yoshio Tajima

Audit & Supervisory
Board member

Director at a Group affiliate (Electronics & Devices)

Australia(4 years)
U.S.A.
(5 years)

—

〇

—

◎

Yusaku Kurahashi

Audit & Supervisory
Board member(outside, independent)

Outside Audit & Supervisory Board member(incumbent)

19/20

〇

13/13

◎

Nobuko Inaba

Audit & Supervisory
Board member (outside,
independent)

Outside Audit & Supervisory Board member(incumbent)

18/20

〇

13/13

4/4

◎

〇

◎

◎

〇

◎

〇

◎

◎
◎
◎

Innovation

Kanematsu’s Foundations

Chief Officer, Electronics & Devices Division; Chief
Officer, Corporate Planning; President; Chairman;
Chief Officer, Internal Auditing Dept. (incumbent)〇

SDGs (ESG)
Technology/
management
DX
thinking

Finance

Chairman

5/5

Sustainability, DX

Investment
decisions

Kaoru Tanigawa〇

Business investment

The Kanematsu Group’s Value Creation

Experience as corporate officer or division chief
officer at Kanematsu or as a corporate officer
outside the Company

Nominating
Committee

◎

◎
◎

〇

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. Director Hiroyuki Sasa was appointed at the June 24, 2022
General Meeting of Shareholders, the numbers of meetings ofthe Board of Directors and Audit & Supervisory Board that hewas eligible to attend differ from those for the other directors
and Audit & Supervisory Board members.
3. Audit & Supervisory Board member Yoshio Tajima was
appointed at the June 27, 2023 General Meeting of
Shareholders.

◎

Details regarding the professional background of each director and Audit & Supervisory Board member are available in the Noticeof the 129th Ordinary General Meeting of Shareholders.

Notice of the 129th Ordinary General Meeting of Shareholders p. 20
https://www.kanematsu.co.jp/en/ir/files/Notice_of_the_129th_ordinary_general_meeting_of_shareholders.pdf

68

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Kanematsu’s Foundations

Evaluating the Effectiveness of the Board of Directors

Basic Policy

Each year, Kanematsu implements evaluations of the effectiveness of the Board of Directors to identify issues to addressin the following year and confirm the status of measures undertaken to address issues identified the previous year.
Through this process of evaluation and the implementation of measures to address issues identified, Kanematsu works
to continually improve the effectiveness of the Board of Directors. The Board of Directors and its secretariat
implemented the measures listed below in fiscal 2023. We will continue working to resolve issues on an ongoing basis.

Kanematsu’s basic policy for director compensation is toadopt a compensation system that is linked to the interestsof 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

Board of Directors Effectiveness Evaluation Process

Director and Audit & Supervisory Board Member Compensation System

Self-evaluation

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

Survey of all directors and Audit& Supervisory Board members

Executive Directors

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

Discussion at the Board of
Directors

Basic Compensation
Monthly fixedcompensation

IssuesBoard of Directors composition

Board of Directors discussions and operations• E nhanced prior explanations of agenda items by the Board’s secretariat for outside directors to improve the quality of Boardof Directors discussions.
•D iscussed Group growth strategy, focusing on Kanematsu Electronics Ltd. and Kanematsu Sustech Corporation.
•W orked toward the establishment of a human capital policy.

Dialogue with shareholders and investors

Shared transcripts of IR meetings at the Board of Directors

Other/Overall

Reinforced monitoring functions related to sustainability based on regular reports from the Sustainability Management
Committee.

Issues to Address Going Forward• Board of Directors composition• Board of Directors operation and discussions• Support system and training for directors and Audit & Supervisory
Board members• Dialogue with shareholders and investors• Opinions on the overall operation of the Board of Directors• Medium- and long-term management strategy; formulating the next
medium-term business plan
• Identifying the skills needed in directors under the next mediumterm business plan
• Medium- and long-term growth strategy; approach to financial andnon-financial aspects• AI and other new technologies• Utilizing human capital and personnel system reform• Support system for outside directors• Group growth strategy, focusing on DX/GX

Rank

PointsMaximum
individual
payment(thousandsof yen)Total Compensation by Type (millions of yen)
Total Compensation(millions of yen)

Monetary Compensation
Basic Compensation

Performance-linked
Compensation

Non-monetary
Performance-linked Stock
Compensation

Number of Individuals
Receiving
Compensation

0.74

0.59

0.53

0.45

0.37

14,400 10,700

8,500

7,600

6,500

5,300

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

Policy and methods for
deciding compensation
amounts and calculation
methods

Total Compensation (Fiscal 2023)

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

40%–70% of totalcompensation

Director and Audit & Supervisory Board Member Compensation

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

15%–45% of total compensation

Profit for theyear
Less than
attributable to¥5.0 billion
owners of the
Parent¥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• 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.

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.

Directors (excluding outside directors)

240

150

40

49

5

Outside Directors

28

28

–

–

3

Outside Directors

Audit & Supervisory Board Members

Audit & Supervisory Board Members(excluding outside members)

57

57

–

–

2

Basic Compensation

Basic Compensation

Outside Audit & Supervisory Board
Members

19

19

–

–

2

Total

344

255

40

49

12

KANEMATSU Integrated Report 2023

¥30.0
billion orabove

Kanematsu’s Foundations

Survey Items

Rank-Based Points and Maximum Individual Payment Amounts

The Kanematsu Group’s Value Creation

Knowledge and training necessary for Board
members•H eld training for officers with external experts on business and human rights, a training topic highly requested in
effectiveness evaluations due to its importance to sustainability.
• E xecutive officers provided explanations of businesses by theme to enhance outside directors’ understanding of businessexecution.

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

Initiatives in Fiscal 2023
• S ecured 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.

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

The Origins of Value Creation

Improvement initiatives

Initiatives to Address Issues Identified in the Previous Year70

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

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

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

Annual Securities Report (Japanese)

https://www.kanematsu.co.jp/ir/library/yuho.html
KANEMATSU Integrated Report 2023

71

Kanematsu’s Foundations

Diagram of the Kanematsu Group Compliance System (as of June 27, 2023)

Internal Control
The Kanematsu Group’s Internal Control System
regarding Groupwide governance, settlement of accounts,
IT, and operational processes is internally monitored by thecompanies and divisions that implement such operations aswell as by the Legal and Compliance Department, which provides independent assessment.
Furthermore, we have established the Internal Control
and Compliance Committee, which is chaired by Chairman
Tanigawa, 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.

Management 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(Chief Officer of Sales Division and Officer in Charge of Support Division)(President/MD or General Manager)

Officers & Employees of Kanematsu Corporation

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

KANEMATSU Integrated Report 2023

1. Prohibition of Bribery
Under the laws of the countries in which the Group operates, the Kanematsu Group’s officers and employees are forbidden from engaging in the bribery of public officials or
persons in comparable positions (such as officers andemployees 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 andemployees of business partners, whether in Japan or overseas, regardless of whether they are public or quasi-public
officials or officers or employees of private companies andregardless of whether such provision is funded by theCompany or personally by individuals. In addition, whenentertainment or gifts are provided to business partners for
legitimate business purposes, such entertainment or gifts
must be applied for and approved in advance in accordancewith the internal rules established by each Group company.
3. R aising Awareness of Compliance with the Laws of
Relevant Countries
The Kanematsu Group takes steps to raise awareness internally of compliance not only with Japan’s Unfair
Competition Prevention Act, but also with laws under whichacts committed by Japanese companies outside the UnitedStates or United Kingdom are punishable, such as the U.S.
Foreign Corrupt Practices Act and the U.K. Bribery Act.
In fiscal 2023, there were zero violations of policies
related to preventing corruption.

Information Management System
Information Asset Categorization

Information Asset Categorization

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

In light of the demand for digitization, detailed rules for
document retention have been integrated into the subordinate rules of the Information Asset Management Rules, anddata and paper documents are retained for a specified period of time in accordance with relevant laws andregulations.

Information Asset Categorization
Important information assets categorized as strictly confidential or internal use only, whether recorded on paper, indigital form, or using other analog media, are managed
and utilized in accordance with the Information AssetManagement Rules, which stipulate procedures for theirappropriate handling, as well as detailed regulations forgeneral employees and information system managers thatspecify procedures and key points to be observed.
Information Security Management System
Implementing information
security management

Checking the statusof measures

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

Incident Response System• Developing rules• Technological measures

President & CEO

Report on ongoingpreventive measures

President & CEO
Internal Control
and Compliance
Committee

Report on
implementation
Departmental information
officers (COO and Chief
officers)
Internal Control
and Compliance
Committee

Check

Report oncomplianceDirect,inspect

Employees

Information Security
Officer (Chief Officerof IT Planning)
Promote,educateKanematsu’s Foundations

72

Bribery Prevention Initiatives
The Kanematsu Group Compliance Handbook lays out theGroup’s prohibitions on bribery and excessive gifts andentertainment for business partners, both in Japan and overseas, with a view to ensuring fair business activities.

The Kanematsu Group’s Value Creation* “Compliance Matter” means matters which may damage company property or reputation of Kanematsu Group through violation of laws andregulations, company regulations or general societal norms.

AuditorInternal Control and Compliance Committee

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 clearly states that the Group rejects any and all ties with
antisocial forces. The Handbook has been made available
through the Company intranet to promote thorough awareness. The Handbook also clearly lays out the system of division and Group company compliance officers, rules forreporting Compliance Matters,* and the hotline systems for
directly reporting to and consulting 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 theprevention of bribery and corruption. To educate employees
about harassment, we have prepared and circulate aHarassment Handbook that features concrete examples,
and we highlight examples of harassment as part of ourinternal compliance training. We also implement management training on handling reports and incidents of bullying
and harassment. Through these efforts, we are working tofurther instill and enhance compliance awareness on an
ongoing basis.
Furthermore, at meetings of Group company presidents, which bring together the top management ofKanematsu and its 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
is promptly reported to the Internal Control and Compliance
Committee, which provides opinions and directions regarding the matter as necessary. The compliance officer of thedivision or Group company where the matter occurred thentakes corrective action and implements measures to prevent
recurrences, respecting the committee’s opinions and directions to the greatest extent possible.

Support and Direction

The Origins of Value Creation

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” by resolution 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 have established the “Kanematsu Group’s Internal
Control Overall Policy”. The effectiveness of internal control

Board of Directors

ReportPropose,reportInformation
System Manager(General Manager,
IT Planning Department)

Information Security Officer(Chief Officer of IT Planning)

Report on
progress

Direct on
response

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 2023

73

Kanematsu’s Foundations

Risk Management System

Decision-Making Process

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)

Application

Market risk

Subcategory

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.

Department responsible
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

Transactional credit
riskCountry risk
Legal risk

Environmental risk
Operational risk
Operation risk

Compliance risk

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.

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

Corporate Planning
Department(Leader)Business
division(Officer incharge)Accounting Department

Investee74

KANEMATSU Integrated Report 2023

Finance Department

Dispatch
staff

The Kanematsu Group works to enhance its system forongoing post-merger integration (PMI) to ensure thatinvestees are appropriately managed as members of theGroup and maximize their enterprise value. Specifically, thequalitative 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 the investee’s business. This isintended to promote close collaboration with Kanematsu’s
support divisions, which offer sophisticated expertise, andthereby make maximum use of the Company’s functions.

Monitoring and Asset Replacement
Credit Control Department
External expert

Other support divisions

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 improveconsolidated 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.) todetermine whether each investment justifies the Company’s cost of capital.

Legal andCompliance Department

Post-Merger Integration Promotion System

At their monthly information sharing meetings, the support
divisions share information about everything from preapproval investment planning to post-investment monitoring, progress, and items of concern. This information is also
reported to members 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 report on related measures and plans to Kanematsu’s
deliberative bodies as necessary.
Based on monitoring, we advance the replacement of
low-efficiency assets and businesses when they meet ourexit criteria or their strategic purpose in the portfolio has
diminished.

Kanematsu’s Foundations

Information security
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)p15

The Kanematsu Group’s Value Creation

Credit risk

Definition

Commodity risk

Business investment
risk

Business investment process details

approval request system based on the Rules on Delegationof Authority for making judgments and decisions aboutbusiness risks. The Project Deliberation Committee evaluates
important investments and loans, including their execution,
continuance, and withdrawal, based on the comprehensive
examination of relevant risks, aiming to minimize theGroup’s losses and promote sound business growth.

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.

Investment risk

Investment

Decision

The Origins of Value Creation

Category

Project Deliberation
Committee

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 primarydepartment responsible for the management of each. The
designated departments 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

Support divisions

Groupwide Activities
Group company presidents meet twice a year and as necessary to share information on Groupwide businessactivities. These meetings are aimed at ensuring mutual understanding and awareness with regard to corporate
governance issues.

KANEMATSU Integrated Report 2023

75

Kanematsu’s Foundations

Corporate Officers(As of June 27, 2023)

Directors and Audit & Supervisory Board Members

Yoshiya Miyabe

Tetsuro Tsutano

Shuji Masutani

ChairmanPresident & CEO

Director

Director

Shares held: 38,600

Shares held: 26,100

Shares held: 25,600

Shares held: 4,000

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)

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, Knowledge
Management Lab (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)

Yoshio Tajima

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: 5,400

Shares held: 600

Shares held: 0

Shares held: 01976 Joined Kanematsu-Gosho Ltd.
2014 Senior Managing Director, KanematsuNNK Corporation (now Kanematsu
Sustech Corporation)2020 Audit & Supervisory Board Member,
Kanematsu Corporation (incumbent)

1984 Joined Kanematsu-Gosho Ltd.
2014 Director, Kanematsu Communications Ltd.
2016 Managing Director, Kanematsu
Communications Ltd.
2017 Director, Managing Executive Officer,
Kanematsu Communications Ltd.
2023 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)
2023 Opened Kurahashi Law Office
Representative Partner, Kurahashi Law Office(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)
Senior Partner, Yasumori Audit
Corporation (incumbent)

KANEMATSU Integrated Report 2023

Eiji Kan

Masahiro Harada

Senior Managing
Executive Officer

Senior Managing
Executive Officer

Managing Executive
Officer

Chief Officer, Credit Control,
Legal and Compliance

COO Steel, Materials & Plant,
Green Transformation
Committee Chair
General Manager, Osaka
Branch; General Manager,
Nagoya Branch

COO Electronics & Devices,
Digital Transformation
Committee Chair

Tetsuro Tsutano

Ryoichi Kidokoro

Hiroshi Yamashina

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

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

COO Motor Vehicles &Aerospace

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

Osamu Iwata

Yoichiro Muramatsu

Jun Nakajima

Toru Hashimoto

Koichi Nishimura

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Chief Officer, Steel,Materials & Plant

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

COO Grain, Oilseeds &Feedstuff

COO Meat Products

COO Foods

Akihiro Fujita

Kaori Kusuda

Shuji Masutani

Executive Officer

Executive Officer

Executive Officer

President, Kanematsu USA
Inc.; General Manager,
Chicago Head Office

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

Chief Officer, Finance,
Accounting, BusinessAccounting

KANEMATSU Integrated Report 2023

Kanematsu’s Foundations

Motohisa Hirai

Toshihide Motoshita

President & CEO

The Kanematsu Group’s Value Creation

Yuko Tahara

Yoshiya Miyabe

The Origins of Value Creation

Kaoru Tanigawa

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.

76

Executive Officers

77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.

KANEMATSU Integrated Report 2023

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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

86

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

88

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

90

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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91

Kanematsu’s Foundations

Financial and ESG Highlights(As of March 31)

JGAAP

IFRS

2016

2017

2018

2019

2020

2021

2022

2023

2023

¥1,019,232—
80,021
18,262¥1,114,539—
86,402
19,776—¥704,211
87,88023,547—¥668,374
86,23818,772—¥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—¥911,408
130,894
38,896—$6,825,495
980,264
291,293

16,781

19,07522,373

18,122

17,87526,04329,177

26,944

23,58028,76535,696

267,3319,564

11,79910,546

8,959

8,049

16,317

16,605

14,39913,315

15,986

18,575

139,114

1,355
1,466
2,821

22,384(1,111)
21,273

6,758(6,649)109

33,024(4,214)
28,81011,852(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

(296)
(16,684)(16,980)(2,221)(124,948)(127,169)

399,186
75,912

428,459
96,204

466,314
119,015

443,592
120,706

479,717
129,863

519,889
147,050

549,459
158,698

551,671
166,174

557,495
180,492

634,456
199,282

677,588
143,423

5,074,431
1,074,095

54,51971,657

90,244

91,599100,357

116,012125,246

130,829

143,926

159,484

128,525

962,523

86,43968,03872,155

48,81355,42959,04549,96951,80740,52051,242

147,948

1,107,981¥ 22.80¥ 28.09¥ 125.494¥ 106.464¥

95.644¥ 193.794¥ 198.22¥ 172.43¥ 159.44¥ 191.42¥ 222.38$ 1.67129.82170.54

1,072.204

1,088.454

1,192.214

1,377.664

1,499.86

1,566.60

1,723.42

1,909.64

1,538.42

11.52

—

3.00

4.00

5.00

6.00

48.005

60.00

60.00

60.00

65.00

75.00

0.56

20.5
13.7
1.6

18.7
16.7
0.9

13.0
19.4
0.8

9.9
20.6
0.5

8.4
20.9
0.6

15.1
22.3
0.5

13.8
22.8
0.4

11.3
23.7
0.4

9.7
25.8
0.3

10.5
25.1
0.3

12.9
19.0
1.15

392.586,087,765
31.90
—
—
—

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

313.05
1,809,9509
29.46
24.28
5.18
0

—

—

—

—

0

0

0

0

—
735,174
5,832
816 (259)—
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)

0719,657
7,866
798(299)

32

33

33

34

34

36

37

37

13.8
4.8
8.1
7 (2)

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)

13.7
—
19.2
7(3)

4 (3)

4 (3)

4 (3)

4 (3)

4 (2)

4 (2)

4 (2)

4(2)

Kanematsu’s Foundations

2015

The Kanematsu Group’s Value Creation

2014

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 ¥133.53 to U.S.$1.00, the exchange rate prevailing on March 31,2023.
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).

KANEMATSU Integrated Report 2023

Thousands of
U.S. dollars2

2013

ESG* (Non-Financial) Data: *ESG: Short for environmental ( ), social ( ), and corporate governance ( ).
CO2 emissions (t-CO2)6, 7, 8
471.42456.44377.54
6,874,521
6,648,353
6,645,797
Total paper use (sheets)7
External disposal of waste (t)7, 10
48.95
37.60
33.40
—
—
—
Recycled waste (t)7———
Non-recycled waste (t)7———
Hazardous waste disposal (t)7
Environment-related fines and———penalties paid (yen)7———
Violations related to water quality/volume7
828,514805,015
682,717
Total electricity consumption (kWh)7
Employees—consolidated
5,522
5,747
6,002
Employees—non-consolidated (women)
782 (242)
800 (246)
813 (253)
Percentage of women among
31
31
31
employees—non-consolidated (%)
Average length of service (years)
16.0
15.7
15.5
Three-year job separation rate (%)11
0
2.6
3.5
Average overtime worked (hours/month)
8.3
8.0
8.8
12
10 (0)6 (1)
7 (2)Directors (outside directors)
Audit & Supervisory Board members12
4 (3)
4 (2)
4 (3)
(outside Audit & Supervisory Board members)

92

Millions of yen1

The Origins of Value Creation

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/Total equity attributable toowners of the Parent
Dividends
Financial indicators:
Return on equity (ROE) (%)
Equity ratio (%)
Net D/E ratio (times)

IFRS

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. 48.
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.

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Kanematsu’s Foundations

Management’s Discussion and Analysis
Business Results
For the fiscal year ended March 31, 2023, revenue increased¥143,445 million (18.7%) from the previous fiscal year to¥911,408 million. Gross profit increased ¥19,093 million (17.1%)
from the previous fiscal year to ¥130,894 million. Operating
profit rose ¥9,549 million (32.5%) year on year to ¥38,896 million, reflecting the increase in gross profit, despite a rise in selling, general and administrative expenses. Profit before tax
increased ¥6,931 million (24.1%) year on year to ¥35,696 million, largely due to the rise in operating profit. Profit for the year
attributable to owners of the Parent rose ¥2,589 million (16.2%)
year on year to ¥18,575 million. As a result, return on equity(ROE) calculated on the basis of total equity attributable toowners of the Parent (shareholders’ equity) came to 12.9%, andreturn on invested capital (ROIC)* came to 5.6%.

Segment Information
Results for each business segment are described below.

Electronics & Devices

Revenue increased ¥312 million from a year earlier to¥13,707 million. Operating profit fell ¥347 million to ¥662
million, and profit attributable to owners of the Parent
decreased ¥246 million to ¥219 million.

Analysis of Financial Status
Assets, Liabilities and Net Assets
Total assets at the end of the fiscal year under review
increased ¥43,132 million from the end of the previous fiscal
year to ¥677,588 million.
Interest-bearing debt increased ¥84,442 million from theend of the previous fiscal year to ¥227,894 million, mainly
due to a rise in short-term borrowings used for making tender offers. Net interest-bearing debt after deducting cash
and deposits rose ¥96,706 million from the end of the previous fiscal year to ¥147,948 million. Interest-bearing debt
does not include lease liabilities.
In terms of equity, total equity attributable to owners of
the Parent fell ¥30,959 million from the end of the previous
fiscal year to ¥128,525 million, mainly due to a decrease incapital surplus following the acquisition of additional sharesof Kanematsu Electronics Ltd.
As a result, the equity ratio at the end of the fiscal year
under review was 19.0%. The net D/E ratio stood at 1.15
times.

Steel, Materials & Plant
Revenue increased ¥45,400 million year on year to ¥193,393
million, due to a rise in revenue in the steel tubing business andenergy business. Operating profit rose ¥8,287 million to¥12,339 million, due to stronger profits in the steel tubing business and the energy business, and profit attributable to ownersof the Parent increased ¥3,435 million to ¥6,694 million.
Performance in terms of operating profit was as follows.
The steel tubing business was strong, reflecting growth inenergy investment in the United States and rising steel tubing prices. The energy business was strong due mainly to rising market prices and sales of marine fuel for ocean-goingvessels. The machine tools and industrial machinery business
saw firm performance due to increased domestic capital
investment demand.

Cash Flows

Motor Vehicles & Aerospace
Revenue increased ¥15,517 million year on year to ¥81,344
million, due to a rise in revenue in the aerospace business.
Operating profit decreased ¥178 million to ¥1,485 million,
due to a fall profit in the motor vehicles and parts business,while profit attributable to owners of the Parent declined¥653 million to ¥803 million
Performance in terms of operating profit was as follows.
Performance in the aerospace business was firm due to thedelivery of products for existing contracts and recovery indemand. Despite similar recovery in demand, the motor vehicles and parts business was weak as soaring transportation
costs put pressure on profits.

In the year under review, net cash used in operating activities
totaled ¥296 million. Net cash used in investing activities
amounted to ¥16,684 million. Net cash provided by financing
activities amounted to ¥4,751 million. As a result, after theeffect of exchange rate changes on cash and cash equivalents, cash and cash equivalents at the end of the fiscal year
under review stood at ¥79,462 million, down ¥11,958 million
from the end of the previous fiscal year.

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 mediumterm vision, future 135.

Operating Profit

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

(Millions of yen)

(Millions of yen)

(Yen)

(Millions of yen)

1,000,000

40,00020,000400

150,000

16,605
767,963

723,849 721,802

30,00030,34915,00029,34728,352

14,399300

10,000 198.22

400,000

191.42172.43

10,000222.38200

120,000

2.0

90,0001.15
1.049,969159.44100

5,000

51,807

(FY)

2019

2020

2021

2022

2023

(FY)

0

0

2019

2020

2021

2022

2023

(FY) 2019

2020

2021

2022

2023

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

94

KANEMATSU Integrated Report 2023

158,698
150,000(Yen)(Millions of yen)

(%)

4,000

200,000

40

3,000

150,000

166,174
143,423

30,000

0.5

0

2020

2021

Net Interest-Bearing Debt

130,829

1,723.42

2,000

100,000

30

22.8

23.7

25.8

128,525
25.1
20
19.0

1,538.42

50,0001,000

50,000

10

0.3

0.3

0

(FY) 2019

1,909.64

100,000

1,499.86 1,566.60

0.4

159,484
143,926
125,246

51,242
40,5200.4
0199,282

200,000

1.5

60,000200,000

0(Millions of yen)

13,31523,63520,000Total Equity Attributable to Owners of
the Parent / Equity Ratio

180,492

15,986649,142600,000(Times)147,948 2.5

Total Equity / Total Equity Attributable to
Owners of the Parent per Share

18,575

911,408
800,000

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

Kanematsu’s Foundations

Revenue

38,896

The Group raises funds primarily through indirect financing based on good relations with banks, life and non-life
insurers, and other financial institutions. Kanematsu also raises funds from capital markets by issuing straight corporate
bonds as a means of long-term capital procurement. During
the year under review, the Company borrowed ¥58.4 billion
to finance the acquisition of common stock of Kanematsu
Electronics Ltd. through a tender offer. In addition, theCompany redeemed ¥5.0 billion in straight bonds that had
matured. As a result, at the end of the fiscal year, debt procurement through direct financing accounted for 7% of consolidated interest-bearing debt.
To facilitate capital procurement, Kanematsu receives ratings from Japan Credit Rating Agency, Ltd. (JCR) and Rating
and Investment Information, Inc. (R&I). The Group’s longterm ratings as of the end of the fiscal year under review are
A-(stable) from JCR, and A- (stable) from R&I, one rank higher
than a year earlier.
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 interestbearing debt accounted for 74% of the consolidated Group’s
interest-bearing debt, a reflection of the concentration offund procurement at the Parent Company.
As a result of the above fundraising activities, at the endof the fiscal year under review, gross interest-bearing debt
stood at ¥227,894 million, an increase of ¥84,442 million
from the end of the previous fiscal year. Net interest-bearing
debt stood at ¥147,948 million, up ¥96,706 million from theend of the previous fiscal year. As a result, the net D/E ratio
stood at 1.15.
Corporate bonds and long-term borrowings (including thecurrent portion of corporate bonds and long-term borrowings) accounted for 38% of the balance of interest-bearing
debt at the end of the fiscal year under review (or 48% on a
non-consolidated basis).

The Kanematsu Group’s Value Creation

Revenue increased ¥27,050 million year on year to ¥282,513
million due to higher revenues in the ICT solutions business,the electronic components and materials businesses, and thesemiconductor parts and manufacturing equipment business. Operating profit rose ¥1,267 million to ¥20,331 million
due to higher profit in the ICT solutions business and thesemiconductor parts and manufacturing equipment business. Profit attributable to owners of the Parent increased¥832 million to ¥8,776 million.
Performance in terms of operating profit was as follows.
The ICT solutions business was strong, reflecting an increase
in security- and network-related sales and improvement indelivery delays. The semiconductor parts and manufacturing
equipment business was firm due to growth in shipments ofsemiconductor and LCD panel manufacturing equipment
and supplies, reflecting booming demand. The mobile business remained lackluster, reflecting a sluggish device sales
volume and a decrease in fee income due to revisions to fee
conditions.

Other

Revenue increased ¥55,164 million year on year to ¥340,448
million, reflecting a rise in revenues in the feedstuff businessand the meat products business. Operating profit rose ¥522
million to ¥4,063 million, due to a higher profit in the feedstuff business, while profit attributable to owners of the
Parent decreased ¥326 million to ¥2,192 million.
Performance in terms of operating profit was as follows.
Performance in the feedstuff business was strong, reflecting
improved profitability. In the food business, trading of products for the retail market was firm. Performance in the meatproducts business was weak, due to a downturn in the overall meat product market from the summer onward.

The Origins of Value Creation* ROIC = Profit for the year attributable to owners of the Parent / Invested
capital (Interest bearing debt + Shareholders’ equity)

Foods, Meat & Grain

2022

2023

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

00(FY) 2019

2020

2021

2022

2023

0

0

(FY) 2019

2020

2021

2022

2023

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 2023

95

Kanematsu’s Foundations

Major Group Companies(As of June 1, 2023)

Electronics Japan& Devices* Companies with shares listed on a stock exchange
Kanematsu Electronics Ltd.
Nippon Office Systems Ltd.
Kanematsu Sustech Corporation
Kanematsu Communications Ltd.
NSC Company Limited
Kinkitelecom CO., LTD.
GCC Corporation
Kanematsu Granks, Corp.
Kanematsu Futuretech Solutions Corporation
Kanematsu Advanced Materials Corp.
Kanematsu Kangawa Co., Ltd.
Kanematsu K.U. Co., Ltd.

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.
Getech Automation Pte Ltd
KIS Global GmbH
www.CanadianPassportPhotos.ca Inc

Data utilization consulting and data exchange support
Design, development, manufacture, and sales of control modules for lithium ion batteries
Manufacture, sales and maintenance services for depanelers and system integrator services for automated machinery
Sales of card printers
Sales and maintenance services for passport photo printing systems

Japan

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 Soytech Corp.

China

ThailandIndonesia
U.S.A.

Steel,
Materials& Plant

Sales of steel and construction materials
Cutting and processing of steel sheet; Sales of construction materials
Processing and sales of stainless steel, titanium, and high-alloy steels
Construction, design, manufacture, installation, and sales of steel joinery
Sales of petroleum products and LPG
Delivery and storage of petroleum products
Domestic sales, import, and export of chemical products, pharmaceuticals, pharmaceutical ingredients, andKanematsu Chemicals Corp.
functional food materials
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.
Machinery installation and maintenance; Automation technical support and sales of related equipment
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 steel tubing-related parts
KGK International Corp.
Sales of machine tools and industrial machineryJapan

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

Ireland
PolandOther

Kanematsu Trading Corp.
Kyowa Steel Co., Ltd.
Eiwa Metal Co., Ltd.
Kenkosya Co., Ltd.
Kanematsu Petroleum Corp.
Kanematsu Yuso Co., Ltd.

U.S.A.

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

Japan

Hokushin Co., Ltd.*
Shintoa Corp.
Kanematsu Logistics & Insurance Ltd.
Japan Logistics Co., Ltd.

Indonesia

96

PT. Dunia Express Transindo

KANEMATSU Integrated Report 2023

Sales of aircraft, defense, and aerospace-related products as well as 3D laser scanners and XR solution equipment
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
Import, export, and sales of pet supplies, soft drinks for vending machines, aero-engines, feed materials, andmetal products
Insurance agency and forwarding business; Consigned freight forwarding business
Warehouse and self-storage operation
Total logistics services, including trucking, warehousing, customs clearance, domestic and international
forwarding, and container depot operations

Company Name
EstablishedFoundation
President & CEO
Head OfficePaid-in Capital*
Fiscal Year
General Meeting of
Shareholders
Number of Offices*

KANEMATSU CORPORATION
August 15, 1889
March 18, 1918
Yoshiya Miyabe
7-2 Marunouchi 2-chome,
Chiyoda-ku, Tokyo
100-7017, Japan¥27,781 million
April 1 to March 31
June
Domestic: Tokyo Head Office, Kobe Head Officeand branches 5
Overseas: 35
798 (Consolidated: 7,866)

Number of Employees*

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

Composition of Shareholders

Tokyo
8020
Sumitomo Mitsui Trust Bank, Limited
200,000,000
84,500,202 (including 263,928 treasury shares)
100
32,329Financial institutions

35.13%

Foreign institutions
and individuals

33.33%

Individuals and others(including treasury shares)21.58%
Other corporations

5.60%

Securities firms

4.36%

Principal Shareholders

Number of shares held (thousands)

Percentage of voting rights (%)

The Master Trust Bank of Japan, Ltd. (trust account)

13,107

15.56

Custody Bank of Japan, Ltd. (trust account)

5,072

6.02

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,322

2.75

SSBTC CLIENT OMNIBUS ACCOUNT

2,142

2.54

MSIP CLIENT SECURITIES

1,894

2.24

The Bank of New York Mellon Corporation 140044

1,418

1.68

MUFG Bank, Ltd.

1,417

1.68

STATE STREET BANK AND TRUST COMPANY 505103

1,287

1.52

BNYM AS AGT/CLTS NON TREATY JASDEC

1,273

1.51

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

1,265

1.50

Note: Calculated after deduction of treasury shares (263,928 shares)

Kanematsu’s Foundations

Motor
Vehicles &AerospaceJapan

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.

Corporate Profile

The Kanematsu Group’s Value Creation

NS Technologies Inc.

(As of March 31, 2023)

The Origins of Value Creation

Foods,
Meat &
Grain

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
Sales of mobile communications devices
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 raw materials, and electronic components and materials
Sales of industrial materials and chemicals
Design, development, and sales of semiconductor production equipment, testing equipment, and wafer marking
equipment; Technical services
Design, development, and manufacture of IC test handlers

Kanematsu PWS LTD.

China
Singapore
Germany
CanadaCorporate Profile

Stock Price/Trading Volume
Trading Volume

Stock price(¥)(Thousands of shares)

2,000

25,0001,500

20,0001,000

15,000500

10,000

0

5,000
0
18/4

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

4

6

8

10

12 23/2

KANEMATSU Integrated Report 2023

97