INTEGRATED REPORTSUSTAINED GROWTH
THROUGH VALUECREATION

The Kanematsu Group aims to create value
for the development of society in line withthe entrepreneurial spirit of its founding.
Over the more than 130 years since its founding in 1889, the Kanematsu Group has been guided by its
Corporate Principle, a codification of the founding purpose and entrepreneurial spirit of its founder.
Staying constantly ahead of the curve, Kanematsu has contributed to social and economic development
by repeatedly creating new businesses.
In April 2018, we launched future 135, our medium-term vision for the coming six years. Under
future 135, we have launched initiatives aimed at sustained growth in core businesses as well as
expansion of scale and securing additional value through business investment. Leveraging our stableearnings structure and financial structure, we are steadily advancing toward the next stage of growth,with the aspiration of being a unique general trading company.

Corporate Principle“Let us sow and nurture the seeds of global prosperity”

Our Beliefs: Kanematsu’s Guiding Principles“Sow a seed now,” and take action to benefit people aroundthe globe, bade our founder, Fusajiro Kanematsu, setting astandard of public duty that we at Kanematsu continue touphold through a commitment to ethical business principles
and corporate responsibility.
The beliefs and philosophies that inspired Fusajiro
Kanematsu in the late nineteenth century Meiji period, a time
when Japan was striving to build a national economy, wereencapsulated in the document Our Beliefs: Kanematsu’s
Guiding Principles in 1967, on the occasion of our merger withThe Gosho Company.

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.

Kanematsu’s Code of Conduct
1. Origin of corporate
activities
2. Fair transactions

We became involved in corporate activities to serve our various stakeholders by providing socially valuable goods and services inaccordance with the aim of our founder to realize a sustainable society.

3. Information management& disclosure

Information is properly managed to protect personal information, customer information, and intellectual property and is disclosed
in a timely and proper manner to establish mutual trust between Kanematsu and the community and maintain a high level oftransparency.

4. Respect for human rights

We respect human rights and do not discriminate. Employee career development and capability development are actively
supported. Diversity, personality, and character are respected so as to create a dynamic corporate culture.

Our corporate activities are conducted in compliance with laws and ordinances in Japan and abroad, international rules andpractices, and internal rules as well as with social common sense.

5. Consideration of the global We exercise sufficient consideration in our corporate activities to maintain a sound global environment for sustainable growth.
environment
We are aware of the importance of our social responsibility as good corporate citizens, and proactively undertake social contribution
6. Social contribution
activities. Employee activities to contribute to community development and to comfortable and safe living are supported.

Contents

2
4
6Management Strategy

The Kanematsu Group’s Origins
The Kanematsu Group’s History
Value Creation Process

8 Message from the President
14 Message from the CFO
18 Special Feature: future 135 Medium-Term Vision
19 Review of the Vision’s First Three Years (FY2019 – 2021)
20 Policy for the Latter Half of the Vision (FY2022 – 2024)
21 The Kanematsu Group’s DX

Management Strategy

Sustainability

Kanematsu’s Progress and Strengths

Kanematsu’s Progress and Strengths

22 Sustainability
35 Corporate Governance
40 Interview with the Outside Directors
42 Corporate Officers
Sustainability

Review of Operations

44 Business Segments
46 Electronics & Devices
48 Foods
50 Meat Products

52 Grain, Oilseeds & Feedstuff
54 Steel, Materials & Plant
56 Motor Vehicles & Aerospace
Review of Operations

Financial Section and Company Information

58 Financial and ESG Highlights
60 Management’s Discussion and Analysis
62 Business Risks
64 Major Group Companies

65 Global Network / Organization Chart
66 Japanese and Overseas Offices
68 Corporate Profile

Financial Section and Company Information

Financial information is available on Kanematsu’s website.

https://www.kanematsu.co.jp/en/ir/library/financial-statements.html

Editorial Policy
The content of the Kanematsu Group’s integrated reports is based on an
integrated reporting approach that references the International Integrated
Reporting Framework of the Value Reporting Foundation (the result of themerger of the IIRC and SASB), the Guidance for Collaborative Value Creation of
the Ministry of Economy, Trade and Industry, and ISO 26000. We hope that thereport will help readers deepen their understanding of the Kanematsu Group.

Forward-Looking Statements
This annual report contains statements regarding the KanematsuGroup'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 tochanges in the economic and market environment surrounding theGroup's business areas, such as exchange rate fluctuation.
KANEMATSU Integrated Report 2021

1

The Kanematsu Group’s Origins
In 1889, Fusajiro Kanematsu founded Kanematsu. Over the 132 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 and transforming itself. While the Group continues to change andevolve, the entrepreneurial spirit valued by our founder and his aspiration tocontribute to international society live on in the Kanematsu Group today.

Fusajiro Kanematsu
1845–1913

The aspiration of founder Fusajiro Kanematsu
Before Founding Kanematsu
In a time when the lifespan of a person was considered to be 50 years, Fusajiro
Kanematsu made a major step toward trade with Australia at the age of 44. His way oflife was to continuously seek out new challenges, with an eye to the future of Japan.
Fusajiro Kanematsu was born in 1845 in Osaka, Japan. He foresaw the arrival of a
new era amid the disorder at the end of the Edo period and decided to establish himself
as a merchant rather than as part of the samurai nobility. In 1873, foreign trade was rapidly growing. Kanematsu, then 28 years old, joined the Osaka Branch, Bank Division, of
Mitsui Gumi (now Sumitomo Mitsui Banking Corporation). Through honest and proactive
hard work, he helped pioneer private funding operations, which banks did not yet handle, achieving many successes and building trust.
He then left the job at Mitsui and participated in the founding of Osaka Shosen(now Mitsui O.S.K. Lines, Ltd.) in 1884, helping to invigorate the shipping industry centered on Osaka. In 1887, he purchased the Osaka Nippo newspaper (renamed Osaka
Mainichi Shimbun the following year). He breathed fresh air into newspapers that weregenerally biased toward the political power and launched a business newspaper to promote the development of industry. In this paper, he introduced novel types of content,
including price lists and the opinions of private companies.
In this way, Fusajiro Kanematsu’s entrepreneurial spirit and aspiration to develop industry in Japan were constants throughout his life.
At the time, nearly 90% of Japan’s imports and exports were dominated by foreign firms. Kanematsu felt that trade was the only way toenhance Japan’s national strength, and that it was thus essential for
the Japanese to control their trading rights. Animated by this ideal andthis hope, he looked to Australia, which had thriving livestock and mining industries and was the largest wool producer in the world. In 1887,
Kanematsu visited Sydney for the first time to understand conditions
there, and in 1889 he founded Fusajiro Kanematsu Shoten ofAustralian Trading (now Kanematsu Corporation) in Kobe, Japan. The
following year, he opened a branch office in Sydney and made the first
shipments of beef fat, cattle hides, and wool to Japan, marking the firstStatement of founding purpose,step in direct trade between Japan and Australia.
written by Fusajiro Kanematsu

2

KANEMATSU Integrated Report 2021

The Sayings of Fusajiro Kanematsu
Kanematsu’s Progress and Strengths

Let Us Sow and Nurture the Seeds of Prosperity for Japan
This was part of Fusajiro Kanematsu’s founding purpose statement in 1889 and is partof our Corporate Principle today. It expresses the aim of contributing to society bybuilding businesses and, in a modern context, of taking action to enrich the lives andwell-being of people not only in Japan, but around the world. This idea is highly compatible with the spirit of the Sustainable Development Goals (SDGs) and aligns withthe concept of creating shared value for society by solving social issues through corporate business activities.

Belief in the Value of WorkManagement Strategy

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

lives on today as the core heritage of Kanematsu.
Sustainability

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

Review of Operations

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

Sydney Branch in 1891

Financial Section and Company Information

Kobe Head Office shortly
after founding

Invoice for the first Australianwool shipment, handwritten
by Fusajiro Kanematsu
KANEMATSU Integrated Report 2021

3

The Kanematsu Group’s History

Innovating and evolving with the times, continually
1889

Fusajiro Kanematsu Shoten of Australian
Trading founded by Fusajiro Kanematsu in Kobe

1890

Branch opened in Sydney
Direct importing of Australian wool began

1967

1989

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

100th anniversary of the Company’s founding

1973

Company name changed toKanematsu Corporation

1990

Listed on the first section of theTokyo Stock Exchange

1918

Company name changed to Kanematsu Shoten
Company

1935

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

Branches opened in New York and Seattle

1943

Company name changed to Kanematsu
Corporation

1951

Electronics & Devices

1968

1978

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

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

1972

1982

Kanematsu Semiconductor Corporation
established (now Kanematsu Futuretech
Solutions Corporation)

Nippon Office Systems Ltd. established
Pacific Western Systems Japan established(now Kanematsu PWS Ltd.)

1974
Kanematsu Computer Systems Ltd. established(now Kanematsu Communications Ltd.)

Overseas affiliate established in New York, thefirst overseas office established by a Japanesetrading company after World War II

Foods, Meat & Grain

1954

1977

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

Kaneshoku Corporation established(now Kanematsu Foods Corp.)

Steel, Materials & Plant

1959

1974

Kanematsu Yuso Co., Ltd. established1967

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.)

1960

1970

Began trading with Steel Service Oilfield
Tubular, Inc.

Kanematsu Kenzai Corporation established(now Kanematsu Trading Corp.)

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

1985

Motor Vehicles & Aerospace

1985

Kanematsu Aerospace Corp. established

1889–1950s

1960s–1980s

Founding

GrowthGuided by Kanematsu’s founder, a pioneer in trade
between Japan and Australia, Kanematsu weathered financial panics and built a solid foundation.
Eventually, the Company expanded to the UnitedStates and other countries.

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

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

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.

Solving Social
Problems

4

KANEMATSU Integrated Report 2021

1991

2014

1993

2016

Kanematsu Electronics Ltd. listed on the firstsection of the Tokyo Stock Exchange
Kanematsu Computer Systems Ltd.
(now Kanematsu Communications Ltd.)
began mobile phone sales

Kanematsu’s Progress and Strengths

creating and providing value unique to Kanematsu.
2019

Acquired a majority stake in Kanematsu-NNK Corp.
(now Kanematsu Sustech Corporation)

130th anniversary of theCompany’s founding

Carried out an absorption-type merger with Diamondtelecom, Inc.,
aimed at expanding the mobile business

Ordinary Income

1995

Kanematsu Sekiyu Hanbai Corp. established(now Kanematsu Petroleum Corp.)(Millions of yen)
30,0001999

25,00020,000Management Strategy

Carried out large-scale business selection
and concentration

15,0002005

Kanematsu Electronics Ltd. became a subsidiary
Acquired a majority stake in Shintoa Corp.
(100% stake acquired in 2010)

10,000
5,000
0

2011

2012

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

2013

2012

2013

2014

2015

2016

2017

2018

2019

2020

* F igures for fiscal 2017 onward are IFRS-basis profit before tax.

2021
(FY)

– future 135 –April 2018–March 2024

Resumed dividend payments“VISION-130”

Sustainability• Sustainable growth in fundamental businesses and expansion of the revenue
base through business investment• Response to technical innovation• Establishment of management infrastructure for achieving sustainable growth

April 2014 – March 2019

• 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 objectives were to “Maintaina healthy financial position” and to “Expand our 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 our business in areas of expertise and investing in new challenges to create
value while bolstering our management base.

• Consolidated net income:¥16.3 billion• ROE:
15.1%• Shareholders’ equity: ¥116.0 billion• Net D/E ratio:
0.5 times

April 2013–March 2016

Review of Operations—Jump to next stage leading to the future—

Largely Completed a Year Early in
Fiscal 2018

• Took a positive stance to enable rapid progress and to establish a solid growth track in preparation for the 125th anniversary.
• Continued to develop professional organizations and personnel as a business creation group, aiming for coexistence andmutual development with our business partners.
• Endeavored to consistently increase corporate value to meet the expectations of domestic and foreign stakeholders.

Resumed paying an interim dividend in fiscal 2014
Note: The above periods are those designated at the time the respective plan/visions were announced.

2010 –

Reforms

Aiming for the Future

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

Kanematsu has enhanced its management base through business selection and concentration.
Implementing M&A in highly specialized fields and business expansion, we are shifting to an
aggressive management stance.

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

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 innovationas AI and IoT.

KANEMATSU Integrated Report 2021

Financial Section and Company Information

1990s–2000s

5

Value Creation Process

The Kanematsu Group is utilizing its capital in its
and increase its enterprise value as it works to address
Corporate Principle—Our Founding Purpose and Our Beliefs:

Key Issues
External
Environment

Building a Sustainable
Supply Chain

Shifting international
conditions

The Kanematsu Group’s Capital• Business fields, each with specificexpertise• Organizational functions that
Organizational support business activities from
specialized perspectives
Capital• Locations around the world• Highly specialized Group
companies

Human andIntellectual
Capital• Wide range of business fields• Expertise and technical capabilities
regarding industries and products• Accumulated know-how• Global professionals/Diverse
professionals• Business creation and proposal
abilities

Financial
Capital• Sound financial position (Net D/E
ratio of less than 1.0)
• Stable earnings base
• Average annual cash flows ofapproximately ¥20 billion

Social and
Relationship
Capital• High quality and quantity ofbusiness partners• Contribution to local communities• Trust built over a period of 130
years

NaturalCapital• Biodiversity (animals, plants, fungi,
etc.)• Sunlight, air, forests, and soil
• Geothermal, wind, and other formsof renewable energy

Climate change
Decarbonization Initiatives
Technologicalinnovation

Mutual Development with
Local Communities

Changing foodsupply anddemand balance

Changing lifestyles

Creating an Environment That
Enables Diverse Work Styles

Legal amendments,
regulatory loosening
and tightening
Enhancement of Governanceand ComplianceCorporate Governance

6

KANEMATSU Integrated Report 2021

Kanematsu’s Guiding Principles

See p. 1

What We Do

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

Value We Provide to Society(Outcomes)

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

Management Strategy

Four Segments with Unique Strengths

Kanematsu’s Progress and Strengths

corporate activities to provide new value to society
five key issues (issues of high materiality).

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

Steel, Materials & Plant

Motor Vehicles & Aerospace
Motor Vehicles and Parts and Aerospace

Priority Initiatives Under the future 135
Medium-Term Vision• Response to technical innovation• Establishment of management infrastructure forachieving sustainable growth

Weighing risks and opportunities

Contributing to local communities andthe environment

We will create a work environmentthat encourages each individual toleverage his or her unique talents
and qualities, supporting diverse
work styles. Furthermore, we will
improve training programs todevelop managers capable of creating and expanding businesses.

Financial Section and Company Information

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

Review of Operations• Sustainable growth in fundamental businesses andexpansion of the revenue base through business
investment

Sustainability

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

Aiming to achieve net zero greenhouse gas emissions, we will promote our clean fuel and renewableenergy business to contribute to
the mitigation of global warming.

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

KANEMATSU Integrated Report 2021

7

Message from the President

8

KANEMATSU Integrated Report 2021

Kanematsu’s Progress and Strengths

From Value Provision to Value Creation—
Looking toward a New Era as a Trading
Company
In June 2021, I had the honor of assuming the position of president of Kanematsu. To achieve thegoals of the latter half of future 135, our medium-term vision for the six years ending fiscal 2024,
I will return to the founding purpose espoused by Group founder Fusajiro Kanematsu as I strive toincrease enterprise value.

Management Strategy

President

Yoshiya Miyabe

Sustainability

Career history
Yoshiya Miyabe joined Kanematsu in 1983. After serving as
general manager of the Industrial Electronics Department, he
was appointed director in June 2012, and was in charge of theElectronics & IT Division and (following reorganization) the Motor
Vehicles & Aerospace Division. In 2018, he was appointed
director and senior managing executive officer, serving as chief
officer of the Motor Vehicles & Aerospace Division and ofTechnologies and Business Collaboration. He has more than adecade of experience working in the United States.

Striving to Meet the Expectations and Trust Placed in Management
down on us, it is clear that tectonic shifts are beginning around the world. I was selected to becomepresident at this time of dramatic change in society
partly, I think, because of my many years of experience in sales in and outside Japan. I therefore understand the mission entrusted to me as being toadvance management while always remembering
the key ideas of interpersonal connection, action, andtaking on ambitious challenges.

Review of Operations

To begin, on behalf of the Kanematsu Group, I would
like to extend my condolences to all those affected by
the COVID-19 pandemic and to thank all those whohave supported our communities through their tireless efforts in this difficult time.
With the end of the COVID-19 pandemic still outof sight and waves of change—from efforts to transition to a decarbonized society spurred by climatechange to digital transformation (DX)—bearing

Our Social Mission is Defined by Our Founding Purpose
purpose, we will build a strong, clear Group identity.
At the same time, as times change, our role as a
trading company is changing. Until now, trading
companies offered functions in such areas as information, logistics, finance, and risk management.
However, as manufacturers and other companies inother industries increasingly provide these functions,
we must step back and deeply examine our purpose
and the value that we can provide.

KANEMATSU Integrated Report 2021

Financial Section and Company Information

Since its founding, the Kanematsu Group has maintained and practiced an entrepreneurial spirit ofdeveloping new markets and businesses and its
founding purpose of providing socially valuable
goods and services, which relates to today’s Sustainable
Development Goals (SDGs). I believe that these areuniversally applicable values that we must continue
to pass down, and that by making management decisions that are rooted always in our founding

9

Changes in the Environment and the Future Potential of Trading Companies
Unafraid of Failure and up for a Challenge
Going forward, while remaining rooted in trading, trading companies will need to make their presence felt as
highly specialized business partners deeply embedded insupply chains and sales networks, going beyond justinvesting to create new value. Building a new businessfrom scratch is quite a fun experience. There are many
failures along the way, but when you achieve successand the team reaches its goals, you taste a satisfactionthat is difficult to put into words. I want to enable as
many of our employees as possible to have this kind ofexperience early in their careers. To this end, we must
develop a culture that encourages aggressively taking on
new challenges. To help such a culture take root throughout the Group as we aim for corporate growth, we willneed to continue efforts to improve work environments
and systems.

Leadership that Unites Teams in Pursuit of Their
Goals
My experience in the Electronics and Devices and Motor
Vehicles & Aerospace divisions, including that in the
United States, is for me an irreplaceable asset. In a trading company, above all, just taking action is crucial.
Among the steps of the PDCA cycle, D (“do”) is the mostimportant. You have to listen to what people are saying
and use your instincts to develop new businesses that areahead of the curve, building relationships and involving
many of those around you. Think of it as building a teamthat encompasses suppliers and customers, people inand outside the Company.
Kanematsu has supported the motorcycle racing
team of one of our suppliers for 30 years. As a private
team, it has always been hard for them to compete withthe works teams run directly by motorcycle manufacturers, which have an advantage in funding. Nevertheless,they were determined to beat the works teams. In 2006,
this team became the top-ranked team in Japan in the
Suzuka 8 Hours Endurance Race, and in 2018, it became
the first Japanese team to win the FIM Endurance WorldChampionship. Over the years, I have seen how the hard
work and determination of this team as they strived
toward victory has attracted many supporters. In particular, I have been moved by the leadership of the teammanager, encouraging and uniting the team, and haveused this example as a guidepost for thinking about
what makes a leader.

A Rare Opportunity for Trading Companies
Until this June, I was Chief Officer of the Motor Vehicles &Aerospace Division. In the current environment, this truly
felt like trying to navigate a turbulent sea without a compass. However, a trading company must create businesses, and to that end, not go on the offensive, but blaze a
new path of innovation in society. I see the moment we
now find ourselves in as a rare opportunity to greatly
increase our enterprise value, which I am determined to
seize by implementing nimble management.
Given these circumstances, we must advanceGroupwide DX with the utmost urgency and scope. The
ICT solutions business, a core part of the Group, is a digital business that plays an essential role in the changes
currently taking place in society. Leveraging this strength,
we will bring transformation to every part of the Group.

Breaking Down Barriers Between Divisions toCreate New Value
Today, DX is an urgent task across every industry. In somecases, like Amazon and Uber, DX is disrupting existing
industries with new technologies and business models
outside the established industry order and business practices. For example, automobiles today are loaded withsemiconductors, and major IT companies are moving into
the automotive industry. In this way, the conventional
delineations between industries are disappearing.
Trading companies are seeking to leverage theirwide-ranging business domains to skillfully combine elements of existing operations and create new businesses
that realize higher added value. To do this, we need to

10

KANEMATSU Integrated Report 2021

up-to-the-minute information from other countries, arean essential part of the business of a trading company,
and we should instead focus on making even more useof these locations and their human resources and intel.
To do this, we will have to implement reforms at
Kanematsu in step with DX. Over the past three years, wehave made considerable progress in building internal IT
infrastructure, and we will now work to expand this toGroup companies. Furthermore, I think it will be important to evolve our existing business models through DX
and technological innovation so as to offer even greater
added value and competitiveness. I feel that this is anarea in which we fell somewhat short during the firstyear of the COVID-19 pandemic.

Kanematsu’s Progress and Strengths
Management Strategy

think not just at the level of individual divisions or theCompany alone but more broadly, encompassing allparts of businesses, and coordinate with Group companies to unite the entire Kanematsu Group in accelerating
new business creation.
In particular, DX is an opportunity for the
Kanematsu Group to make a major leap forward. Even
after the COVID-19 pandemic, changes in the ways people move and meet—touched off by remote work—are
sure to remain. Interpersonal relationships are the foundation of a trading company’s business. When it became
clear that we could do more remotely, we considered thepossibility of slimming down our overseas locations for
efficiency. However, further study of the issue led us to arenewed awareness that such locations, in providing

Overview of the First Three Years of future 135
Of particular note in the last three years were efforts
to identify growth opportunities. We formed aTechnologies and Business Collaboration team, creating
mechanisms for sharing information and networks not
only within segments, but across the Group. The team’s
members come mainly from the Corporate Planning
Department, with participation from the IT Planning
Department, the business segments, and, more recently,
Group companies Kanematsu Electronics Ltd. andKanematsu Communications Ltd. The impetus for thecreation of this team was the involvement of Group company Kanematsu Ventures Inc. in fostering new businesses. This company, based in Silicon Valley in the UnitedStates, is deepening ties with startups to create new
businesses. Although modest in scale, Kanematsu
Ventures’ projects go beyond the mere investment of
capital; in order to nurture new companies; the company
supplements the functions of startups by drawing on the
networks and know-how of Kanematsu as a trading
company. We are also advancing efforts to launch new
businesses in partnership with a venture capital fund in
Silicon Valley. Currently, we are expanding such projects
to multiple divisions, and we have established the conditions to promote coordination between divisions andGroup companies. We are creating opportunities tocome into contact with such cutting-edge technologies
and new businesses across the Group while nurturing theseeds of future growth, driven by robust relationships inand outside the Group, including those based on open
innovation.

Review of Operations
Financial Section and Company Information

KANEMATSU Integrated Report 2021

Sustainability

Under future 135, our medium-term vision for the six
years ending fiscal 2024, we are proactively promoting
the expansion of scale, acquisition of added value, andimprovement of quality, aiming for a future trajectory ofeven greater growth. We have done so in line with abasic policy of seeking to contribute to sustainable global
economic growth and the resolution of social issues by
evolving our existing businesses and creating new businesses. In the first year of future 135, our plans advancedsmoothly, with financial results exceeding forecasts.
However, from the second year onward, progress was
impacted by the COVID-19 pandemic. In fiscal 2021, thethird year, we recorded year-on-year decreases in revenue and profit, primarily due to the impact of the pandemic. However, in the latter half of the year, operating
profit returned to the pre-pandemic level, demonstrating
the underlying strength of our earnings base, particularlyin the Electronics & Devices and Foods, Meat & Grain
segments.
Looking at the important management issues ofhuman resource strategy and DX, I think that our efforts
so far have served to lay the groundwork for the future.
In terms of business investment and M&A, which are key
to building new businesses, we invested approximately¥23 billion over the vision’s first three years, but much ofthis consisted of investments made by individual businesses, divisions, or Group companies. Investing more
effectively in ways that maximize synergies across theGroup is a challenge we face in the remaining three yearsof future 135.

11

Key Issues for the Final Three Years of future 135
Helping Achieve the SDGs and Proactively
Advancing DX
In May 2021, following the conclusion of fiscal 2021, we
announced revisions for the second half of future 135.
Despite changes in the market environment since theplan was originally formulated, our basic policy remains
largely intact, with the addition of addressing the SDGs
and promoting DX to the vision’s priority initiatives. We
also revised the vision’s qualitative targets in light of thetemporary slowdown in business investment and revenue growth caused by the COVID-19 pandemic. The special feature on pages 18–21 covers these changes inmore detail.
Over the course of the remaining three years, I thinkthat we must focus on promoting Groupwide DX andunified Group management that generates synergies
across divisions in order to expand added value andbusiness creation. In particular, we will further advancedigitization to increase operational efficiency while
integrating digital technologies into existing businesses
to create new value generators and increase their contribution to revenue.
In addition, to help realize a sustainable society, we
will advance investment in business areas related to theenvironment, society, and safety where we can contribute to the achievement of the SDGs. To clarify the connections between our businesses and the SDGs and oursense of purpose regarding their achievement, we now
require investment proposals to include information
about which SDGs the project relates to and how.
Through such efforts, we are increasing awareness of theSDGs and TCFD recommendations across the Group.

The Future of Innovation Investment
Investment in innovation is at the core of the growthenvisioned under future 135. In this area, we are working
to create business in step with innovation in society byleveraging such cutting-edge technologies as AI and IoT
and advancing cross-division coordination. Over the past
three years, we have built a service framework for developing and operating a data exchange market, aiming tocommercialize data exchange and utilization. We alsoacquired a company that possesses technologies forusing vehicle operation data and AI to reduce carbon
emissions and, in the long term, will play a role in thedevelopment of the in-vehicle telematics market. Goingforward, we plan to make cross-segment use of ourbroad-ranging customer base to advance data exchange
and utilization businesses on a Groupwide basis.

12

KANEMATSU Integrated Report 2021

Furthermore, in April 2021, we entered new logistics
fields, including a business partnership in infrastructuredevelopment for flying vehicles* and the drone delivery
market.
* The Ministry of Economy, Trade and Industry and Ministry of Land,
Infrastructure, Transport and Tourism are leading public-private efforts todevelop and implement a roadmap for air mobility in Japan with the aimof beginning service in 2023.

Human Resource Development That Contributes
to Professional Fulfillment
Human resource strategy is one of the most importantelements of a trading company’s management. In 2019,as the core of our human resource development, welaunched Kanematsu University, a training system for
employees in their first ten years with Kanematsu. Opento all Group employees, Kanematsu University provides
opportunities to build character as a member of a trading company, study international cultural and language
skills, and acquire the operational and investment knowledge necessary for creating business plans. The program
thus enables participants to acquire a wide range ofknowledge, from the basics to practical application, andemployees have been ambitiously engaging with theprogram.
In addition, we have enhanced other training systems for employees at every level, including training inbusiness plan formulation and executive management
training. Developing human resources with the skills to
excel globally, however, is difficult to accomplish throughformal instruction alone. It is important to get our young
employees onto the front lines of business so that they
can gain hands-on experience. To this end, we haveestablished a six-month overseas training system for
employees in their first five years with the Company. We
have high expectations that these development programs will soon begin to yield tangible results. Going forward, we cannot afford to discount the new businesspotential of individuals’ ideas. I believe that we must proactively take in ambitious employees’ proposals andbreak down the barriers separating them from management. Our human resource strategy is not aimed simply
at providing learning opportunities. Rather, it is part ofefforts to change our employees’ mindsets and help
them realize professional fulfillment.

Increasing the Effectiveness of Corporate
GovernanceLooking at corporate governance, in the first three years

Directors with input from an external institution,
enabling efforts to further enhance the Board’s functions
and invigorate discussion. Going forward, we will expand
the breadth and depth of the Board’s agenda, including
considerations of medium- and long-term management
strategy, and enhance its functionality and diversity as
part of efforts to further enhance its effectiveness.

Kanematsu’s Progress and Strengthsof future 135, we made the Board of Directors more nimble and efficient and advanced the separation of management oversight and business execution. We
welcomed new outside directors with experience andknowledge useful to enhancing the Kanematsu Group’s
enterprise value and benefitted from their valuable
expertise in Board of Directors’ meetings. We have evaluated and analyzed the effectiveness of the Board of

To Our Stakeholders
risk asset ratio and revenue structure. For fiscal 2022, weplan to keep the annual dividend per share at ¥60 (for apayout ratio of 33.4%).
Kanematsu’s founding purpose aligns with theSDGs and the principle of creating shared value. In this“new normal” time of heightened uncertainty, I feel,
more than ever, that our founding purpose must be ourcompass. Going forward, we will continue to return tothis universally applicable way of thinking to sustainably
increase our enterprise value and contribute to society.

Management Strategy

While uncertainty caused by the COVID-19 pandemic
remains, economic activity is expected to normalize as
vaccination progresses. Based on this assumption, in fiscal 2022 we are planning for consolidated revenue of¥700.0 billion, up 7.8% year on year, operating profit of¥28.0 billion, up 18.5%, and profit for the year attributable to owners of the Parent of ¥15.0 billion, up 12.7%.
The Kanematsu Group considers providing returns
to shareholders to be one of its most important tasks. We
will continue to pay stable dividends backed by a stable

Sustainability
Review of Operations
Financial Section and Company Information

KANEMATSU Integrated Report 2021

13

Message from the CFO

decrease in profit for the year attributable to owners of the
Parent (consolidated net income) was a temporary effect ofthe pandemic, we kept the dividend per share steady,resulting in a payout ratio averaging around 35%, exceeding the future 135 target range of 25%–30%.

Our Aims for the Second Half of future 135

Shuji Masutani
Executive Officer, CFO

Review of the First Half of future 135
The original version of the future 135 medium-term vision
for the six years beginning fiscal 2019 included the quantitative target of ¥25 billion in consolidated net income infiscal 2024, the vision’s final year and the 135th anniversaryof Kanematsu’s founding.
This plan entailed major growth in operating profit from
¥26.2 billion at the vision’s start to approximately ¥45
billion. Broadly speaking, we planned to realize about halfof this growth in core businesses and half from new business investment.
We made a strong start in the first year of future 135,
achieving operating profit of ¥30.3 billion, up ¥4.2 billion
year on year, or approximately 50% of the growth targetedin core businesses. From the latter half of the second year
onward, however, the COVID-19 pandemic had a major
impact on all our core businesses as well as on the progressof new investment. There were multiple instances, primarily
related to major investments, in which industry valuations
became unclear, or valuations fell and the business owners
decided not to sell. As a result, in the first three years of
future 135, we made investments in earnings base expansion in fields where we have strengths and insight, in
acquiring added value in terms of trading company functions, and in innovation, mainly in advanced technologies,
but total cash used in investing activities was only around¥23.0 billion, of which business investment accounted forabout ¥15.0 billion, approximately a third of our target forthe six year period of the vision.
Looking at shareholder returns, however, because the14

KANEMATSU Integrated Report 2021

Since future 135 is a six-year medium-term vision, wealways planned to make revisions at the halfway point. As
explained above, the COVID-19 pandemic not only impacted performance in our core businesses, but caused delays
and cancellations of major investments. Accordingly, standing at the halfway point, we have carefully and realisticallyevaluated our plans for the second half of future 135.
In the fiscal year ending March 2022 (the current fiscal
year), we are seeing improvement compared with the latter
half of the previous fiscal year and expect business performance to generally recover to pre-COVID levels (those of
fiscal 2020).
Looking at consolidated net income, as in the first half ofthe vision, we are planning for organic growth in core businesses and growth from business investment to be approximately equal. However, given the results of the first half, weare limiting projections of business investment to potential
investments currently under consideration. Based on evaluations of these, we have revised our target for consolidated
net income for the final year of the vision downward from¥25 billion to ¥20 billion, while revising the target payout
ratio (total return ratio) upward to 30%–35%.
Looking at overall financial operations over the coming
three years, in terms of liquidity, based on the expected
recovery to normal performance levels in core businesses,
we expect an annual average of ¥15 billion to ¥20 billion in
cash flows provided by operating activities. This will fundshareholder returns and the investments that we currently
have under consideration. Furthermore, in fiscal 2021, thegross D/E ratio fell below 1, the level targeted in terms offinancial discipline, meaning that we have room for
Figure 1. Consolidated Net Income*/Payout Ratio(Billions of yen)

(Yen)

20

200

37.6%
16.6

16.3

34.8%

15

15.0
14.4

13.3

150

33.4%

30.3%

10

100

60

60

60

60

5

50

24.8%

48

0

0

FY2018FY2019FY2020Consolidated net income (left)
Payout ratio

FY2021

FY2022(Forecast)
Annual dividend (right)* Profit for the year attributable to owners of the Parent

has made the process of requesting and granting approvals
entirely paperless and improved efficiency. Similarly, forexpense reports, which number about 16,000 per year,
using 96,000 sheets of paper, we adopted SAP Concur’s
Concur Expense system, eliminating the use of paper forms
and saving labor. Furthermore, we moved the daily reporting of logistics deliveries, which had previously been doneon paper, to an entirely digital system while maintaining
the previous level of control. Through such efforts, we
expect to see improvement in efficiency and an overall
annual reduction of approximately 60,000–70,000 sheetsof paper in our operational flows.
Going forward, we will continue to advance measures to
respond to work style reforms.

Figure 3. Total Shareholder Returns

(%)

(%)

20

250

15.1

212.7
13.8

187.8
9.7

10

171.1
159.4

8.3
6.7

6.4

5

5.3

Financial Section and Company Information

200

11.2

162.3

150

4.9
125.6

3.5

132.9
0

100

FY2017
ROE

Review of Operations

Figure 2. ROE/ROIC/WACC

Sustainability

In fiscal 2021, due to the COVID-19 pandemic, we instituted
restrictions on on-site work, which threw into relief issues inoperational flows that had been developed based on theassumption of using paper documents. We have beenworking to implement changes to such processes to facilitate remote work.
Specifically, we developed and implemented an electronic decision-making system, HI-MAWARI, to handle
approval requests, which number more than 10,000 per
year and entail around 140,000 sheets of paper. This system

15

Management Strategy

Our Share Price
Kanematsu’s five-year total shareholder return at March 31,
2021, was 213%, exceeding the 162% of the TOPIX Total
Return Index (Figure 3). However, as of mid-June 2021, theprice-earnings ratio has been persistently low, around 8,
and the price-to-book ratio is below 1, at 0.8.
Recently, efforts toward decarbonization have been
gaining momentum worldwide. The Kanematsu Groupdivested all its natural resource assets years ago, and sincethen has not operated power generation, coal, or othersuch businesses with high environmental burdens. Groupemissions are thus low, and we aim to achieve carbon
neutrality in the near future. Leveraging the appeal of theGroup’s environmental friendliness, we will work to ensure
Kanematsu’s true enterprise value is clear to the market so
as to maintain a commensurate stock price.
Fiscal 2022 marks the start of the latter half of the medium-term vision. As vaccination progresses, a full-fledged
return to normal economic activity within 2021 is now apossibility. We are looking ahead to the trends of the postCOVID world as we boldly advance toward further growth,aiming for the goals of the second half of the medium-term
vision.

Work Style Reform-Related Measures

Kanematsu’s Progress and Strengths

additional capital procurement. Even if we decide to raise
additional funds for a major investment, we expect to beable to maintain a sound financial balance.
From the perspective of efficiency, in fiscal 2021, calculated based on consolidated net income of ¥13.3 billion,
return on invested capital (ROIC) came to 4.9%, and theweighted average cost of capital (WACC) increased slightly,
to around 3.5%, due to small increases in the risk-free rate
and our β. However, we generated an excess return (EVA
spread) of about 1.5%.
Due to the decrease in net income, ROIC has been worsening, from 6.4% in fiscal 2019 (with consolidated net
income of ¥16.6 billion) to 5.3% in fiscal 2020 (with consolidated net income of ¥14.4 billion). To address this, returning consolidated net income, the numerator in ROIC, to a
growth track is our topmost priority in terms of financial
efficiency.
We fully adopted ROIC as an internal indicator of capitalefficiency in fiscal 2020. We use ROIC for management
control and various deliberations, and have advanced
disclosure of the indicator at the segment level, working toenhance capital cost-conscious management across theconsolidated Group. Going forward, we will need to continue to replace inefficient operations and businesses in eachsegment while increasing ROIC and generating excess
return to raise ROE.

ROIC

FY2018WACC

FY2019FY2020

FY2021

126.2

114.7
FY2017
Kanematsu

114.2
FY2018FY2019FY2020

FY2021

TOPIX Total Return Index
KANEMATSU Integrated Report 2021

15

Progress Since Fiscal 2000
high-quality trading rights. By steadily building up consolidated net income, we bolstered shareholders’ equity andrepaid borrowings, shrinking interest-bearing debt. Thesemajor improvements and reinforcements to our financialbase have led to our achievement, in fiscal 2021, of ROE ofapproximately 10%, an equity ratio of approximately 25%,
and a net D/E ratio of 0.3, evidence of our stable earnings
structure and financial structure.

In 1999, a few years after the collapse of the Japanese
economic bubble, Kanematsu implemented large-scalebusiness selection and concentration. We made a decisiveturn away from our previous approach of developing businesses of all kinds and toward carefully selecting businesses
and concentrating management resources, working to
improve management and efficiency with the aim of
becoming a new, lean trading company specializing inConsolidated Net Income (Loss)
Structural
Reform Plan

New medium-termbusiness plan

NewKG200

team KG 120

S-Project(Billions of yen)

25
20

17.3

15

VISION-130

future 135

Medium-term business plan
Final natural resource assets sold

19.0

Deferred tax assets recorded

16.3

16.6

14.4

10

13.3

5
0
-5

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

-10
-15

Financial crisis
Reversal of deferred tax assets-20

Impairment accounting adopted-25

FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021

Shareholders’ Equity and Equity Ratio
Structural
Reform Plan

New medium-termbusiness plan

NewKG200

team KG 120

S-Project(Billions of yen)

Shareholders’ equity / Total equity attributable to owners of the Parent (left)

(%)

30

Equity ratio (right)
19.4

120

20.6

16.7
90

90.2

13.7

60

9.1

7.3

30
0

future 135

Medium-term business plan

180
150

VISION-130

11.5 1.3 14.4 1.9

4.6
15.72.6 10.8
23.3
2.0

38.0

4.7
26.0

5.9
33.0

45.6

6.0

7.3
28.9

33.1

22.3
116.0

22.8

23.7

125.2 130.8

25
143.9
20

100.4

15

71.7

9.8

8.5

91.6

20.9

25.8

10

54.5

39.0

5

24.9

0

FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021

Interest-Bearing Debt and the D/E ratio
Structural
Reform Plan

New medium-termbusiness plan

(Billions of yen)

629.5

400
300

30.1

200
100
0

S-Project

Gross interest-bearing debt

543.8 528.8
47.1
433.0412.1

500

team KG 120

VISION-130

future 135(%)

Medium-term business plan

700
600

NewKG200

Net interest-bearing debt

70

Net D/E ratio 60

40362.4 355.1
319.3 323.5 310.8 298.4
30
270.7
29.7 287.2 261.6
246.3
204.9223.7 213.6 193.1
20
173.6 160.8 146.9
23.0
148.9 134.6
141.9 139.7 136.9 133.8 137.3 139.5 143.4
12.3
122.2
109.4 104.6
9.5
1090.0 86.4 68.0 72.2
6.9
6.2
5.4
55.4 59.0 50.0 51.8
48.8
3.3
3.8
40.5
3.2
2.3
1.6
0.9
0.8
0.6
0.5
0.4
0.5
0.4
0.3 0

FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021

16

50

KANEMATSU Integrated Report 2021

Kanematsu’s Progress and Strengths

Analyst Comment

Management Strategy

A Company that Invests
Capital With Care

Masayuki Nagano
Senior Analyst,
Equity Research Department,

Daiwa Securities Co. Ltd.

Sustainability
Financial Section and Company Information

KANEMATSU Integrated Report 2021

Review of Operations

Kanematsu’s post-bubble financial restructuring went on longer than that undertaken by mostother companies. As a result, however, the Company has been transformed, boasting the best
financial position in the trading company industry. Under the six-year medium-term vision
launched in fiscal 2019, Kanematsu designated “Sustainable growth in fundamental businesses
and the expansion of the revenue base through business investments” as a priority initiative andmoved into a new stage of dramatic growth. Then, in May 2021, following the conclusion of thefirst half of the vision, Kanematsu announced revisions to future 135. The main changes to thequantitative targets for fiscal 2024 were the revision of the consolidated net income target from¥25 billion to ¥20 billion and the revision of the total payout ratio target from 25%–30% to
30%–35%.
In the following two respects, these changes can be seen as a product of Kanematsu’s policy of
promoting “management with an emphasis on capital efficiency.” The first is the focus on the efficiency of invested capital. In an environment of global financial easing like we find ourselves innow, investment assets tend to be expensive. More than a few trading companies have ignored
investment efficiency, acquiring overpriced assets only to then record sizable impairment losses.
Kanematsu, on the other hand, maintained careful control and invested approximately ¥23 billion
over the first three years of future 135. Although Kanematsu’s financial position would have beenable to support larger investments, the Company has stayed prudent and cool-headed, making
decisions from the perspective of efficiency, and invested capital with care, avoiding waste. The
revision to the profit target of the medium-term vision is largely due to this cool-headed control ininvestment, and I think it reflects an underlying soundness. The second respect is the emphasis on
capital efficiency in terms of shareholder’s equity. Although Kanematsu lowered the consolidated
net income target, by raising the total payout ratio target, regardless of the business environment,
the Company is, laudably, making efforts to increase capital efficiency for its shareholders, whoinvested based on the promise they saw in the Company.

17

Special Feature

future 135 Medium-Term Vision
April 2018 – March 2024 (Revised May 2021)
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 thee years of the vision,
Kanematsu revisited the vision to reaffirm its business direction, especially in light of the progress of business investments
and the impact of the COVID-19 pandemic. Although there have been 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. This section offers a review of the first three years of future 135 and Kanematsu’s policy for the remaining three years.

Basic Policy• 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.

Investment ininnovation(seeds)
Added
value
Functions

Essentials

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

Stable earnings
base

Expansionof scale*Profit for the year attributable to owners of the Parent• 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%.
Quantitative
Targets

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

Revised target(Final year: the fiscal year ending March 2024)

Target announced in May 2018¥20 billion¥25 billion

ROE

10% – 12%13% – 15%

Total return ratio

30% – 35%

25% – 30%

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

Priority
Initiatives

Customers • Markets • Share

Sustainable growth in fundamental businesses and expansion of the revenue basethrough business investments• Achieve sustainable growth while achieving a balance between capital and risk assets backed by a stablerevenue structure and financial structure• Promote business investment in areas of strength to achieve expansion of scale and acquisition of added value• Invest in business segments related to environmental, social, and safety issues to help achieve the SDGs

Response to technical innovation• 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• Build a framework for global strategy, including the reinforcement of the overseas earnings base• Invest in human resources, including the cultivation of management-level human resources• Improve operational efficiency and employee satisfaction (ES) through continued work style reforms

18

KANEMATSU Integrated Report 2021

Kanematsu Group, including the reorganization of theprinter and semiconductor businesses and expansion infood markets in Asia
The Group’s financial performance was sufficiently
robust to ensure management stability, with the equity
ratio and the net D/E ratio standing at 25.8% and 0.3
times, respectively, at the end of fiscal 2021. In terms ofshareholder returns, the Group kept the equity ratio andrisk-asset ratio steady, enabling the payment of continuousand stable dividends. As a result, the total return ratio overthe first three years exceeded the target range’s upperboundary of 30%. Furthermore, operating activities
provided annual positive cash flows in the ¥15 billion to¥20 billion range, helping ensure a sound financial balanceable to support billions of yen in new investments.

Management Strategy

During the first year of the future 135 medium-term vision,
markets in and outside Japan continued to gradually
expand, and the Kanematsu Group achieved solid year-onyear increases in revenue and profit. However, the effectsof the COVID-19 pandemic from late in the second year
onward resulted in a slower pace of growth than originallyenvisioned. Nevertheless, the negative impact of COVID-19
on the Group’s businesses has been limited, albeit worse insome businesses than others, confirming the underlying
strength of the Kanematsu Group’s earnings base.
Initiatives related to the expansion of scale to bolster
growth bore fruit across a wide range of fields, including
mobile, meat products, aircraft parts, machinery, andchemicals. In terms of the acquisition of added value, we
advanced business development in areas unique to theKanematsu’s Progress and Strengths

Review of the Vision’s First Three Years (FY2019 – 2021)

Results in the First Three Years of the Vision(Billions of yen)

Operating profit

Profit before tax

Consolidated net income (profit for the year attributable to owners of the Parent)

ROE

35
30

15.1%

25

13.8%
11.2%

20

9.7%

15

Sustainability

1050

Total return ratio

FY2018FY2019FY2020

FY2021

24.8%

30.3%

34.8%

37.6%

Medium-term vision future 135

Review of Operations

Approximately ¥23 Billion in New Investment in Fields Where We Have Strengths and InsightElectronics & Devices:
Approx. ¥6 billion(U.S.) Joined cyber security investment fund(U.S.) Invested in startup that develops equipment for
rescue helicopters(Europe) Purchased aircraft in the aircraft parts
business(Japan) Made takeover bid for Kaneyo Co., Ltd.
(Japan) Acquired company that develops andmanufactures dashboard cameras(Japan) 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 printercompany(Japan) Acquired semiconductor manufacturing (marking)equipment trading company(Japan) Acquired semiconductor manufacturing equipment(IC test handler) manufacturing business

Steel, Materials & Plant:
Approx. ¥9 billion(South Korea) Made equity investment in steel plate
processing company(Japan) Acquired specialized metal sash manufacturer(Japan) Acquired plant engineering company(Vietnam) Made equity investment in steel frame andbridge fabricator(U.S.) Established second steel tubing processing factory
Investments that contributed significantly to revenue in the first three years
Investments expected to contribute to revenue in the latter three years

New business
investment(FY2019 – 2021)

Financial Section and Company Information

Motor Vehicles & Aerospace:
Approx. ¥7 billion

Foods, Meat & Grain:
Approx. ¥1 billion(China) Established beef primary processing and sales
company(China) Established feedstuff material production plant(Indonesia) Increased investment in processed food productmanufacturer(Uruguay) Invested in Uruguayan beef producer(Japan) Invested in soy plant-based meat producer

KANEMATSU Integrated Report 2021

19

Policy for the Latter Half of the Vision (FY2022 – 2024)
Consolidated net income
Quantitative
Targets

20

15

20.0 billion

Up ¥5 billion in three years(Billions of yen)

15.0 billion
Growth in the Electronics & Devices Division Is Key to Reaching
the Consolidated Net Income Target

10• Supporting DX in the ICT solutions business5• Providing solutions related to the spread of 5G in the mobile business• Increasingly sophisticated semiconductor-related business

0

Fiscal 2022 forecast

Fiscal 2024 target

Fiscal 2022 forecast

Fiscal 2024 target

ROE

10.4%

10% – 12%

Total return ratio

33.4%

30% – 35%

Key Initiatives and Growth Fields in the Latter
Three Years of the Vision

Electronics & Devices• Reinforce integrated strength to support DX• Pursue added value in the semiconductor,
semiconductor component, and semiconductor
manufacturing equipment fields• Development and expansion of data exchange
markets

Steel, Materials & Plant• Expand biomass energy supply• Official Development Assistance business inrenewable energy (wind, solar)• Expand supply of steel tubing for enhanced oil
recovery using pressurized CO2

Non-Financial
Targets

20

Foods, Meat & Grain• Expand and grow meat product supply chains andsecure added value• Enhance productivity and competitiveness inagriculture through DX• Plant-based meat alternatives and synthetic
additive-free foods

Motor Vehicles & Aerospace• Shift from internal combustion engines tocomponents for electric vehicles• Safety and environment fields, including vehicle
control and fuel efficiency enhancement• Space industry (satellites and rockets) and newmarkets, such as drones• Post-COVID mid-sized aircraft market

Upon the launch of the future 135 medium-term vision in fiscal 2019, the Kanematsu Group established
key issues (issues of high materiality), taking into account international targets and standards—such as theSustainable Development Goals (SDGs)—as well as stakeholder expectations, Kanematsu’s Corporate
Principle, and importance to management. We have been working to achieve non-financial targets basedon these key issues. Furthermore, among the recent revisions to future 135 was the addition to the vision’s
priority initiatives of “Sustainable growth in fundamental businesses and expansion of the revenue basethrough business investments” and “Invest in business segments related to environmental, social, andsafety issues to help achieve the SDGs.” Building on our existing efforts to resolve social issues through business activities, we have designated key SDGs for new investments in each segment (see pp. 46-57).

KANEMATSU Integrated Report 2021

Kanematsu’s Progress and Strengths

The Kanematsu Group’s DX
In the first three years of future 135, the Kanematsu Group advanced the creation of infrastructure and resources
to promote internal DX. The revisions to the medium-term vision included the addition of “Response to technicalinnovation” and “Promote Groupwide DX” to the priority initiatives, and we plan accelerate measures in theseareas. The Kanematsu Group’s Electronics & Devices Division includes the ICT solutions business, which supports
the DX of its customers. In order to leverage that know-how within the Group itself, we have appointed the Chief
Officer of the Electronics & Devices Division as the Chief Officer of the Digital Transformation (DX) Acceleration
Team to lead the Group’s efforts in this area. As a trading company, Kanematsu has access to data from the broadranging businesses of its numerous Group companies. Leveraging this strength, we are working to quickly improve
operational efficiency via DX and thereby advance business model innovation and business creation.
In addition, we established the DX Project Office in July 2021 to accelerate these efforts in the latter half offuture 135. This committee is proactively planning and implementing measures to reinforce Groupwide digital
infrastructure, promote DX in existing business chains, and realize business innovation.

Management Strategy

DX Highlights

Kanematsu Fully Digitizes Meeting Operations
all of which are now, without exception, fully digital.
Going forward, we will analyze data from these digital
approval processes to gain a better understanding of thedifferent types of approval request in terms of volume, time
taken for processing, and workload generated for different
divisions, and we will apply the insights gained to optimize
internal rules on an ongoing basis. In addition, we plan touse natural language processing and other techniques toanalyze patterns in approval
request as part of efforts tofurther evolve the Company
and increase management
sophistication.

Sustainability

In April 2021, Kanematsu Corporation fully digitizedinternal approval procedures, from initial request submissions to their handling in high-level meetings, entirely eliminating the use of paper documents. Over approximately ayear, the IT Planning Department led efforts to develop asystem to allow all participants to engage in meetings using
just a tablet. This use of digital technologies by top management is an efficiency-improving operational innovation.
Until now, Kanematsu had handled approval requests
using paper forms and stamping. These documents, representing several thousand requests and comprising morethan 10,000 sheets of paper per year, were cumbersome tostore or revise. By updating our internal rules, we condensed
approximately 3,000 existing approval routes into just 600,

Kanematsu Sustech Develops e-soil Total Foundation Support System
Sustech will work to realize new customer value and business model innovation by, for example, developing
next-generation disaster prevention and mitigation
systems that leverage big data and developing foundation
design services that use AI. Through such initiatives, thecompany will strive to realize new growth and reinforce its
competitiveness.

Review of Operations

Kanematsu Sustech Corporation is proactively advancing
DX in its businesses. The company’s Geo-tech Division has
developed e-soil, a total foundation support system thatenables high-precision soil evaluations for housing
construction based on soil data for approximately 100,000
house sites in Japan and related analysis results that
Kanematsu Sustech has digitized and linked with map
data. Furthermore, to improve the efficiency of on-site
work, survey data and photos can be input on the spotusing a tablet. In recent years, the system has beenenhanced with functions that integrate the managementof customer information and property trends, enabling the
tailoring of construction proposals to customer needs andserving as a new sales tool. Going forward, Kanematsu

Check photos on the spot andinput them into the system!

Kanematsu Electronics Ltd. Designated a DX Certified Operator by the Ministry of Economy, Trade and Industry
Financial Section and Company Information

On May 1, 2021, Kanematsu Electronics Ltd. (KEL) was
designated a DX certified operator under the Ministry of
Economy, Trade and Industry’s DX operator certification
system.
KEL made DX a priority initiative under its medium-termbusiness plan for the three years beginning fiscal 2020.
Through capital expenditure, investment in humanresources, and strategic alliances with partners, thecompany has developed a DX strategy and systems.
Going forward, digital technologies will continue togrow in importance as infrastructure for companies andsociety at large. However, many companies find it difficult
to determine how to best utilize such technologies andapply them in their business operations.
As a DX certified operator, KEL will be a strategic IT
partner for such companies, creating new services
supporting their DX that enable them to use digital technologies to achieve their true business goals and overcome obstacles.

KANEMATSU Integrated Report 2021

21

Sustainability

Our Approach to Sustainability
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 of contributing tointernational society and economic development.
The challenges facing international society today, such as climate change and other increasingly serious socialand environmental problems, are growing more diverse and complex. We believe that carrying out corporate
activities proactively, with an awareness of these challenges and a sense of mission, serves to both help address
such challenges and promote the growth of the Kanematsu Group.
With an eye toward cooperation and mutual development with our customers and business partners, we willcontinue to leverage the insight and know-how built up over Kanematsu’s long history to provide goods andservices 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.

The Key Issues and Our Activities
Business activities

Social contribution activities, etc.

Building a Sustainable
Supply Chain
Business supplying high-valueadded health foods forhealthier living
Initiatives to introduce ICT(smart farming) to livestock
farming
Security business to guard
against cyber attacks
Cloud-based farmmanagement systems forchicken farming

Decarbonization
Initiatives

Aiming to achieve net zero
greenhouse gas emissions, we will
promote our clean fuel and renewableenergy business to contribute to themitigation of global warming.

Sustainable coffee
plantation-related initiatives
Offering services closely
tailored to local needs atmobile phone shops

22

Kanematsu Foundation for
the Research of Foreign Trade

p. 29

Volunteeringp. 29

Supporting amputee footballp. 29

e-Net Caravan

p. 27

Enhancing the corporate
governance systemp. 35

Enhancing internal control
and risk management
systems

p. 38

KANEMATSU Integrated Report 2021

Creating an Environment That
Enables Diverse Work Styles

Enhancement of Governanceand ComplianceAt the start of the future 135 medium-term vision in 2018, we sought to determine
which issues the Kanematsu Group should focus on in its corporate activities,
taking into account international targets and standards—such as the Sustainable
Development Goals (SDGs)—as well as stakeholder expectations, Kanematsu’s
Corporate Principle, and importance to management. Through these efforts, weestablished five key issues (issues of high materiality). In response to thesubsequent global increase in awareness of the importance of sustainability and
ESG management, we changed the composition of our Sustainability Management
Committee to include mainly the top management of our business divisions anddiscussed our current projects and future direction. Based on these efforts, in 2021,
we newly identified key five issues of high materiality.

Kanematsu’s Progress and Strengths

Determining and Revising Materiality
Key Issues• Building a Sustainable Supply Chain• Decarbonization Initiatives• Mutual Development with Local
Communities• Creating an Environment That Enables
Diverse Work Styles• Enhancement of Governance andComplianceManagement Strategy

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

Demonstration project toincrease effective EV range
Aircraft rotable parts businessand part-out business

p. 27

Forest conservation initiatives inIndonesia (REDD+)

p. 26

Renewable energy power plant
construction business

Sustainability

Solar panel and converter supply
business

p. 27

Business supplying high-efficiency
industrial machinery employing
low-carbon technologies

Mutual Developmentwith Local Communities

Business supplying heat reflective paint to combat global
warming
Business selling biomass fuels tocombat global warming
Lumber preservation treatment
technology helping reduce global
warming
Environmentally friendly ground
improvement using wooden piles

Review of Operations

Through our global operations, we will
support the lives of people around the globe,
work on improving social infrastructure, andcontribute to the sustainable growth anddevelopment of local communities.

p. 26

Business promoting the implementation of switches to LP gas fuelWe will maintain a robust supervisory system to prevent accidents and fraud
and aim for sustainable growth through the transparent disclosure of
information to stakeholders.

Business selling Miracle Meat
plant-based meat made fromsprouted soybeans
Securing Traceability in Marine
Products

Financial Section and Company Information

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

Acquisition of Carbon Credits
with Saudi Arabia via the Joint
Crediting Mechanism
Establishment of a company tomanage the TradeWaltz trade
data sharing platform

p. 28

Promoting work style reforms

p. 33

Human resource development
initiatives

p. 30

Activities to support the independence of persons with disabilities

KANEMATSU Integrated Report 2021

23

The Process of Identifying Key Issues
Step 1Create a list of issues

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

Step 2
Evaluate the importance of each issue to the company and to society
Considering Kanematsu’s Corporate Principle, individual divisions’ strengths, and theneeds and expectations of society, we plotted the issues identified in step 1 on amateriality matrix, with importance to external stakeholders on the vertical axis andimportance to the Kanematsu Group on the horizontal axis.
* The materiality matrix is disclosed on Kanematsu’s website.

Step 3
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.
Periodic review in light ofchanges in the external
environment

Step 4
Identify key issues
In May 2021, the key issues were approved by the Sustainability
Management Committee and finalized by resolution of the Board of
Directors.

Sustainability Promotion Framework
Kanematsu’s framework for promoting sustainabilityoriented management is as follows. The Sustainability
Management Section plans and formulates proposals
of sustainability-related basic policy, strategy, surveys,
and operations. The Sustainability Management
Committee discusses and makes decisions regarding
such plans and proposals.
The Sustainability Management Committee
comprises mainly officers from business divisions andthe chief officer of corporate planning and meets
approximately once a month. The Sustainability
Management Section and Public & Investor Relations
Section serve as the committee’s secretariat. The
committee works to understand the issues faced bysociety and its expectations regarding the role ofKanematsu. It then contrasts this with the perspectivesof Kanematsu’s business divisions, reflecting the resultsin policy for business activities to better promotesustainability-oriented management.

Board of Directors
Sustainability Management Committee
Chair

Executive officer (chief officer of corporate planning)

Members

Executive officers(business division chief officers or deputy chief officers)
Electronics & Devices Division
Foods Division
Meat Products Division
Grain, Oilseeds & Feedstuff Division
Steel, Materials & Plant Division
Motor Vehicles & Aerospace Division

Expert members Managers of business division planning offices

Electronics Planning Office
Foods & Grain Planning Office
Steel, Materials & Plant Planning Office
Motor Vehicles & Aerospace Planning Office
General Manager, Finance Department(Public & Investor Relations)

Secretariat(Sustainability Management Section, Public & Investor Relations Section)(As of June 23, 2021)

For more details, please visit our website.

https://www.kanematsu.co.jp/en/sustainability/materiality/
24

KANEMATSU Integrated Report 2021

Kanematsu’s Progress and Strengths

Message from the Sustainability Management Committee ChairManagement Strategy

Tetsuro Tsutano
Director, Senior Executive Officer

Review of Operations
Financial Section and Company Information

KANEMATSU Integrated Report 2021

Sustainability“Can you battle 24/7?” When I joined Kanematsu in the early 1990s, this catchphrase wason TV in commercials all the time. Back then, that was the kind of businessperson we
aspired to be—working every waking moment and flying around the world, making ourmark. Oil resource development was a flourishing business and, even as it damaged theenvironment and we damaged ourselves through grinding schedules, we never doubted
that it would last.
A quarter century later, the world looks very different. Work style reforms and the useof remote work have become commonplace, and momentum aimed at achieving sustainability, as extolled in the SDGs, is growing globally. In particular, efforts to decarbonize society to avoid climate change are accelerating—both in Japan, with Prime Minister Suga’scommitment to achieving carbon neutrality in 2050 in Japan, and globally, with the Biden
administration of the United States returning to the Paris Agreement.
About 20 years ago, the Kanematsu Group sold all its natural resource assets as part oflarge-scale financial restructuring. In part because we have not been involved in thermal
power generation, coal, or other such businesses with a high environmental impact, CO2
emissions from the Group’s business activities are very low. At the same time, we are promoting REDD+ businesses that help prevent deforestation and reduce net greenhouse gas
emissions, and we plan to achieve carbon neutrality in the near future. We have added environmental measures to the priority initiatives of the medium-term vision for its remaining
three years and declared our support for the Task Force on Climate-Related Financial
Disclosures (TCFD).
Our founder, Fusajiro Kanematsu, wrote that profit is just a by-product of business.
Japanese businessmen in the 19th century prided themselves on putting the public good
above their own profit, a stance that ties into the idea of corporate social responsibility, andan important consideration for us today. As recognition of the importance of sustainability
and ESG management grows worldwide, we will invest in business areas related to the environment, society, and safety, aiming for the sustainable growth of society and theKanematsu Group.

25

Addressing the Five Key Issues
Ground Stabilizing Eco Wood Pile Receives the Eco Mark Award 2020 Excellence Prize
Kanematsu Sustech Corporation’s ground stabilizing Eco
Wood Pile, made with lumber harvested during forest thinning, received the Eco Mark Award 2020 Excellence Prize.
Used for ground stabilization, Eco Wood Piles are made fromwood that has undergone high-quality treatment to preventrot and insect damage, enhancing its durability. Lumber fromforest thinning in Japan comprises a portion of the raw material used. The Eco Mark Award recognizes companies andorganizations that proactively implement initiatives aimed atrealizing a sustainable society by providing environmentallyfriendly product choices to consumers or through direct environmental efforts. Kanematsu Sustech’s Eco Wood Pile
received the award in recognition of the use of wood fromforest thinning and the technological development thatmade this possible.

Ground improvement using Eco Wood Pile is used tostabilize foundations when building houses. When installed,
the product is hidden in the ground, but each piece is printed
with the Eco Mark. This product has been used to stabilize thefoundations of more than 30,000 structures across Japan todate. Eco Wood Pile contributes to reducing net CO2 emissions because, compared with the steel or cement conventionally used in ground stabilization, much less CO2 is emitted
during its manufacture, and the wood absorbs CO2 during its
growth process. Through Eco Wood Pile,
which is environmentally friendly andcontributes to sound forest management, Kanematsu Sustech will continue
to contribute to the realization of asustainable society.

Forest Conservation Initiatives Receive the Minister of the Environment Awards for Climate Action
Since 2011, Kanematsu has been implementing a forest
conservation project in Gorontalo Province, Indonesia, as a
REDD+* international initiative to promote sustainable forest
management in developing countries. This project received
the Minister of the Environment Awards for Climate Action(Dissemination/Promotion Division, Mitigation/Adaptation Field).
In partnership with the Gobel Group in Indonesia, thisproject supports the promotion of cacao farming in Gorontalo
Province, helping to increase earnings for poor farmers andreduce slash-and-burn corn farming, a major cause of deforestation. As a Japanese company, Kanematsu’s involvement

26

KANEMATSU Integrated Report 2021

in this project, helping conserve the rich tropical rainforests ofIndonesia, contributes to Japan’s reduction in greenhouse gas(GHG) emissions under the Paris Agreement. Implemented incooperation with the local government, the project helps to
not only reduce deforestation andconserve forests, but improve
farmers’ livelihoods and reduce
GHG emissions, benefitting all
parties involved.
*Reducing Emissions from Deforestation andForest Degradation in developing countries

Kanematsu’s Progress and Strengths

Solar Power Generation System in Vietnam
Japan has built and is implementing a joint crediting mechanism (JCM) to promote the use of energy-saving and renewable energy technologies in developing countries as a way offurthering the absorption and reduction of emissions ofgreenhouse gases.
Using this system, Kanematsu KGK Corp. partnered with
the Vietnamese Sao Mai Group Corporation to install one ofVietnam’s largest solar power generation systems in An Giang
Province, in the south of the country. The sale of power fromthe system began in December 2020, and the project is
expected to reduce emissions by 52,778 t-CO2 per year. The
project thus contributes to the achievement of Vietnam’s
target of supplying 23% of domestic power using renewableenergy by 2030 and to the reduction of GHG emissions.

Management Strategy

Providing Instructors for e-Net Caravane-Net Caravan is an initiative targeting elementary throughhigh school students as well as their parents and teachers toraise awareness and provide guidance regarding safe internet
use. Kanematsu Communications Ltd. sends employees who
have been certified as instructors to carry out e-Net Caravan
activities.
This initiative is being carried out by a partnership
between the Ministry of Internal Affairs and Communications,
the Ministry of Education, Culture, Sports, Science andTechnology, and communications operators, and is aimed at
protecting children from internet-related hazards, particularly
in light of the rapid proliferation of smartphones in recent
years. In fiscal 2020, the program reached 18,908 participants
at 122 schools. In addition to a conventional in-person group
lesson format, lessons were made available via remote conferencing and video on demand.
Through these activities, the Kanematsu Group will continue
to promote safe and secure internet use and internet literacy.

Sustainability
Review of Operations

Aircraft Rotable Parts and Part-Out Businesses

Financial Section and Company Information

Ireland-based Group company KG Aircraft Rotables Co., Ltd.
purchases and disassembles used aircraft that areapproaching decommission, managing an inventory of andselling the resulting components. Aircraft maintenance generally requires the constant replacement of parts; reusing
components not only reduces costs, but reduces environmental impact.
Although the COVID-19 pandemic has caused a severe
decline in commercial air travel demand worldwide, with theadvance of vaccination, recovery is expected going forward.
Since establishing a component shipping hub in Kuala
Lumpur, Malaysia, KG Aircraft Rotables has opened a newshipping hub in partnership with a U.S.-based supplier.
Through the commercial aircraft component business, wewill help ensure the effective use of resources and air safety.
KANEMATSU Integrated Report 2021

27

Kanematsu Begins Handling Anti-Bacteria, Anti-Virus Film
Kanematsu has begun sales of the anti-bacteria, anti-virus
film RIKEGUARD to railway and real estate companies.
RIKEGAURD is a film developed by RIKEN TECHNOSCORPORATION for use in the prevention of infection bypathogens, such as bacteria and viruses, and has received the
SIAA mark.* The product both suppresses bacterial growth on
the film surface to less than 1% of normal levels and reduces
the number of specific viruses on the film surface by 99.99%.
Taking advantage of these features, it is used on, for example,
ticketing and fare adjustment machines in train stations anddoorknobs and elevator buttons in office buildings.
Going forward, we will promote its use globally for the
touch panels of tablets and smartphones, now an essential
part of daily life, striving to help provide healthy and safe
living environments.
*SIAA marks: Symbols established by
the Society of Industrial Technology
for Antimicrobial Articles (SIAA) for
marking products that meet standards
related to antimicrobial properties,
safety, and appropriate labeling.

Company Established to Manage TradeWaltz Trade Data Sharing Platform
Kanematsu, along with six other companies, including NTT
DATA Corporation and Mitsubishi Corporation, established
TradeWaltz Inc. to manage the TradeWaltz trade data sharing
platform.
Trade operations are essential to the movement of all kindsof products and involve paper document processing operations
in corporate offices and by governmental authorities.
Inefficiencies caused by the lagging digitization of suchprocesses have been an issue for many years. In addition, the
COVID-19 pandemic has revealed risks of interruptions inimporting and exporting. TradeWaltz is an open, global trade
ecosystem that uses blockchain (distributed ledger) technology
to enable the direct, uninterrupted sharing of information
between parties involved in trade.
In addition to increasing the resilience of supply chains inJapan, the new company is advancing coordination in other
Asian countries facing the same issues, working to provide newvalue that goes beyond
the digitization of trade
documentation.

Environmental Initiatives
Kanematsu has established a basic management policy for the environment and strives to implement sustainable corporate
activities with sufficient consideration for the maintenance of a healthy global environment. A healthy global environmentis absolutely fundamental and the foundation on which sustainable economic activity can be realized. Based on thisunderstanding, we have added environmental initiatives aimed at achieving the SDGs to our priority initiatives for the latter
half of the medium-term vision and revised our key issues, identifying the new issue of Decarbonization Initiatives.
As the framework for environmental initiatives, we have built and are operating an environmental management
system based on the international standard ISO 14001. In addition to the Tokyo Head Office, we have applied thisenvironmental management system at the Osaka Branch, Nagoya Branch, and other domestic branches, and 11 Group
companies have also obtained ISO 14001 certification. We are working to reduce electricity and paper consumption, reduceand effectively sort waste, reduce CO2 emissions, and build a recycling-oriented society.
The Kanematsu Group is advancing initiatives aimed at creating a virtuous cycle between the environment and theeconomy and taking new steps toward the realization of a sustainable society.
In keeping with Kanematsu’s Code of Conduct, the Company has established the following Environmental Policy.
Basic management policy for the

We conduct corporate activities with sufficient consideration given to maintaining a healthy global environment
and aim for sustainable development.

02 laws and regulations

Compliance with environment-related

In the activities of the Company, we comply with environment-related laws and regulations in Japan and abroad aswell as international rules and practices.

03 Constant improvement of systems

In order to make environmental activities more effective, we constantly improve our environment management
systems.

01 environment

Attention to the development of a low-

04 carbon society/recycling-oriented society
Attention to the environment in business05 activities

Establishment of the environmental

06 management system of the Group

Aiming to reduce greenhouse gas emissions, we promote energy conservation and make climate change mitigation
and adaptation efforts. We strive to realize sustainable patterns of resource use and to address natural resource
depletion by proactively engaging in energy conservation, reduction of waste and reuse and recycling of resources.
We strive for environmental conservation and the prevention of environmental pollution and consider biodiversity
and the conservation of natural ecosystems in our business activities.
We utilize the ISO 14001 environmental management system to establish an environmental management system
for the Company and the Group, responding appropriately to environmental issues and working constantly on
improvements.

Publicity and disclosure of environmental We ensure that our executives, employees, and companies in the Group are well aware of our environmental

07 policies

policies, and we also disclose them to the general public through our website and the like.

For more details, please refer to Kanematsu’s Environmental Report (online) and “Addressing the Five Key Issues” (this report, pp. 26–28).

https://www.kanematsu.co.jp/en/sustainability/environment/report.html
28

KANEMATSU Integrated Report 2021

Kanematsu’s Progress and Strengths

Social Contribution Initiatives
Every Kanematsu employee, as a good citizen, is aware of the importance of social responsibility and proactively
works to solve social issues through business activities and social contribution activities, aiming for the realizationof a sustainable society. Furthermore, through volunteer activities, employees broaden their horizons, come tounderstand new values, and gain insight, enabling them to further contribute to the enrichment of society.

The Kanematsu Foundation for the Research of Foreign Tradefor the prize. The Kanematsu Prize thus provides graduate
students in the fields of economics, management, andaccounting across Japan with opportunities to win a research
fellowship and to present their research.
Beginning with the 2018 prize, the economics division andmanagement division are judged separately. Kanematsu willcontinue to support research in the fields of economics,
management, and accounting through the Kanematsu Prize.

Management Strategy

The Kanematsu Foundation for the Research of Foreign Tradewas established in 1940 with the purpose of contributing toeconomic development through support and funding for
research into trade and international economics. The Foundation
is jointly operated by the Research Institute for Economics andBusiness Administration of Kobe University and Kanematsu.
In 1993, the Kanematsu postgraduate research scholarship,
known as the Kanematsu Prize, was jointly established by the
Research Institute for Economics and Business Administration of
Kobe University, the Kanematsu Foundation for the Research of
Foreign Trade, and Kanematsu Corporation. Every year, graduate students are invited to submit their dissertations to apply

https://www.trf.kanematsu.co.jp/ (in Japanese)

Support for the Lucy Osburn-Nightingale Foundation in Australia
Japan. Kanematsu will continue to support the foundation in its
work preserving these valuable materials, which have contributed
greatly to the development of medicine in Australia, for future
generations.
Sustainability

Kanematsu Australia provides support to the Lucy OsburnNightingale Foundation. The foundation originated from theKanematsu Memorial Institute of Pathology endowed to Sydney
Hospital in 1933 to mark the 40th anniversary of Kanematsu
Australia’s founding. The museum run by the foundation houses
medical charts, documents, photos, and memorabilia from theinstitute and stores and manages more than 2,000 morbid
anatomy specimens collected when the institute was active. This
sample collection, one of the largest in Australia, frequently lends
items to research intuitions and accepts educational tours of
nursing students from within Australia and overseas, including

Supporting Amputee Football
COVID-19 pandemic greatly limited practices and games infiscal 2021, Eastern Japan Amputee Football League matches
and friendly matches were held with due virus countermeasures in place, such as forgoing opening ceremonies and exhibition matches. Through support for these efforts, Kanematsu
aims to spread awareness of amputee football, broadly
communicating the appeal and excitement of the sport.

Review of Operations

Kanematsu supports the parasport of amputee football incooperation with the Japan Amputee Football Association(JAFA), which aims to help realize a broadly inclusive society,regardless of disability, through sport.
Kanematsu provides a meeting room at its Tokyo Head
Office for JAFA to use as an office as well as the Kanematsu
Tsuga Ground for matches and other activities. Although theVolunteer Activities

Volunteering in Areas Affected by the Great East Japan Earthquake
Since 2011, the Kanematsu Group has carried out volunteer
efforts to support recovery in Rikuzentakata, Iwate, an area
affected by the Great East Japan Earthquake. In 2020, due tothe COVID-19 pandemic, on-site volunteer activities werecancelled, but, to date, a total of 337 Kanematsu Group
employees have taken part in 20 volunteer trips. As the areas
affected have transitioned from processing disaster debris into

recovery, there has been less need for volunteer labor.
Accordingly, since 2018, Kanematsu has been a corporate
sponsor of the Road to Recovery Rikuzentakata Support
Appreciation Marathon. This marathon brings runners andvolunteers from around the country together with local citizens
in a shared hope for recovery.
In addition, in fiscal 2019, Rikuzentakata was designated an
SDGs Future City by the national government, and the city is
actively working toward theachievement of the SDGs underthe banner of “Rikuzentakata: an
Intentionally Inclusive Community.”
Kanematsu supports Rikuzentakata
in its new community-building
efforts.
KANEMATSU Integrated Report 2021

Financial Section and Company Information

To encourage employees to volunteer, Kanematsu has created a
volunteer leave system. In addition, the Company has set up a
support system to cover transportation and lodging costs not
only for Company-organized volunteer efforts, but also employees’ self-directed participation in volunteer activities related tonature, the environment, disaster recovery, local contribution,and social welfare.

29

Human Resource Development Initiatives
Human resources are a vital asset for Kanematsu, and retaining and training human resources is important for theCompany’s growth. Kanematsu maintains systems to promote work-life balance, including childcare support and familycare support systems, seeking to create workplaces that are comfortable and rewarding for employees. Furthermore,
we focus considerable effort on human resource development, an indispensable part of Kanematsu’s growth.

Message from the Chief Officer of Human Resources & General Affairs

Kazuo Tanaka
Senior Executive Officer,
Chief Officer,
Human Resources & General Affairs

Human resources are the Kanematsu Group’s most valuable assets. Our Corporate Principle,
established based on the entrepreneurial spirit of our founder, Fusajiro Kanematsu, includes thepassage, “Our purpose as a Company is not only to build a sound and flourishing business, but tofulfill our responsibilities as a corporate citizen, contributing to society and the security andwell-being of all.” Since the Group’s founding more than 130 years ago, Kanematsu has strived todevelop its people and create employee-friendly workplaces, growing and developing alongside
a talented workforce.
One of the priority initiatives of the future 135 medium-term vision is the establishment ofmanagement infrastructure for achieving sustainable growth, under which we aim to build aframework for global strategy, cultivate management-level human resources, and improve operational efficiency and employee satisfaction.
To cultivate management-level human resources, we expanded the scope of Kanematsu
University, our structured training system, to include all employees. We are striving to cultivate
highly capable human resources with the excellence of character and leadership needed to create and manage new businesses.
We are steadily advancing efforts to create environments that enable diverse employees toexercise their abilities. In recognition of these efforts, Kanematsu received “Platinum Kurumin”
certification in December 2020 and was selected as a 2021 Certified Health & Productivity
Management Outstanding Organization in March 2021. In our diversity and inclusion efforts,
launched in 2019, we have assembled a project team consisting of members from across various
divisions that are working to roll out activities on a Companywide basis. By promoting the recognition and acceptance of diverse values and ways of thinking, we will make it easier for all
employees to work and utilize their abilities. Going forward, we will continue to advance work
style reforms from a variety of angles in order to increase employee engagement and create
environments that enable diverse work styles, an issue included in one of our five key issues.
No matter how times change, Kanematsu will work to develop business professionals withstrong basic qualities of character, such as fairness and integrity, as well as rich individuality, sothat every employee can act with pride to build strong relationships with business partners,
thereby supporting the development of the Kanematsu Group.

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KANEMATSU Integrated Report 2021

Kanematsu’s Progress and Strengths

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

V oiceKanematsu University Student’s Perspective
through the GLOBIS program, I was able to takeclasses in my own areas of interest. I am currently
working in the Motor Vehicles & Aerospace
Division on new business creation and investmentin the area of next-generation mobility. As such, I
selected the courses that met my needs for learning about technology, innovation and investingfrom the wide variety available. The knowledge
and skills I have gained have helped me form new
business ideas, and I hope to utilize what I’ve
learned to the fullest to promote new businesses.

Management Strategy

Kanematsu University has curriculum for employees of varying experience levels, so that users cantake classes at the right level for them in suchareas as ways of thinking, strategy, and marketing.
The e-learning format made it easy to fit classes
into my own schedule, even with the time difference from Japan while I was stationed abroad. The
system also includes group training sessions taught
directly by professional instructors. I learned atremendous amount through this training.
In addition to the mandatory curriculum,

Shunya Sato
Motor Vehicles andAerospace Planning Office,Advanced Mobility Business
Development Section

Executive Management Training

V oiceSustainability

Kanematsu created a new executive management training system in fiscal 2017 to foster the skills to operate businesses and organizations from an executive management perspective. Specifically, the targets of this training are to (1) foster strategy formulation and humanresource management abilities and (2) acquire the basic knowledge necessary to an executive manager. In the first year, we implemented
this training for general manager-level employees. Since fiscal 2018, we have been gradually expanding this training to the division
manager level and below, planning to eventually include employees who are in approximately their 10th year with the Company.

Executive Management Trainee’s Perspective
the lecturers the decisions an executive manager
would make in example situations from othercompanies, taking into account the various factorsthat go into such decisions.
All the participants had different professional
backgrounds, providing an opportunity to absorb
their expertise and varied perspectives and expand
my own thinking. Going forward, I will continue todevelop my management knowledge and experience with the other participants to contribute to theKanematsu Group’s management and the acceleration of business creation.

Yoko Terauchi

Review of Operations

This training, consisting of lectures by outside instructors delivered over the course of six months, wasaimed at imparting the basic knowledge and skills
necessary to an executive manager, namely, strategy
formulation and human resource management abilities. At the same time, we studied finance, accounting, data applications, and leadership throughe-learning. In the strategy formulation and humanresource management training, based on patterns in
the approaches of leaders and 360-degree evaluation results, which included advice from others in the
program, we discussed among ourselves and withManager, IT Planning
Department, Section 2

Training in Business Plan Formulation
Kanematsu aims to improve corporate value by further developing areas of strength, making new investments for business creation,and taking on other new challenges. To this end, we have created training courses covering business plan formulation to impart theskills necessary for drafting road maps to the creation and successful launch of new businesses.

Financial Section and Company Information

V oiceBusiness Plan Formulation Trainee’s Perspective

The first half of the training consisted of working
on problems we had received in advance using
instructional texts, followed by a systematic study ofthe basic skills necessary for business plan formation through lectures and lessons from instructors.
By exploring questions with the instructors, I
gained insight and understanding that I could nothave fully grasped just by reading on my own.
In the second half, we split into groups to identify a new business opportunity within a given areaand develop a business plan. Using the analyticalmethods we learned in the first half, we advanced
discussions as a team, getting advice from the
instructors as needed, and got to experience firsthand the process of applying theory in actual
business.
Rather than just studying theory, this training
provided opportunities to practice it, and I definitely feel that I gained new skills. Business creation
is a key focus for Kanematsu, so I hope to focus
even more effort on business creation and, in thewords of one of our instructors, leave my mark.

Yasushi Hashioka
Corporate Planning
Department, Corporate
Planning Section

KANEMATSU Integrated Report 2021

31

Diversity and Inclusion
Kanematsu has formed a Diversity and Inclusion (D&I) Team that is promoting the recognition and acceptance of diverse values andways of thinking in order to create environments that will make it easier for all employees to work and utilize their abilities. To encourage
employees to take ownership of D&I issues, we have promoted the use of childcare leave by men and implemented e-learning, diversity
talks, and activities through the Companywide project team.

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

Promoting Greater Professional Participation and Advancement for Women and Non-Japanese Nationals
General Employer Action Plan
(Women’s Participation and Advancement)
Duration

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 2018)
2. Increase the percentage of women among new graduate hires to
42% (from 34% in fiscal 2018).

Initiatives

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

Female Employee Numbers
FY2016FY2017FY2018FY2019FY2020Female career-track
employees* at fiscal
year-end

56

54

52

54

64

Responsibility bandat fiscal year-end

22

22

27

28

31

Women among new
graduate hires

31.0%

34.4%

34.0%

39.0%

51.0%

*E
 mployees 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.

General Employer Action Plan
(Raising the Next Generation)
In December 2020, Kanematsu was granted“Platinum Kurumin” certification by the Ministryof Health, Labour and Welfare’s Tokyo Labour
Bureau. This special certification is granted to “Kurumin” certified companies that are implementing especially high-level
initiatives to support their employees in balancing work andchildcare. “Kurumin” certification is granted to companies
that formulate action plans based on the Act on
Advancement of Measures to Support Raising the Next

V oiceSystems to Support the Women’s Professional
Participation and Advancement•	System to allow non-career-track employees to take division manager or assistant manager positions•	System for rehiring employees who left the Company toaccompany a spouse who was transferred to another location• Initiatives to help improve work-life balance.
1.	Reduced duties during pregnancy
2.	Shortened working hours for childcare (until the end of
the child’s third year of elementary school)
3.	Individual staggered work hours until the child finishes
elementary school
4. Full flexi-time system
5. System for hourly use of paid vacation for childcare•	Diversity hiring
In order to recruit students with diverse backgrounds fromaround the world, we are implementing diversity hiring
through activities to select employee candidates fromstudents with global experience.
Diversity Hiring Rate (Among New Graduates Hired as
Career-Track Employees)
FY2016FY2017FY2018FY2019FY2020

FY2021

Graduates with nonJapanese citizenship

2%

0%

3%

0%

3%

26%

Graduates ofoverseas universities

0%

0%

0%

3%

6%

16%

Perspective of a Female Employee Working Overseas

I joined Kanematsu Australia in 2010. As a FinanceManager, I oversee all facets of Finance andAccounting. In addition, I work closely with
Kanematsu New Zealand and provide support for
taxation, financial, and external reporting.
Kanematsu Australia, originally established as
the Sydney Branch of Kanematsu Shoten, is thelongest established Japanese company in Australia,
with more than 131 years of history. Kanematsu
Australia trades in a wide range of products, such asmeat, marine products, honey, grains, legumes, andfeedstuff, as well as stainless steel and limestone. In
partnership with other Kanematsu overseas offices,32

Generation and reach said plans’ targets. This marks
Kanematsu’s third re-certification after its initial “Kurumin”
certification in December 2010.
Under our fifth General Employer Action Plan, formulated
in April 2020, we are advancing initiatives to fully harness
employee potential, with the principal aim of creating work
environments that enable employees to autonomously
engage in their work and continue to fully participate professionally regardless of the ups and down of life events.

KANEMATSU Integrated Report 2021

the company has expanded trading with countries
other than Japan in Asia, the Middle East, and SouthAmerica in recent years. I am confident that withcross-border collaboration and the ability to leverage
global talent, the overseas offices can make a greater
contribution to the success of the Kanematsu Group.
I am appreciative of the opportunity to attend
the online Kanematsu training in 2020. I valued thepractical techniques taught in the programs and therelationships formed with colleagues from otheroffices. I will continue to learn, grow, and add value
to the company to the best of my ability.

Maki Namekawa
Kanematsu Australia Ltd.

Kanematsu’s Progress and Strengths

Heath & Productivity Management
On March 4, 2021, Kanematsu was recognized as 2021 Certified Health & Productivity Management Outstanding
Organization in the large enterprise category of the Certified Health & Productivity Management Organization
Recognition Program organized by the Ministry of Economy, Trade and Industry and Nippon Kenko Kaigi.
Kanematsu’s main health and productivity management initiatives are as follows.

Establishment of the Kanematsu Health & Productivity Management Declaration
Kanematsu Health & Productivity Management Declaration
Kanematsu believes that maintaining and improving employee health is a crucial management issue for achieving sustainablegrowth. Accordingly, to advance health & productivity management, we strive to do the following.
1. Health management:
We support employees’ individual efforts to proactively maintain and improve their health.
2. Environment improvement: We create workplaces that ensure employees can work without endangering their health and participate fully.
3. Ongoing improvement:
We study, implement, confirm effectiveness, and take steps to improve measures related to health management andenvironmental improvement on an ongoing basis.

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

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

Board of Directors
Management Committee
Health & Productivity
Management Promotion Officer

Management Strategy

Establishment of the Health & Productivity
Promotion System(Chief Officer of Human Resources& General Affairs)

Kanematsu Health
Insurance Society

Medical Center

Personnel and General
Affairs Department

Occupational HealthCommittee

Mental Health Problem Prevention
We aim to prevent mental health problems by such means asproviding an internal consultation hotline and increasing therate of employees who take stress checks.

Sustainability

Industrial Physician

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

Childcare Support
Review of Operations

until the child’s third birthday.
Many mothers take childcare leave, and when they return
to work, as a rule, they are placed in the divisions in which
they worked before. These measures are taken to create apleasant working environment.
Number of Employees Taking Childcare Leave
FY2016FY2017FY2018FY2019FY2020

14

18

20*

20

28**

* Includes two male employees** Includes four male employees

Financial Section and Company Information

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, and shortened work
hours and full flextime system after returning from leave.
From fiscal 2019, the period after returning from leave during
which employees are eligible for reduced work hours has
been extended from up to the child’s third birthday to theend of the child’s third year of elementary school. In addition,
employees may work reduced hours with no reduction in pay

Family Care Support
In addition to the conventional family care leave system,
Kanematsu has recently enabled special paid holidays forfamily care.
We have also created a handbook for using support
systems for balancing work and family care as part of efforts
to provide information to employees who have concerns
about family care. In addition, we have not only contractedwith an external family care consultation service that
employees can use at any time, but appointed a child-raisingand family care consultation officer, enabling
one-to-one consultation on these matters.
Information about Kanematsu’s familycare-related systems is publicly available on the
Ministry of Health, Labour and Welfare’s Ryoritsu Shien no
Hiroba website. In recognition of such systems, Kanematsu
has been granted “Tomonin” certification as a company that isprovides work environments that enable employees tobalance work with family care.
KANEMATSU Integrated Report 2021

33

Full Flextime System
In fiscal 2021, we implemented a full flextime system. In theinterest of promoting flexible work styles, this system hasdone away with the core time (specific hours during which
employees are required to work) designated under theprevious system. Now, in principle, individuals can freely
adjust the times they begin and end their work in accordancewith the varying demands of their own schedules, enabling
more individually optimized and efficient work styles.

Overview of the Full Flextime System• Employees are, in principle, free to decide what time tostart and end work within the hours of 5 am and 10 pm,
with a minimum work time per workday of one hour.
• To use this system, in principle, employees must submit

notice of their planned start and end times by the end of
the previous week. However, after such plans are
submitted, they may be revised as needed to accommodate
urgent errands, illness, or other individual circumstances.

Remote Work System
In February 2020, we launched a remote work system on a
trial basis to prevent the spread of COVID-19, and officiallyadopted the system in December 2020. In addition tocreating a remote work system for the work styles of a newera, we have provided environments and tools to enable
employees to be efficient while working remotely.

Systems for Using Paid Vacation
Bronze Week
Since fiscal 2016, Kanematsu has maintained a “Bronze
Week” system for systematically encouraging the use ofannual paid vacation days. This is intended to make it easierfor employees to take off the time they are entitled to andcreate workplaces that are more comfortable and rewarding.
From fiscal 2020, we have upgraded the system, renaming
it the Bronze Week Plus System and doing away with thesystem of having sections designate candidate days off fromwhich employees chose. We also increased the minimum
number of days employees are required to use through thesystem to five to ensure compliance with the Revised Labor
Standards Act’s requirement that employees take at least fivedays of paid vacation per year. Since the system’s introduc-tion, the rate of annual vacation days used has risen steadily,
reaching 73.8% in fiscal 2019. We will continue working tocreate even more employee-friendly workplaces and further
increase the paid annual vacation usage rate.
Annual Vacation Usage Rate
(%)
80

73.7%

73.8%

70

65.6%

62.4%

66.7%

60

50

FY2016FY2017FY2018FY2019FY2020Bronze Week Plus System Outline• Makes it easier to take off a bridge day between two
ordinary days off, the day before or after a three-day
weekend, or take two days before or after a normal
weekend, effectively extending the number of consecutive
days off for the individual to four or more.
• This system is aimed at helping employees have special
experiences that are difficult to realize with one or twodays off so that they will feel refreshed and have new ideasthat they can then put to use in their work.

• At the start of each fiscal year, employees schedule at least
five days of paid vacation for that year.
• Applies to all employees, in principle, excluding those on
dispatch within Japan, stationed overseas, or on leave.
• The system, which encourages the use of paid annual vacation, especially multiple consecutive days off , is named“Bronze Week Plus” in reference to the yearly clusters of
public holidays in Japan popularly known as “Golden Week”
and “Silver Week.”

My Weekend System

priority to their personal lives. In particular, managerial
employees, who often find it particularly difficult to take timeoff, are asked to use at least five days per year. This systemthus provides support to help employees prioritize both theirwork and private lives.

In fiscal 2019, we established the “My Weekend” system toencourage employees to take their paid annual vacation to,for example, pursue their hobbies or enjoy special family occasions. This system is aimed at helping employees feel comfortable taking days off for important events and giving greater

My Weekend System Outline• By encouraging employees to take off not only ordinary
weekends, but days of personal significance, such as theirwedding anniversaries or the birthdays of family members,
as “my weekends,” this system is aimed at helping employees take time for their personal interests and important

34

KANEMATSU Integrated Report 2021

family occasions.
• Managerial employees are asked to take at least five days
off per year through the My Weekend system alone (nousage requirement has been set for non-managerial
employees).

Corporate Governance

Kanematsu’s Progress and Strengths

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.

System of Corporate GovernanceManagement Strategy

Board of Directors
The Board of Directors is made up of six directors, with the chairman of the Board of Directors as its presiding officer. The Board
decides on matters required of it as set out in law and Kanematsu’s Articles of Incorporation as well as business policies and otherimportant matters and oversees business execution by directors. Two of the six directors are outside directors to ensure that theBoard conducts appropriate decision making and to further reinforce the supervision of business execution. In principle, the Boardof Directors meets once a month, with additional meetings held as necessary. Directors are appointed to the Board for one-year
terms to allow the Board to respond appropriately to changes in the business environment.

Main Board of Directors Agenda Topics and Number of Items Discussed
FY2020Management strategy, corporate governance, and sustainability

25

25

Governance (rules, structures)

21

16

Closing of accounts

1212Internal control, risk management, and compliance

10

10

Human resources

9

6

Specific projects

50

62

Total

127

131

Sustainability

FY2021

Review of Operations

Evaluating the Effectiveness of the Board of Directors
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 implementationof measures to address issues identified, Kanematsu works to

Financial Section and Company Information

Issues Identified in the Fiscal 2020
Evaluation of the Effectiveness of theBoard of Directors

continually improve the effectiveness of the Board of
Directors. Based on issues identified in the fiscal 2020 evaluation, the Board of Directors and its secretariat implemented
the measures listed below in fiscal 2021. We will continue
working to resolve issues on an ongoing basis.

Initiatives in Fiscal 2021 (April 2020–March 2021)

Medium- to long-term
management strategy

The Board of Directors held open-ended discussions of the Group’s business risks and medium- to long-term Group strategy.

Initiatives related to the SDGs

Based on an awareness that SDGs are a key element of sustained growth over the medium to long term, we adjusted thecomposition of our Sustainability Management Committee to include mainly the top management of our business divisions anddiscussed our current projects and future direction.

Revising the operation of theBoard of Directors

By holding meetings of the Board of Directors and of the Management Committee (which comprises the executive officers) on
different days, we ensured that the Board of Directors had adequate time for discussion and could deliberate on risk response
regarding specific projects at a different level than the Management Committee.

Sharing opinions of investors

We shared information about shareholders and investors, including opinions they provided, with Board of Directors meeting
participants and discussed them freely.
KANEMATSU Integrated Report 2021

35

Corporate Governance Structure
General Meeting of Shareholders
Appointment/Dismissal
Consultation

Board of Directors

Advice/Suggestions

Six Directors(including two
outside directors)

Appointment/
Dismissal

Appointment/Dismissal
Audit

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

Collaboration

Nominating Committee
Compensation Committee

Appointment/Dismissal/
Supervision

President

Audit

Collaboration

Management Committee
Project Deliberation Committee
Internal Control and Compliance Committee
Sustainability Management Committee

Internal Auditing
Department
Internal
controls

Accounting audit

Accounting Auditor

Collaboration

Marketing Area/Support Area, Domestic and Overseas Offices, Subsidiaries(As of June 23, 2021)

Advisory Bodies
To reinforce the objectivity, independence, and accountability of the Board of Directors, Kanematsu has voluntarily established a
Nominating Committee and a Compensation Committee as advisory bodies under the Board of Directors.
• Nominating Committee: Comprises the chairman as committee chair and the two outside directors. The committee provides
recommendations to the Board of Directors based on deliberations regarding such matters as proposals for the General Meetingof Shareholders related to the appointment and dismissal of directors and the necessary policy, rules, and procedures forreaching related resolutions• Compensation Committee: Comprises the president as committee chair and the two outside directors. The committee provides
recommendations to the Board of Directors based on deliberations regarding such matters as policy regarding the setting ofcompensation levels and types for individual directors and executive officers as well as the necessary policy, rules, and procedures
for reaching related resolutions.

Reasons for the Adoption of the Current Corporate Governance System
Kanematsu uses the audit & supervisory board system in order to increase the transparency of management and create a more
equitable, efficient, and sound company.
Two of the four Audit & Supervisory Board members are outside members. Based on their insights and experience, the outside
members provide suggestions and advice from an objective standpoint, realizing effective outside management supervision andoversight.
In addition, the Company’s directors include multiple highly independent outside directors in order to reinforce and enhancethe effectiveness of the Board of Directors’ management oversight and the transparency of its decision making.
Going forward, to further reinforce corporate governance, we will continue working to ensure a system of corporate governance that is appropriate in light of legal and regulatory systems, the conditions within the Company, and the Company’s scale.

Management Committee
Kanematsu has adopted an executive officer system to improve the flexibility of business execution, speed up management decision
making, and further clarify roles and responsibilities through the separation of supervisory and executive functions. With authority
delegated by the Board of Directors, the executive officers carry out business operations in their respective areas of responsibility
based on the decisions of the Board of Directors.
To facilitate rapid decision making and flexible management, Kanematsu has set up a Management Committee, chaired by thepresident and composed of the chairman of the Board of Directors and certain executive officers. In principle, the Committee meetsat least twice a month. The Committee establishes basic policies for Companywide general business execution in accordance withbasic policies determined by the Board of Directors and provides instruction and guidance on the execution of business.

Project Deliberation Committee
The Project Deliberation Committee considers and discusses important projects before they are referred to the Management
Committee or other bodies. Comprising the chief officers of credit control, finance and accounting, and corporate planning, theCommittee meets twice a month, in principle.

36

KANEMATSU Integrated Report 2021

Kanematsu’s Progress and Strengths

Audit & Supervisory Board
Kanematsu uses the audit & supervisory board system. The Audit & Supervisory Board and its members act independently to audit
directors’ performance of their duties. Specifically, the four Audit & Supervisory Board members, including two outside members,receive reports from directors and employees on the performance of their duties as required, and attend meetings of the Board of
Directors and Management Committee.
Furthermore, the full-time Audit & Supervisory Board Members attend the Project Deliberation Committee, Internal Control
and Compliance Committee, and other important meetings or committees.
Reasons for Selection of Outside Directors and Outside Audit & Supervisory Board Members
NameFiscal 2021 Attendance

Yuko Tahara

17 of 17 Board of Directors meetings

Kazuhiro Tanaka

So that he can provide advice to management and appropriate oversight of business execution
based on his extensive expertise and deep insight regarding corporate management as auniversity professor specializing in business administration.

14 of 14 Board of Directors meetings1

So that he can audit Kanematsu based on his expert knowledge and experience as a lawyer.

17 of 17 Board of Directors meetings
14 of 14 Audit & Supervisory Board
meetings

OutsideDirectors

Outside Audit Yusaku Kurahashi& Supervisory
Board
Members
Nobuko Inaba

So that she can audit Kanematsu based on her expert knowledge and experience relating toaccounting and tax affairs as a certified public accountant and as a certified public tax accountant.

Management Strategy

Reasons for Selection

So that she can provide advice to management and appropriate oversight of business execution
based on her wealth of experience in corporate management and deep insight gained throughexperience in human resources and organizational consulting.

—2

1. As Mr. Tanaka was appointed at the June 24, 2020 General Meeting of Shareholders, the number of meetings of the Board of Directors that he was eligible toattend differs from those for the other outside director and Audit & Supervisory Board members.
2. As Ms. Inaba was appointed at the June 23, 2021 General Meeting of Shareholders, she did not attend meetings in fiscal 2021.

Outside Director and Outside Audit & Supervisory Board Member Support System

Sustainability

Outside directors are provided with necessary information, reports, and other communications, including advance briefings about
Board of Directors agenda items. To enable them to smoothly and efficiently collect information and carry out their audit duties,
outside Audit & Supervisory Board members are provided in advance with materials related to the meetings and committees thatthey attend as well as with approval requests to ensure adequate preparation.

Director and Audit & Supervisory Board Member Compensation
Breakdown of Director and Audit & Supervisory Board Member Compensation
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

214

164

33

16

4

Outside Directors

19

19

—

—

3

Audit & Supervisory Board Members(excluding outside members)

49

49

—

—

2

Outside Audit & Supervisory Board
Members

26

26

—

—

3

Total

309

259

33

16

12

Review of Operations

Directors (excluding outside directors)

Financial Section and Company Information

1. Per the resolution of the June 24, 2015 General Meeting of Shareholders, total annual compensation for directors is capped at ¥300 million (of which, total annualcompensation for outside directors is capped at ¥30 million), and total annual compensation of Audit & Supervisory Board Members is capped at ¥84 million.
2. The above table includes two individuals who served as outside directors or Audit & Supervisory Board members who retired as of the conclusion of the June24, 2020 General Meeting of Shareholders.
3. The above figure for non-monetary compensation (¥16 million) is the amount recorded as costs for performance-linked stock compensation in fiscal 2021.

Performance-Linked Stock Compensation Plan
The performance-linked stock compensation plan is aimed at more closely linking director compensation with corporate performance and stock price and better motivating directors to improve corporate performance and enterprise value over the medium
term by having directors share with other shareholders the potential benefits and risks of share price changes. Under the plan, atrust established using funds provided by the Company acquires shares of the Company. Via the trust, shares of the Company in a
number equivalent to the number of points granted to each director by the Company, based on a designated formula, are thengranted to each director. One point represents one share of the Company’s stock; however, in the event of a share split, reverse
share split, gratis share allocation or other event for which it would be considered reasonable to adjust the number of shares of
the Company, the Company will make reasonable adjustments reflecting the ratio of such stock split or reverse stock split, etc.
KANEMATSU Integrated Report 2021

37

Internal Auditing
The Internal Auditing Department conducts internal audits of Kanematsu Corporation and its subsidiaries toensure proper accounting and record keeping and to evaluate and oversee improvement and control activities tohelp make business execution more effective and efficient.

Internal Control System and Risk Management System
Maintaining the Internal Control System
To comprehensively assess risks facing the Kanematsu Group, to comply with laws and regulations relating to operational effectiveness and efficiency and business activities, to protect its assets, and to ensure the reliability of its financial reporting, theKanematsu Group has built an internal control system. To maintain and advance the use of this system, we have also establishedthe Internal Control and Compliance Committee. We develop, operate, assess, and improve internal controls related to financial
reporting to ensure the correctness of the Group’s reporting in line with the internal control reporting systems defined in the
Financial Instruments and Exchange Law.

Compliance
In light of the importance of corporate legal compliance, we have set up internal control systems for the Group as well as an Internal
Control and Compliance Committee to implement said systems, seeking to strengthen our internal compliance system. In addition topreparing a Compliance Handbook that covers all Group companies, we work to enhance awareness of and training on sensible behavioral ethics. The Group also maintains a hotline system that allows employees to directly report to or consult with the Internal Control
and Compliance Committee or an outside lawyer.
Diagram of the Kanematsu Group Compliance System
Board of Directors

Instructions, Feedback

Management Committee

Reports, Consultation
AuditorInternal Control and Compliance Committee
Internal Control and Compliance Committee Members
Promotion Office: Legal & Compliance Department(For units that do not have a controlling division at Kanematsu Corporation)

Marketing Area/Support Area
Departmental Compliance Officers(Chief officers of business divisions and administrative departments)

Officers & Employees of Kanematsu Corporation

Group Companies
Compliance Officer(President or Head of Location)

Officers & Employees of Group Companies*Sub-subsidiaries report through their immediate parent companies(As of June 23, 2021)

Elimination of Antisocial Forces
One of Kanematsu’s compliance commitments is to take a firm stand against and eschew all relationships with antisocial forces. To
promote the elimination of antisocial forces, Kanematsu belongs to the Tokyo Metropolitan Police Department’s Special ViolencePrevention Countermeasures Association, cooperating closely on a regular basis by sharing information. The Human Resources &General Affairs Department is designated to coordinate Companywide response and information gathering to address any unreasonable demands from antisocial forces, and the Company maintains a framework for responding in coordination with outside organizations, including the police and attorneys.

Information Management System
With regard to information management, we have established standards for the retention and disposal of accounting records, balance
sheets, agreements and contracts concerning the basic rights and obligations of Kanematsu, certificates related to properties, and othersimilar documents.
As information is a valuable corporate asset, we have also formulated, and work to reinforce, rules on information security management with the aim of protecting and managing personal data and other information in line with compliance requirements.
With regard to security in the use of information systems, the Group has established information security management rules aimed
at preventing leaks and losses of important information and established standardized rules covering the use of PCs, networks, and e-mailto protect corporate and personal information. Furthermore, the Group continually reviews its systems framework aimed at enhancing
security and operates and maintains said framework to ensure that security is maintained at necessary and appropriate levels.

38

KANEMATSU Integrated Report 2021

Kanematsu’s Progress and Strengths

Risk Management
With respect to business risks that may affect our operations, based on designated levels of authority, departments responsible forfunctions related to each type of risk establish internal regulations along with detailed enforcement regulations and prepare operational guidelines while using training and other means to ensure thorough awareness of risk management. The Company also
sets up cross-departmental committees as necessary to control risks.
We have established an approval request system based on designated levels of authority for making judgements and decisions about business risks. The Project Deliberation Committee considers important investments and loans, including their execution, continuance, and withdrawal, based on the comprehensive examination of relevant risks.
To address the risk of crises related to the occurrence of major events, such as natural disasters, we have put in place a system,
including specific rules and manuals, to ensure the appropriate management of the Group at such extraordinary times.

Quantifying and Monitoring Risk
Risk Assets(Billions of yen)(Times)

150

144

0.6

131

125
116

0.44
0.40

100

100

0.4

0.33
0.30

50

Management Strategy

4446

FY2017FY2018

0.30

43

41

40

FY2019FY20200

0.2

0Risk assets (left)

Shareholders’ equity (left)

Sustainability

The Kanematsu Group has laid out basic guidelines forcontrolling and managing risk in its Risk Management
Guidelines. Based on said guidelines, we classify and definerisks, then respond to each appropriately, aiming to minimize
losses to the Kanematsu Group and achieve sound businessgrowth and development.
The Group monitors quantifiable risks (market risk, credit
risk, investment risk, country risk, etc.) by regularly measuring
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 theConsolidated Statement of Financial Position as well as offbalance sheet items.
Recently, to achieve more sophisticated capital management, we set an upper limit on the risk asset ratio, aiming toensure a sound balance of risk assets and risk buffer (shareholder’s equity) and maintain a sound financial position while
increasing enterprise value through business creation andrevenue expansion.

FY2021

Risk-asset ratio (right)

Groupwide Activities

Review of Operations

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

Financial Section and Company Information

Disclosure
Kanematsu regards promptly, fairly and accurately disclosing important corporate information about management
to shareholders, investors, and all other stakeholders, including employees, business partners, and the media, as
well as ensuring transparency, as a responsibility of management. We practice timely disclosure of important
corporate information, such as that regarding decisions made, the occurrence of material incidents, and the closingof accounts, by registering such information with securities exchanges and through our website and otherchannels. We handle unpublished material information in accordance with internal rules regarding themanagement of material information and control of insider trading, working on a Groupwide basis to prevent
insider trading.

KANEMATSU Integrated Report 2021

39

Interview with the Outside Directors

Human resources constitute the Kanematsu Group’s most important asset. We asked our outside directors
about the strengths of Kanematsu’s human resources and what development frameworks or work styles
the Group will need going forward to continue to grow amid a rapidly changing business environment.

Human Resource Development and Strategy

Q: Kanematsu’s Corporate Principle includes the passage,“Our purpose as a Company is not only to build a sound andflourishing business, but to fulfill our responsibilities as acorporate citizen, contributing to society and the security
and well-being of all.” Since the Group’s founding 132 years
ago, Kanematsu has strived to develop its people and create
employee-friendly workplaces. We are known among ourbusiness partners for the good nature and honesty of ourpeople. As outside directors, what do you see as
Kanematsu’s particular features, strengths, and weaknesses?
Tahara: Kanematsu has an excellent corporate culture thatvalues people. There is a warm, homey atmosphere—for example, every year, the corporate officers and newly appointed

division managers visit the grave of Group founder Fusajiro
Kanematsu to pay their respects. I get the impression that helping employees develop outstanding character has long been akey part of Kanematsu’s culture. In addition, I sense a certain
culture of tolerance and generosity of spirit that allows employees to boldly take on challenges. This culture nurtures employees who proactively make suggestions without having to be
told and take the initiative to move forward.

Tanaka: I agree that Kanematsu has a wealth of employeeswith excellent integrity. Kanematsu’s particular size allows it totake attentive care of its employees, and its culture allows
employees to ambitiously try out various things early in theircareers. People grow the most when they are entrusted with a
job that they themselves can directly and tangibly impact, andKanematsu’s employees have many such experiences. Goingforward, I hope the Group will maintain these characteristics
even as it gets larger. I also think that the creation of
Kanematsu University represents a major strength. Thisapproach to developing human resources through not only
regular on-the-job practice, but such practice in combination
with learning via Kanematsu University, is very promising.

Diversity and Inclusion

Yuko Tahara
Outside Director
1998 President and CEO, Basic Inc. (incumbent)
2018 Outside Director & Member of the Audit and Supervisory Committee, Sanyo Homes
Corporation (incumbent)
2019 Outside Director, Kanematsu Corporation (incumbent)
2020 Visiting Professor, Research Institute of Advanced Education, The Graduate School ofInformation & Communication
2021 Professor, School of Professional Education, The Graduate School of Information &Communication (incumbent)

40

KANEMATSU Integrated Report 2021

Q: Kanematsu launched the Diversity and Inclusion (D&I)
Team in fiscal 2020 and a cross-divisional D&I project team in
fiscal 2021. There are still many issues to address, but what
are your views on Kanematsu’s diversity-related measures sofar?
Tahara: The recent launch of the cross-divisional D&I project
team is a very positive step. The exchange across divisions of
their respective specialized skills and expertise will make theirefforts more potent. I have previously expressed my opinion
that Kanematsu’s strength as a trading company is theKanematsu’s Progress and Strengths

know-how and expertise it has accumulated through the various
businesses it undertakes. The product of such intellectual assets
is none other than its outstanding human resources.
Collaborative D&I initiatives like this, which look beyond justincluding women, will lead to new business creation possibilities going forward.

Tanaka: Diversity means respecting the individuality ofWork Style Reforms

Tahara: Conventional personnel management has focused

Expectations for Kanematsu from Expert
Perspectives

Q: Lastly, from the perspective of your areas of expertise,what expectations do you have for Kanematsu?
Tahara: Trading companies are often subject to a conglomerate discount, but I think that they should rather receive apremium, as they contain tremendous potential, resources, andopportunities. I think that the move to the new head office in2022 may be Kanematsu’s time to shine in terms of its
strengths in DX. Surprisingly, Kanematsu was appointing
women to management positions as far back as the 1950s,
making it truly ahead of its time. I think that this culture of looking at the individual and helping them grow has been a
constant at Kanematsu ever since. I have great expectations
that Kanematsu will continue to leverage this culture to accept
diversity and further develop its strengths going forward.

Tanaka: It goes without saying that the long-term growthof a company depends on the growth of the individual employees who carry out its business and the development of humanresources who can manage the company not only at the levelof individual businesses, but as a whole. In that respect, I thinkthat Kanematsu University will play a crucial role, and I hope to
see it further enhanced going forward. Discussions of humanresource development tend to focus entirely on skills andknowledge, but character is also important. People are a trading company’s capital. In addition to knowledge and skills,
character and integrity are especially vital. I feel that there are
truly a great number of people with integrity at Kanematsu,
and I hope that the Group will continue to value and cherish
that culture and use it to its advantage.

KANEMATSU Integrated Report 2021

Financial Section and Company Information

Tanaka: Kanematsu’s corporate culture tends to assume thebest of people. This is a good thing, and labor management
should, fundamentally, do so as well. However, assuming thebest unconditionally, that is, simply trusting everyone to handle
their work with no accountability, is asking for trouble. When asupervisor assigns a task to an employee to complete, thatsupervisor retains a responsibility to check on the project’s
progress and provide supervision when called for. That said,
placing too little trust in employees and subjecting them toconstant surveillance is also a problem. The key, in other words,
is to assume the best of people without being careless. On adifferent note, we humans, by our nature, tend to focus on thetasks immediately before us. To increase labor productivity, it
will be important to revise daily work processes using DX and,in particular, for managers to maintain a long-term perspective.

Review of Operations

on just that—managing personnel. Today, however, focusing
on the know-how, skills, and competencies of each individual
to develop and effectively utilize human equity is a major factor
in corporate value creation and growth. In light of this, more
and more companies overseas are advancing disclosure in linewith ISO 30414 (Human Resource Management). To betterfocus on the strengths of individual employees, HR-relatedtech, like that which Kanematsu is implementing, and diverse
career plans will be increasingly crucial going forward. In addition, a growing number of companies are utilizing “workations” (a combination of work and vacation), which can have
many benefits, such as furthering intellectual creation, increasing productivity, and building ties with local communities. The
crucial first step for such initiatives is making work more trackable.

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

Sustainability

Q: Amid the ongoing COVID-19 pandemic, Kanematsu
has moved forward with work style reforms and efforts todiversify work styles, including the use of remote work andfull flextime systems. However, while diversity and freedom
in work styles are increasing, we are still figuring out some
aspects of human resource management under these newframeworks. Do you have any advice for increasing laborproductivity?

Kazuhiro Tanaka

Management Strategy

others. Mutual respect of one another’s individuality, in turn,means respecting the facts of reality. Distorting or denying thefacts leads to trouble. For example, when a female employee
takes maternity leave, it can temporarily increase the workloadof her colleagues. Such situations arise from the natural differences among diverse employees, including gender, which aresimply facts of reality. If everyone involved accepts and respects
them as such, it can lead them to look for creative ways to overcome difficulties and become a positive impetus for improvement. In advancing D&I, it is crucial to not only create systems,
but develop workplace culture.

41

Corporate Officers(As of July 1, 2021)

Directors and Audit & Supervisory Board Members

Kaoru Tanigawa

Yoshiya Miyabe

ChairmanPresident

Shares held: 30,900

Shares held: 15,800

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)

Masayuki Shimojima

Tetsuro Tsutano

Yuko Tahara

Kazuhiro Tanaka

Director

Director

Director

Director

Shares held: 27,700

Shares held: 23,600

Shares held: 0

Shares held: 01974 Joined Kanematsu-Gosho Ltd.
2010 President
2017 Chairman
2021 Director (incumbent)

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

1998 President and CEO, Basic Inc. (incumbent)
2018 Outside Director & Member of the Audit
and Supervisory Committee, Sanyo Homes
Corporation (incumbent)
2019 Outside Director, Kanematsu Corporation(incumbent)
2020 Visiting Professor, Research Institute ofAdvanced Education, The Graduate Schoolof Information & Communication
2021 Professor, School of Professional Education,
The Graduate School of Information &Communication (incumbent)

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

Tetsuro Murao

Motohisa Hirai

Yusaku Kurahashi

Nobuko Inaba

Audit & Supervisory Board
Member (full-time)

Audit & Supervisory Board
Member (full-time)

Audit & Supervisory Board
MemberAudit & Supervisory Board
MemberShares held: 9,200

Shares held: 3,800

Shares held: 0

Shares held: 01976 Joined Kanematsu-Gosho Ltd.
2015 President, Shintoa Corporation
2019 Audit & Supervisory Board Member,
Kanematsu Corporation (incumbent)

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

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

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

1 Ms. Yuko Tahara and Mr. Kazuhiro Tanaka 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. Yusaku Kurahashi, and Ms. Nobuko Inaba are independent officers, as defined by the Tokyo Stock Exchange.

42

KANEMATSU Integrated Report 2021

Toshihide Motoshita

Eiji Kan

Masayuki Hamasaki

Masahiro Harada

President

Senior Managing
Executive Officer

Managing Executive
OfficerManaging Executive
OfficerManaging Executive
Officer

Chief Officer, Credit Control,
Legal and Compliance

Chief Officer, Steel,Materials & Plant Division
General Manager, Osaka
Branch; General Manager,
Nagoya Branch

Chief Officer, Grain, Oilseeds& Feedstuff Division

Chief Officer, Electronics &Devices Division, Digital
Transformation (DX)
Acceleration Team

Kazuo Tanaka

Tetsuro Tsutano

Ryoichi Kidokoro

Hiroshi Yamashina

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

Senior Executive Officer

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

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

Chief Officer, Motor Vehicles& Aerospace Division

President, Kanematsu USA Inc.

Osamu Iwata

Yoichiro Muramatsu

Jun Nakajima

Toru Hashimoto

Koichi Nishimura

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Deputy Chief Officer, Steel,Materials & Plant Division

President, Kanematsu
GmbH; President,
Kanematsu Europe PLC

Deputy Chief Officer, Grain,
Oilseeds & Feedstuff;
General Manager, Grain &Feedstuff Dept.

Chief Officer, Meat
Products Division

Chief Officer, Foods Division

Akihiro Fujita

Kaori Kusuda

Shuji Masutani

Executive Officer

Executive Officer

Executive Officer

Deputy Chief Officer,
Electronics & Devices
Division; General Manager,
Semiconductor Equipment
Dept.; General Manager,
Electronics Planning Office

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

Chief Officer, Finance,
Accounting, BusinessAccounting

Management Strategy

Yoshiya Miyabe

Kanematsu’s Progress and Strengths

Executive Officers

Sustainability
Review of Operations
Financial Section and Company Information

KANEMATSU Integrated Report 2021

43

Business Segments
Revenue

Main Business• Semiconductor Equipment• Electronic Components andMaterials• Industrial Electronics• Semiconductors & Devices• ICT Solutions• Mobile• CCTV Systems• DataElectronics & Devices(¥ billion)

300.0

265.5

254.5
226.1

200.0

100.0

0

FY2019Foods, Meat & Grain

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

FY2020

FY2021

244.9

251.4

244.6

FY2019FY2020

FY2021(¥ billion)

300.0

200.0

Meat
Products• Meat Products

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

Steel, Materials & Plant

100.0• Steel• Steel Tubing• Chemicals• Energy• Plant & Ships• Machine Tools & Industrial
Machinery0(¥ billion)

150.0

139.4

120.0

129.9
96.8

90.0
60.0
30.0
0

FY2019Motor Vehicles & Aerospace• Motor Vehicles and Parts• Aerospace

FY2020

FY2021(¥ billion)

80.0

74.6

60.0

71.1

62.1

40.0

20.0

0

FY201944

KANEMATSU Integrated Report 2021

FY2020

FY2021

(FY 2021)

Operating Profit(¥ billion)

20.0

18.5

19.0

10.0

(%)

9.5

17.6

25

9.3
8.5

8.0

15.0

6.0
11.2

4.0

10.7

9.2

10

2.0

0

5

0

FY2019FY2020

FY2021

Other

1.6%

11.0%

Electronics &Devices

34.8%

15

10.0

5.0

20

Motor Vehicles &Aerospace

Kanematsu’s Progress and Strengths(¥ billion)

Revenue

Net Income*/ROIC

0

FY2019FY2020Net Income (left)

FY2021

Steel,
Materials &Plant¥649.1 billion

14.9%

Foods, Meat &
Grain

37.7%

ROIC (right)

Operating Income(¥ billion)

5.0
4.0

(%)

3.0

15

8.7%

2.5

4.0

2.0

3.0

10

2.4

1.3

2.0
1.5

1.0
0

1.5

5
2.5

2.8

FY2020

FY2021

FY2020

FY20210

FY201974.4%¥23.6 billion

6.3%

ROIC (right)

Sustainability

Net Income (left)

2.8%

Electronics &Devices

Foods, Meat &
Grain

0

FY2019Other

Steel,
Materials &
Plant

7.8%

4.9

1.0

Motor Vehicles &Aerospace

Management Strategy(¥ billion)

Net Income*(¥ billion)(¥ billion)

5.0

(%)

3.0

4.4

4.0

15

11.2%

2.6
2.3

3.8

2.0

3.0
2.0

1.8

4.8

1.0

4.1

2.1

FY2020

FY20215
3.5

0FY2019FY2020Net Income (left)

Electronics &Devices

63.7%

10

0

FY2019Other-¥0.2 billion

FY2021

Steel,
Materials &Plant¥13.3 billion

15.5%

Review of Operations

1.0
0

Motor Vehicles &Aerospace

Foods, Meat &
Grain

11.2%

ROIC (right)

Total Assets(¥ billion)(¥ billion)

3.0

(%)

2.5
2.0

2.4
2.1

2.0

1.5

8

1.9
6.0

0

FY2019FY2020

FY2021

1.5
4.3

4
2

0

0

FY2019

8.6%

Electronics &Devices

36.4%

6

0.5

Net Income (left)

8.7%

Other

1.7
5.0

1.0

1.0

Motor Vehicles &Aerospace

Financial Section and Company Information

2.5

10

FY2020

FY2021

Steel,
Materials &
Plant

23.1%

¥557.5 billion
Foods,
Meat &
Grain

23.3%

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

KANEMATSU Integrated Report 2021

45

Electronics & Devices
The Electronics & Devices segment handles a value chain spanning
ICT solutions, mobile, and electronics-related materials parts, devices
and equipment, providing unique added value across a wide rangeof fields. Using our solid technological prowess and wealth of knowhow in electronics, we are advancing new initiatives in the IoT and
AI fields and offering new value to contribute to society.

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

Key SDGs

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

Segment Vision

Constantly provide solutions to international society by leveraging advanced technologies in all fields
Segment Strengths
Stable profit generated by the solid foundations built up in the ICT solutions and mobile businesses
Expansive supply chains and a robust customer base in the semiconductor component and equipment businesses and the electronic
devices and materials businesses
Specialized business areas—we develop specific business areas in depth, for example, enhancing business proposal capabilities byacquiring development functions centered on commercial printers in the industrial electronics businessBusiness Environment
Opportunities• Growth of the remote work market• The creation and expansion of related technology
and service markets driven by the adoption of AI,
IoT, robotics, and 5G• Accelerating DX initiatives at companies in Japan

Growth Strategies• Provide solutions and services in such areas as virtual desktop infrastructure(VDI) and connectivity to reinforce the earnings base of the ICT solutions andmobile 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 inthe 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• Acquire and expand solutions platforms based on capital alliances and partnerships with companies in and outside Japan that have specialized technologies• Industry reorganization, the impact of core technologies, and technological innovation• Supply chain interruptions due to changing international conditions, geopolitical risks, or pandemics

46

KANEMATSU Integrated Report 2021

• Expand scale by acquiring companies and businesses and acquire and develop
new products and solutions through innovation investment• Optimize and diversify supply chains by expanding the functions of overseas
locationsKey Businesses and Locations• Printer business• Semiconductor equipment• Semiconductor components
and electronic materials• Semiconductor equipment• Semiconductor components
and electronic materials

Germany
China• ICT solutions

Korea
TaiwanIndia
ThailandSingapore• Semiconductor equipment• Semiconductor components
and electronic materials

New Jersey
Texas• ICT solutions• Mobile• Semiconductor equipment• Semiconductor components
and electronic materials• CCTV system• Data• Semiconductor components andelectronic materials

Management Strategy• ICT solutions• Semiconductor components
and electronic materials• Printer business• Printer business

Silicon ValleyJapan

Kanematsu’s Progress and Strengths• ICT solutions• Mobile• Semiconductor equipment• Semiconductor components andelectronic materials• Semiconductor equipment• Semiconductor components
and electronic materials

Progress toward the Medium-Term Vision
circumstances, we acquired and promoted the consolidationof mobile phone sales agencies, aiming to increase ourmarket share and thereby secure our position while building
a high-revenue business structure.
In the semiconductor component and equipment businesses, we acquired an IC test handler manufacturing business and made a company that sells laser wafer marking
equipment and provides related services a Group company,
expanding our business portfolio.

Sustainability

The COVID-19 pandemic impacted our businesses in many
ways. In the ICT solutions business, we faced limitations on
business activities, and some aspects of IT investment wererestrained, reflecting worsening corporate results. However,demand for strategic IT investment, such as that for remote
work, increased, and we strived to further expand sales in
VDI environment building, security solutions, and servicebased businesses. The mobile business was forced to shorten
store hours and faced industry restructuring and the introduction of plans available online. Under these

Review of Operations

Business Highlight
Sales of Stamping-Type Plating Machines

Financial Section and Company Information

In the industrial electronics and electronic materials businesses, we began sales ofa stamping-type plating machine that enables high-speed plating. This machine
was developed by Mikado Technos Co., Ltd., incorporating its proprietary vacuum
press technologies and drawing on patents and expertise provided by Toyota
Motor Corporation. The product features a revolutionary new technology
employing a polymer membrane (solid electrolyte membrane) that allows metal
ions to pass through, effectively “stamping” metal plating only on the necessary
parts of components. This process eliminates the need to completely immerse
components in baths of plating solution, as with conventional processes. As such,it will enable major reductions in emissions of waste solution and CO2, helping to
reduce environmental impact.

KANEMATSU Integrated Report 2021

47

Foods, Meat & Grain
Foods

Committed to safe, secure food, this division applies a manufacturer’s
perspective to maintain an integrated supply system spanning raw
material procurement through finished product processing.
With a broad lineup that includes agricultural products, marine
products, coffee, alcoholic and non-alcoholic beverages, and cooked
foods, the Foods Division meets diverse market needs.
Koichi Nishimura
Executive Officer,
Chief Officer, Foods Division

Key SDGs

The Foods division seeks to secure stable food sources and contribute to local communities bypromoting business in environmentally friendly and sustainable agricultural and marine products,
such as Rainforest Alliance-certified coffee and MSC/ASC-certified* marine products. Furthermore,
we are contributing to the reduction of food loss through the provision of processed ingredientsthat offer extended shelf lives while maintaining high quality.
* MSC: Marine Stewardship Council; ASC: Aquaculture Stewardship Council

Division Vision

Support people’s health in Japan and across Asia by providing a stable supply of safe, reliable, high-quality
food ingredients and products
Division Strengths
Procurement network leveraging locations worldwide for securing high-quality, differentiated raw ingredients
Specialized staff capable of quickly developing products and proposals in response to customer needs
Import, manufacturing, and logistics networks covering growing Asian markets
Business Environment
Opportunities• Demographic graying of consumers and rising
health awareness• Personnel shortages and rising staffing costs inthe food products industry• Growing food demand and shift from focus on
quantity toward quality in Asia

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

48

KANEMATSU Integrated Report 2021

Growth Strategies• Develop production sites for fresh agricultural products that are safe andreliable• Develop and commercialize delicious and easy to prepare processed foodproducts 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 grow businesses in local production for local consumption

Countermeasures• Hedge risks by working with production sites distributed around the world;
secure water resources and promote cultivation• Reinforce food safety management systems based on ISO 22000 and FSSC
2200
• Trade in agricultural and marine products that are certified as sustainable bythird parties and promote the use of renewable products

Key Businesses and Locations
Kanematsu’s Progress and Strengths

Germany• Frozen dim sum manufacturing•Cooked meat product manufacturing
Dalian Tiantianli Food Co., Ltd.

• Japanese food import and sales
Fujita & Co.

• Fruit processing
Shangdong Lufeng Foods Co., Ltd.
• Seaweed processing
Nantong Taiyang Foodstuff Co., Ltd.

China

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

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

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

Management Strategy• Frozen processed food
PT. Kanemory Food Service

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

Progress toward the Medium-Term Vision
our retail lineup of frozen fruits and vegetables that are easy
to eat and leave minimal residue when used at home.
In the alcoholic and non-alcoholic beverage business, the
COVID-19 pandemic led to increased demand for in-homeconsumption. In response, we developed such retail products as bottled wine and coffee products, and sales havebeen strong.
In Asian markets, to respond to changes in the market
environment of PT. Kanemory Food Service in Indonesia, weare advancing product supply to cloud kitchens for homedelivery services and the development of frozen food products for retail distribution. Furthermore, by reinforcing relationships with our partners and aggressively investing, we
aim to become a leader in the region as part of efforts toachieve the medium-term vision.

Sustainability
Review of Operations

To strengthen its ability to procure high-quality raw materials overseas, the Foods Division works with suppliers
around the world via exclusive contracts, investment, andfacility loan agreements. To ensure the level of quality that
consumers in Japan expect, we reinforce production systems
and put in place Japanese specialists to oversee quality
control systems. Through such efforts, we are working toensure the stable supply of safe, reliable food. Furthermore,as the COVID-19 pandemic has increased demand for readymade meals and foods prepared at home, we have
expanded sales of retail products to meet consumer needs.
In the cooked foods business, anticipating needs forfoods that are quick and easy to prepare, we developed
pre-cooked food products and easy meal preparation kits. In
the fruit processing and fruit juice businesses, we expanded

Business Highlight
Cutting-Edge Fruit Processing Technology—Nice Tech

KANEMATSU Integrated Report 2021

Financial Section and Company Information

As a leader in processed fruit products, Kanematsu
develops products based on a commitment to safety, reliability, and quality.
In recent years, we have been focusing efforts onfrozen fruit based on Nice Tech, a new freezing technology. Ordinary rapid freezing has a significant downside—when fruit is frozen this way, the cell walls break,causing water to leak out along with nutrients and flavor.
With Nice Tech freezing technology, however, fruit can befrozen and thawed without breaking the cell walls andlosing water. This allows fruit to retain all its natural nutrition and flavor. As a result, we are able to offer frozen

fruit at a quality level virtually the same as fresh.
Kanematsu has been handling Nice Tech products
since their launch in 2014. As a sales agency, we strive fortechnological and quality enhancement and to more
broadly market these products.
Nice Tech frozen fruit can be stored longer than fresh,
helping to reducefood waste. Goingforward, we will
expand sales of theseproducts as a form ofsustainable fruit.

49

Foods, Meat & Grain
Meat Products

Leveraging our accumulated know-how as an industry leader in themeat products business, we build meat product value chains, fromsecuring raw ingredient sources to processing and sales, to provide astable supply of safe, reliable, high-value-added products that meetcustomer needs.

Toru Hashimoto
Executive Officer,
Chief Officer,
Meat Products Division

Key SDGs

The Meat Products division promotes business in animal products produced withlow environmental impact, such as Uruguayan beef, and proactively engages withnew food technologies, such as those for meat substitutes, to help securesustainable food sources.

Division Vision

Support people’s health in Japan and across Asia by providing a stable supply of safe, reliable, high-quality
food ingredients and products
Division Strengths
A product lineup spanning the full range of meat products and a leading market share in each product category
Meat product value chains extending from raw ingredient procurement (production site development) to processing and distribution tomeet customer needs
Attentive service with highly specialized staff and differentiated products and services
Business Environment
Opportunities

Growth Strategies• Expansion of imports due to reduced import tariffs under the TPP11, the EPA with the European
Union, and the TAG with the United States• Pursue expansion of scale via business investment and M&A to strengthen thefunctions of the meat products group and thereby reinforce domestic sales• Growing demand for meat products in Asian markets• Growing consumer awareness of safety and reliability issues• Step up initiatives undertaken with current suppliers and cultivate new production sites to develop safe, secure, high-value-added products with a stablesupply stream

Risks

Countermeasures• Supply interruption related to diseases, such as
foot-and-mouth disease, BSE, hog cholera, andavian influenza• Raw ingredient price fluctuation• Decrease in Japan-bound supply availability due
to rapid growth in demand for meat products in
Asian markets

50• Extend business models used in Japan to expand meat product businesses in
Asian markets

KANEMATSU Integrated Report 2021

• Diversify production sites to better distribute suppliers• Diversify customers and expand processing businesses to mitigate price fluctuation risk
• Reinforce procurement capabilities by deepening initiatives with suppliers

Key Businesses and Locations
Kanematsu’s Progress and Strengths• Meat importing and sales• Meat processing• Beef importing and sales• Beef and pork purchasing

CanadaEurope
China

Japan

Hong Kong• Meat importing and sales• Meat processing• Cooled and refrigerated storage
and distribution• Japanese beef and pork sales
and exporting

United StatesIndonesia• Pork and chicken
purchasing• Pork purchasing

Brazil• Pork purchasing

Chile
Australia

Management Strategy• Chicken and processedchicken product purchasing• Beef, lamb, and live cattle
purchasing• Beef, pork, chicken, andturkey purchasing• Beef sales

MexicoThailand•Beef importing and sales• Beef and pork purchasing

New ZealandUruguay• Beef purchasing• Beef and lamb purchasing

Progress toward the Medium-Term Visionmarket. Responding to the rapid growth in Asian markets, in2018 we established Dalian Matsutomo Foods Co., Ltd., as a
joint venture with a local partner in China for the primaryprocessing and sale of meat products. In the Chinese market,
which is beginning to emerge from the economic stagnation
caused by the COVID-19 pandemic, demand for beef isrecovering and increasing. To meet this demand, we plan toexpand the facilities of Dalian Matsutomo Foods. We will
horizontally expand similar initiatives in growing Asianmarkets to expand the earnings base.

Sustainability

To establish a stable supply of safe, reliable, high-valueadded products that meet customer needs, we continue tobuild value chains. In upstream areas, we are reinforcing
relationships with suppliers through business tie-ups andinvestment while diversifying our sources to secure a stablesupply. In mid- and downstream areas, we have worked withGroup companies and our partner companies to reinforce
such functions as sales business promotion, storage (refrigeration), and processing. In the processing business, in 2019
we established a joint venture plant in Higashi Ogishima,
Kawasaki, to reinforce Group functions in the Japanese

Review of Operations

Business Highlight
Helping Solve the Protein Crisis—Expanding thePlant-Based Meat Business* A plant-based food made from legumes that reproduces the richflavors and textures of meat using multiple manufacturingmethods patented in Japan, the United States and Europe. This
“next-generation meat” offers the potential to greatly reduce meatindustry greenhouse gas
emissions. As a new superfood
from Japan and the latest infood tech, the application ofthis technology to a wide
variety of product categories
is very promising.

KANEMATSU Integrated Report 2021

Financial Section and Company Information

The United Nations estimates that the global population will reach 10 billion by 2050. At the same time, theglobal supply of protein is expected to fall short ofdemand by 2030, creating a global protein crisis.
Against this backdrop, in December 2020, theKanematsu Group formed a capital alliance with DAIZ
Inc., a startup in the business of plant-based meat, tohelp provide a stable supply of high-quality plant
protein to the market. The Kanematsu Group willleverage its wide-ranging sales channels in and outside
Japan in the food soybeans, oilseeds, meat products,
and food businesses to sell Miracle Meat,* the plant-

based meat developed and produced by DAIZ. By
promoting this business, we will help solve the global
protein crisis and reduce environmental impact,
contributing to the realization of a sustainable world.

51

Foods, Meat & Grain
Grain, Oilseeds & Feedstuff

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

Key SDGs

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

Division Vision

Support people’s health in Japan and across Asia by providing a stable supply of safe, reliable, high-quality
food ingredients and products
Division Strengths
Comprehensive product lineup, including oilseeds and staple grains, such as rice, barley, soybeans, and corn, as well a wide range ofrelated products
Resources to secure a stable food supply (supply bases in key food production regions worldwide and human resources with abundant
product expertise)
Supply of high-quality products from production sites that practice stringent quality control in and outside Japan
Business Environment
Opportunities

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

Risks• Price fluctuations• Supply disruptions due to extreme weather
events• Quality control

52

KANEMATSU Integrated Report 2021

• Use IoT, genome editing, and other technologies to help increase the productivity of our partner

Countermeasures• Enter into hedges via futures markets, such as the Chicago Mercantile
Exchange• Secure stable supply by diversifying production sites and suppliers• Enhance quality control through upstream production and sourcing businesses

Key Businesses and Locations• General raw feedstuff material supply,
local production
Mixed feedstuff manufacturer
Dalian Runsong Biological Feed Co., Ltd.

EuropeNorth America

China• 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 the aquacultureindustry
Dalat Milk Joint Stock Company
Other partners

ASEAN region

Management Strategy

SouthAmerica

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

Kanematsu’s Progress and Strengths• Pasta, frozen dough,and raw feedstuff
material supply• Grains, oilseeds, fish meal
and fish oil, and roughage(cottonseed, etc.)

Progress toward the Medium-Term Vision

Start of Operations at an Animal Feedstuff
Soybean Processing Plant and Sustainable
Feedstuff Material Supply in China

and we expect strong growth going forward.
Kanematsu supplies all the joint venture’s raw materials,
mainly soybeans produced in the United States. The U.S.grown soybeans are sourced only from factories certified
under the Soy Sustainability Assurance Protocol (SSAP), andthe joint venture is one of few companies authorized by the
U.S. Soybean Export Council to use the SSAP certification
logo on the packages of its products distributed in China.
Through its operations, the joint venture is promoting a shift
away from animal protein meal—an area of concern due todwindling supply—and toward its sustainable plant-based
animal feedstuff while contributing to the growth ofdomestic meat production in China, where demand is
growing. The KanematsuGroup aims to continue tocontribute to the development of the meatindustry going forward.

KANEMATSU Integrated Report 2021

Financial Section and Company Information

In 2019, Kanematsu established Dalian Runsong Biological
Feed Co., Ltd. as a joint venture with local partners. This
company operates outside Dalian, China, producing soybean
products for animal feedstuff, such as puffed soybean meal,that are sold on the domestic Chinese market. In the first halfof 2020, the COVID-19 pandemic caused delays in thecompany’s operational launch. In the latter half of the year,
however, it began operation in earnest, making a smooth
start toward a planned annual capacity of 100,000 tons.
In recent years, reflecting government policies, major
meat producers have been moving their farms to northeast
China, setting up new facilities and implementing plans toincrease production by more than 10% per year. Such major
meat producers are the main customers of our joint venture,

Review of Operations

Business Highlightpartners, has begun operations. The plant has a planned
capacity of 100,000 tons per year, and production and sales areadvancing smoothly. Furthermore, using this sales channel, we
are also expanding sales of other animal feedstuff products.
In North America, our forage processing plant remains in full
utilization after a previous drop due to U.S.-China trade friction.
Exports to the Middle East are also gradually increasing, andthis business promises growth going forward.
In the domestic feedstuff materials business, we have a
supply framework for an unmatched full product lineup andare working to realize smart farming through the application of
ICT across the livestock field.

Sustainability

In the rice business, we have a leading share of Japan’s
imported rice market and are seeing gradual growth in rice
trading overseas, such as exports to Singapore and China.
Going forward, we will also focus on exports from Vietnam, ouroverseas base for the rice business, to other countries in Asia.
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 aleading market share in Japan. We have also begun seed
improvement using genome editing with the aim of providing
even more added value.
In the overseas feedstuff materials business, our joint-venture
soybean processing plant in Dalian, China, established with local

53

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

Eiji KanManaging Executive Officer,
Chief Officer, Steel, Materials &Plant Division

Key SDGs

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

Segment Vision

Change society by providing high-value-added products through businesses that support infrastructure
Segment Strengths
Diverse products and relationships with a broad client base due to the integration of businesses in different sectors
Business creation capabilities of staff with wide-ranging expertise in areas from trading to business investment
Global value chains operating in cooperation with influential partners in and outside Japan
Business Environment
Opportunities• Changes in the global energy market structure,including declining demand for fossil fuels• Intensifying trade frictions between key countries,
such as the United States, China, and nations in
Europe and Asia
• Growing global awareness of the SDGs and otherenvironmental issues

Risks• Further changes to market structures and the realization of geopolitical risks due to trade problem
intensification• Temporary personnel shortages due to accelerating business investment• Changes to the business environment due totightening environmental regulations or otherfactors arising from the international shift toward
lower carbon emissions

54

KANEMATSU Integrated Report 2021

Growth Strategies• Accelerate initiatives in renewable energy businesses• Expand business in high-performance products and products made to proprietary standards to reduce risk related to trade problems• Create new business schemes by reinforcing relationships with business partners

Countermeasures• Mitigate the risk of trading right advantages being weakened by cultivating
new markets, products, and trading partners• Provide education and opportunities for employees to gain experience, mainly
through personnel exchanges with affiliated companies in and outside Japan• Create new businesses that contribute to environmental preservation, including CO2 reduction

Key Businesses and Locations
Kanematsu’s Progress and Strengths• Equipment for ships• Pharmaceuticals• Functional foods• Specialty steel

Russia• General chemicals• Specialty steel

North America

EuropeChina

Middle East

• Treated-surface steel materials• Specialty steel

South Korea

India• Plant facilities• Iron and steel productsSoutheast Asia

• Bunker oil• Biomass fuel• General chemicals• Specialty steel• Plant/infrastructure• Shipbuilding• Steel tubing• Specialty steel• Functional foods

Management Strategy• High-performance steel materials• General steel materials

Progress toward the Medium-Term Vision

Development and Supply of Steel Piping for CO2
Injection in Oil Reservoirs in the United States:
Helping Reduce CO2 Emissions

Kanematsu and its U.S.-based Group companies Steel
Service Oilfield Tubular, Inc. and Benoit Premium
Threading, LLC, have supplied steel tubing with specialized connections to CO2 EOR operators for many years.
Going forward, the Kanematsu Group will build a supply
network for the promising global CCUS market in order
to contribute to the realization of a sustainable world.

KANEMATSU Integrated Report 2021

Financial Section and Company Information

Carbon capture, utilization and storage (CCUS) has
been spotlighted in recent years as a necessary technology for achieving e carbon neutrality by 2050. In the
United States, Kanematsu provides steel tubing for CO2
enhanced oil recovery (EOR), a method of CCUS.
A process for extracting crude oil from oil fields
where extraction is otherwise impossible, CO2 EOR
entails injecting CO2 into oil reservoirs. At the end of
the process, CO2 that would have been released into
the atmosphere remains stored in the reservoir. The
United States has been implementing EOR projects formore than 60 years and today accounts for almost 90%of active EOR projects globally.

Review of Operations

Business Highlight

In the energy business, in response to rising renewableenergy demand and growing concern about the environment, we are expanding initiatives in the solar power generation and biomass fuel businesses.
In the plant and ships business, we are working toachieve greater differentiation from our competitors, mainly
through package project proposals covering everything fromraw materials and products to related materials.
While this segment currently faces numerous headwinds,such as shifting crude oil prices and trade problems, we are
steadily taking steps to build a stable business foundation
for the future.

Sustainability

In the chemicals business, we deepened initiatives in thehigh-value-added pharmaceuticals and life science fields.
In the iron and steel business, we have invested in South
Korean and Vietnamese companies with strengths in theconstruction materials field, which offers high growthpotential. In Japan, we have welcomed a Kyushu-based
aluminum construction material manufacturer into theGroup, reinforcing our comprehensive construction
material-related product and service sales capabilities.
In the steel tubing business, we have established a technical center and a new factory with an eye to meeting longterm needs in the United States, which has become theworld’s top oil producer.

55

Motor Vehicles & Aerospace
The motor vehicles and parts business handles motorcycle andautomobile parts as well as complete built up vehicles, while theaerospace business handles aircraft and parts as well as space-related
products. These businesses operate on a global scale, leveraging theGroup’s superb expertise and extensive information resources.

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

Key SDGs

The Motor Vehicles & Aerospace segment aims to contribute to society byproviding safe and pleasant mobility. We aim to build living environments thatare environmentally friendly, sustainable, and free of traffic accidents throughnext-generation mobility.

Segment Vision

Contribute to society by creating next-generation mobility businesses centered on the environment, safety,
and comfort
Segment Strengths
A strong roster of sales assets, including industry-leading customers and business partners around the world, built up over the decades
Supply chain management that leverages our logistics network through overseas locations and Group companies
Ability to gather information, set up businesses, and execute investments in areas related to advanced technologies and startups
Business Environment
Opportunities

Growth Strategies• Long-term growth in demand for cars and motorcycles inemerging countries and the emergence of new demand related
to the evolution of CASE and MaaS technologies• Leverage the Group’s global network to further hone existing projects,
increase value added, and execute new investments• Growing demand for air travel in step with globalization andgrowth in the space business due to public and private development and forward-looking investment in developed countries• Rapid diversification of mobility as part of a once-in-a-century
period of technological innovation and digitization• Advance partnerships with startups, mainly through our investmentbase in Silicon Valley, to create new businesses

Risks

Countermeasures• Fluctuations in demand due to changes in international conditions, such as environmental regulations, economic sanctions,or trade frictions• Innovate existing value chains, create new added value and evolve toimplement next-generation business models• Drastic changes in commodity structures, value chains, or business models due to the development of CASE, MaaS, or othersuch technologies• Fluctuations in commercial air travel due to movement restrictions imposed in response to global pandemics

56• Further develop the commercial aircraft aftermarket business andexpand scale, mainly in the part-out and maintenance, repair and overhaul (MRO) businesses

KANEMATSU Integrated Report 2021

• Increase trading of components for EVs and other environmentallyfriendly vehicles, develop data and software businesses in addition to
our existing businesses• Rebuild business operations and reinforce our foothold in growing
markets in Asia

Key Businesses and Locations• Motorcycle OEM components• Aerospace equipment andcomponent agency sales

EuropeChina

North America

Japan
South
Korea

India, Thailand,
Indonesia• Motorcycle OEM components andwarehouse operation• Establishment and operation of jointventure plants with business partners• Aircraft and helicopter fuselages,
components sales agency, and spacerelated sales agency (private/public)• Rocket downrange operations• Kanematsu Aerospace Corp.
(aircraft equipment import agency sales)• Kaneyo Co., Ltd.
(Fiber material import, export, anddomestic sales)• Datatec Co., Ltd.
(Vehicle operation management, driving
safety analysis, and other network
service development and sales; andvehicle meter development and sales)

Central &South America(Mexico and Brazil)
Management Strategy• 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

Kanematsu’s Progress and Strengths• Motorcycle and automobile
OEM components• Establishment and operation of
joint-venture plants withbusiness partners(Germany, Italy, United
Kingdom, Austria, Ireland,and Poland)• 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 advanced
technologies, and growth support for startups• Motorcycle and automobile
OEM component trading

Progress toward the Medium-Term Vision
field, which we aim to pioneer in Japan. In the space business, the satellite-related component business, an area ofstrength, performed steadily, and we have been receiving
stable orders in the rocket downrange operations businessand contributing to national projects.
Moreover, to further efforts to develop cutting-edge
technologies and build new business models, in April 2021
we established the cross-divisional Advanced Mobility
Business Development Section. Working in close coordination with Kanematsu Ventures Inc. (established in Silicon
Valley in 2018), the new department will work to further
accelerate business investment and new business creation
initiatives.

Sustainability
Review of Operations

In the motorcycle and automobile business, we have been
setting up sales offices in Thailand and India, leading toclose involvement in production in Thailand by Indian manufacturers, and we are now in the process of establishing new
operations centered on Asia. Aiming to expand our areas ofbusiness, in February 2021, we acquired 90% of the sharesof Datatec Co., Ltd. With this acquisition, we will advancenew data businesses in and outside Japan. In the aircraftbusiness, Kanematsu has partnered with Skyports Limited, acompany that develops vertiports, a form of ground-based
infrastructure for eVTOL (flying vehicles), which are being
hailed as the next generation of mobility. Through this partnership, we are building the foundations for business in thisBusiness Highlight
New Business in Vehicle Data

KANEMATSU Integrated Report 2021

Financial Section and Company Information

Kanematsu acquired 90% of the shares of Datatec Co.,
Ltd. in February 2021. Datatec possesses particularexpertise in vehicle behavior analysis technology andprovides such products and services as digital tachographs for commercial vehicles and other in-vehicle
devices that aid safe driving. The company also provides
products and services that improve fuel efficiency,
helping to reduce CO2 emissions. Datatec is currently
conducting field tests in Indonesia as part of the Ministryof the Environment’s Financing Program to Demonstrate
Decarbonization Technology for Realizing
Co-Innovation, developing technologies aimed at facilitating a shift to a low-carbon world.
Kanematsu will expand sales of Datatec’s mainstay

digital tachographs in Japan and overseas and utilize
Datatec’s vehicle behavior analysis technology to develop
new businesses in the in-vehicle telematics market.
Leveraging the vast amounts of vehicle operation dataobtained from Datatec’s in-vehicle units along with AI, we
will focus our efforts on the environment, safety, andcomfort. We will work toward a next-generation mobility
society that is
free from traffic
accidents andfriendly to theenvironment,
thereby contributing to theachievement of
the SDGs.

57

Financial and ESG Highlights
JGAAP(As of March 31)

IFRS

2011

2012

2013

2014

2015

Operating income/Operating profit¥936,891—
76,90518,029¥1,006,365—
80,90021,426¥1,019,232—
80,021
18,262¥1,114,539—
86,402
19,776—¥704,211
87,88023,547

Income (loss) before income taxes andminority interests/Profit before tax

13,03013,52916,781

19,07522,373

Net income (loss)/Profit for the year
attributable to owners of the Parent3

9,175

6,110

9,564

11,79910,546

Cash flows from operating activities

7,827
17,32225,14915,822
1,291
17,113

1,355
1,466
2,821

22,384(1,111)
21,273

6,758(6,649)109

Net assets/Total equity

388,676
49,576

399,753
55,992

399,186
75,912

428,459
96,204

466,314
119,015

Shareholders’ equity/Total equity
attributable to owners of the Parent

33,10139,00854,51971,657

90,244

Net interest-bearing debt

104,61290,01286,43968,03872,155

Net income/Basic earnings per share
attributable to owners of the Parent3¥21.93¥14.60¥ 22.80¥ 28.09¥ 125.494

Net assets/Equity attributable to ownersof the Parent

79.07

93.16

129.82170.54

1,072.204

—

—

—

3.00

4.00

29.59
8.5
3.2

16.95
9.8
2.3

20.45
13.7
1.6

18.70
16.7
0.9

12.99
19.4
0.8

For the year:
Net sales
Revenue
Gross profit

Cash flows from investing activities
Free cash flow
At year-end:
Total assets

Per share (yen):

Cash dividends
Financial indicators:
Return on equity (ROE) (%)
Equity ratio (%)
Net D/E ratio (times)

ESG* (Non-Financial) Data: *ESG: Short for environmental, social, and corporate governance.

4,770
832 (250)

4,770
795 (238)

5,522
782 (242)

5,747
800 (246)

6,002
813 (253)

30

30

31

31

31

External disposal of general waste (t)7

644.76
6,801,30571.50

443.83
7,062,310
46.57

471.42
6,874,521
48.95

456.44
6,648,353
37.60

Total electricity consumption (kWh)7

Employees—consolidated
Employees—non-consolidated (women)
Percentage of women among
employees—non-consolidated (%)

1,561,164

871,965

828,514805,015

Directors (outside directors)810 (0)

10 (0)

10 (0)

6 (1)377.54
6,645,797
33.40
682,7177 (2)Audit & Supervisory Board members8(outside Audit & Supervisory Board members)

4 (3)

4 (3)

4 (3)

4 (2)

4 (3)

15.1
6.5
7.2

15.5
10.3
10.1

16.0
0
8.3

15.7
2.6
8.0

15.5
3.5
8.8

6, 7

CO2 emissions (t-CO2)

Total paper use (sheets)7

Average length of service (years)
Three-year job separation rate (%)9
Average overtime worked (hours/month)

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 ¥110.71 to U.S.$1.00, the exchange rate prevailing on March 31,2021.
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.

58

KANEMATSU Integrated Report 2021

IFRS
Millions of yen1

Thousands of
U.S. dollars2

2018

2019

2020

2021

2021

—
¥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—$5,863,477
916,952
213,490

18,122

17,87526,04329,177

26,944

23,580212,992

8,959

8,049

16,317

16,605

14,39913,315120,272

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)
27,057334,070(89,667)
244,403443,592
120,706

479,717
129,863

519,889
147,050

549,459
158,698

551,671
166,174

557,495
180,492

5,035,640
1,630,316

91,599100,357

116,012125,246

130,829

143,926

1,300,029

48,81355,42959,04549,96951,80740,520366,003¥ 193.794¥ 198.22¥ 172.43¥ 159.44$ 1.44

1,088.454

1,192.214

1,377.664

1,499.86

1,566.60

1,723.42

15.57

5.00

6.00

48.005

60.00

60.00

60.00

0.54

9.85
20.6
0.5

8.39
20.9
0.6

15.08
22.3
0.5

13.77
22.8
0.4

11.25
23.7
0.4

9.69
25.8
0.3

5,832
816 (259)

6,727
835 (273)

6,666
842 (282)

6,915
765 (263)

7,182
775 (266)

7,296
795 (284)

32

33

33

34

34

36

392.586,087,765
31.90
735,1747 (2)398.686,256,363
32.70
768,1668 (3)400.745,920,960
29.50
772,1378 (3)358.31
5,510,121
35.00
690,3786 (2)304.05
4,919,786
27.20
659,5346 (2)265.44
3,099,900
18.28
597,845
6 (2)

4 (3)

4 (3)

4 (3)

4 (3)

4 (2)

4 (2)

13.8
4.8
8.1

15.4
5.2
11.6

15.5
9.4
12.1

15.0
10.5
12.5

14.0
—
17.5

13.8
—
18.1

Financial Section and Company Information

95.644

Review of Operations¥

Sustainability¥ 106.464

Management Strategy

2017

Kanematsu’s Progress and Strengths

2016

6. The coefficients used to calculate the above figures are the most recent values published by the Japan Foreign Trade Council (originally publishedby the Electric Power Council for a Low Carbon Society via the Japan Business Federation).
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
office space due to the consolidation of branches or sales offices, etc.
8. The number following the General Meeting of Shareholders, after the year-end.
9. 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 hiredin 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).

KANEMATSU Integrated Report 2021

59

Management’s Discussion and Analysis

Foods, Meat & Grain

Business Results
For the fiscal year ended March 31, 2021, revenue declined¥72,660 million (10.1%) from the previous fiscal year to ¥649,142
million. Gross profit decreased ¥9,389 million (8.5%) from the previous fiscal year to ¥101,515 million. Operating profit decreased¥4,717 million (16.6%) from the previous fiscal year to ¥23,635
million, reflecting the decrease in gross profit and despite adecrease in selling, general and administrative expenses. Profit
before tax decreased ¥3,364 million (12.5%) from the previous­fiscal year to ¥23,580 million, reflecting improvements in financecosts and share of profit of investments accounted for using theequity method. Profit for the year attributable to owners of the
Parent decreased ¥1,084 million (7.5%) from the previous fiscal
year to ¥13,315 million. As a result, return on equity (ROE) calculated on the basis of total equity attributable to owners of the
Parent (shareholders’ equity) came to 9.7%.

Segment Information
Results for each business segment are described below.

Electronics & Devices

Revenue decreased ¥28,407 million year on year to ¥226,109 million.
Operating profit fell ¥1,388 million to ¥17,575 million. Profit for theyear attributable to owners of the Parent fell ¥844 million to¥8,484 million.
Performance in terms of operating profit was as follows. The
ICT solutions business was generally solid, despite slow growth inserver and storage-related sales to the manufacturing industry andservices sector. The mobile business remained lackluster, mainly
due to decreased store foot traffic, reflecting shorter businesshours. The semiconductor parts and equipment business saw
firm performance in such areas as shipments to China of LCD
manufacturing equipment.
The COVID-19 pandemic impacted our businesses in many
ways. In the ICT solutions business, we faced limitations on businessactivities, and some aspects of IT investment were restrained,reflecting worsening corporate results. However, demand for strategic IT investment, such as that for remote work, increased, andwe strived to further expand sales in VDI environment building,security solutions, and service-based businesses. The mobile­business was forced to shorten store hours and faced industry
restructuring and the introduction of service plans available online.
Under these circumstances, we acquired and promoted the­consolidation of mobile phone sales agencies, aiming to increase
our market share and thereby secure our position while building
a high-revenue business structure. In the semiconductor component and equipment businesses, we acquired an IC test handler
manufacturing business and made a company that sells laser
wafer marking equipment and provides related services a Group
company, expanding our business portfolio.

Revenue decreased ¥6,786 million year on year to ¥244,617 million.
Operating profit fell ¥883 million to ¥1,498 million. Profit attributable to owners of the Parent rose ¥241 million to ¥1,495 million.
Performance in terms of operating profit was as follows. The
feedstuff business was strong, reflecting growing demand for foodprepared at home and rallying prices. Performance in the foodbusiness and the meat products business was lackluster, due largely
to struggling sales in the food service sector.
The food business was impacted by the COVID-19 pandemic,
but continues to work with suppliers around the world via exclusive
contracts, investment, and facility loan agreements to strengthen its
ability to procure high-quality raw materials overseas. To ensure
the level of quality that consumers in Japan expect, we send
Japanese specialists to reinforce production and quality control
systems. Through such efforts, we are working to ensure the stablesupply of safe, reliable food. In the meat products business, toestablish a stable supply of safe, reliable, high-value-added productsthat meet customer needs, we continued to build value chains,
investing in a Uruguayan beef producer and a company that produces plant-based meat from soy. In the feedstuff business, reflecting
economic recovery in China, our joint-venture soybean processing
plant established with local partners in China and our forage processing plant in North America have been operating smoothly.
Going forward, we aim to further expand overseas trading, improve
cultivars through genome editing, and realize smart farming.

Steel, Materials & Plant

Revenue decreased ¥33,027 million year on year to ¥96,831 million. Operating profit fell ¥1,979 million to ¥1,840 million. Profit
attributable to owners of the Parent decreased ¥195 million to¥2,060 million.
Performance in terms of operating profit was as follows.
Performance in the energy business was firm, mainly thanks to
improvement in the profitability of domestic petroleum producttrading. Meanwhile, performance in the iron and steel business
was lackluster, mainly due to high raw materials prices and thestagnation of overseas markets, despite improvement in market
conditions in Japan after manufacturers began raising prices.
Performance in the machine tools and industrial machinery business was weak, due primarily to the postponement of capital
investment plans, and the steel tubing business also performed
poorly, reflecting the continued impact of weak drilling demand.
While this segment currently faces numerous headwinds, suchas shifting crude oil prices and trade problems, in the iron and steelbusiness, we have invested in South Korean and Vietnamese companies with strengths in the construction materials field, which
offers high growth potential, reinforcing our comprehensive construction material-related product and service sales capabilities. In
the chemicals business, we deepened initiatives in the high-valueadded pharmaceuticals and life science fields; in the steel tubing
business, we established a new factory; in the energy business, we

Revenue

Operating Profit

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

(Millions of yen)

(Millions of yen)

800,000

35,00020,000675,579

714,790

723,849(Yen)

198.22200

193.79721,802649,142600,000

172.4330,34930,00016,31728,352
26,16025,00022,633

16,60515,000159.44

23,63520,000150

14,39913,31595.64*
100

10,000400,000
15,0008,049

10,000200,000

5,000

50

5,000

0

0

0

FY2017 FY2018 FY2019 FY2020

FY2021FY2017 FY2018 FY2019 FY2020

FY20210

FY2017 FY2018 FY2019 FY2020

FY2021

Profit for the Year Attributable to Owners of the Parent
Basic Earnings per Share60

KANEMATSU Integrated Report 2021

*	Kanematsu executed a share consolidation on
October 1, 2017, at a ratio of five shares to one. The
calculation of the above figures assumes that said
share consolidation was implemented on April 1, 2016.

Motor Vehicles & Aerospace

Other

Revenue decreased ¥921 million year on year to ¥10,497 million.
Operating profit fell ¥123 million to ¥696 million. Profit attributable to owners of the Parent rose ¥90 million to ¥380 million.

Analysis of Financial Status
Assets, Liabilities and Net Assets

Fundraising

The Kanematsu Group carries out fundraising in line with a basic
policy of stably procuring funds at low cost as needed to realize
sustainable growth in line with its six-year medium-term vision,
future 135.
The Group raises funds primarily through indirect financing
based on good relations with its main banks, regional banks, lifeand non-life insurers, and other financial institutions. Kanematsu
also raises funds from capital markets by issuing straight corporate
bonds as a means of long-term capital procurement. At the end of
the fiscal period under review, debt procurement through direct
financing accounted for 8% of consolidated interest-bearing debt.
To facilitate capital procurement, Kanematsu receives ratingsfrom Japan Credit Rating Agency, Ltd. (JCR) and Rating andInvestment Information, Inc. (R&I). The Group’s long-term ratings asof the end of the fiscal year under review are BBB+ (positive) from
JCR and BBB+ (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, the Group
has adopted a cash management system under which fundraising
for major domestic subsidiaries and affiliates is concentrated at the
Parent Company and proceeds are then allocated in response tocapital requirements. At the end of the fiscal period under review,
the Company’s interest-bearing debt accounted for 65% of theconsolidated Group’s interest-bearing debt, a reflection of theconcentration of fund procurement at the Parent Company.
As a result of the above fundraising activities, at the end of the
fiscal period under review, gross interest-bearing debt stood at¥122,157 million, a decrease of ¥21,237 million from the end of
the previous fiscal year. Net interest-bearing debt stood at ¥40,520
million, down ¥11,287 million from the end of the previous fiscal
year. As a result, the net D/E ratio stood at 0.3, and Kanematsu’s
financial position remained sound.
Corporate bonds and long-term borrowings (including the­current portion of corporate bonds and long-term borrowings)
accounted for 69% of the balance of interest-bearing debt at theend of the fiscal year under review (or 99% on a non-consolidated
basis). As such, Kanematsu’s fundraising was stable.

(Millions of yen)(Times)1.5

59,045(Millions of yen)

(Yen)

(Millions of yen)

200,000

2,000

150,000

55,42949,969(%)

143,926

180,492

51,807
158,698
150,000

40,52040,000Total Equity Attributable to Owners of
the Parent / Equity Ratio

1.0

147,050
1,499.86

129,863

166,174
1,566.60

125,246

125,000

1,723.42

100,357
100,000

1,377.66
1,000

50,000

500

22.3

20.9

30

25

25.8
22.8

23.7
20

75,00015

50,00010

25,0005

Financial Section and Company Information

100,000 1,192.21*

130,829

116,012

1,500

Review of Operations

Total Equity / Equity Attributable to
Owners of the Parent per ShareNet Interest-Bearing Debt*1 /Net D/E Ratio*2
60,000In the year under review, net cash provided by operating activities
totaled ¥36,984 million. Net cash used in investing activities
amounted to ¥9,927 million. Net cash used in financing activities
amounted to ¥37,497 million. As a result, after the effect of
exchange rate changes on cash and cash equivalents, cash andcash equivalents at the end of the fiscal year under review stood at¥81,045 million, down ¥10,060 million from the end of the previous
fiscal year.

Sustainability

Total assets at the end of the fiscal year under review increased¥5,824 million from the end of the previous fiscal year to¥557,495 million.
Interest-bearing debt decreased ¥21,237 million from theend of the previous fiscal year to ¥122,157 million, mainly due
to the repayment of borrowings and the redemption of bonds.
Net interest-bearing debt after deducting cash and deposits fell
¥11,287 million from the end of the previous fiscal year to¥40,520 million. Interest-bearing debt does not include leaseliabilities.
In terms of equity, equity attributable to owners of the parentrose ¥13,097 million from the end of the previous fiscal year to¥143,926 million, chiefly due to retained earnings and increases inother components of equity resulting from the depreciation of the
yen and rising share prices.

Cash Flows

Management Strategy

Revenue decreased ¥3,519 million year on year to ¥71,086 million.
Operating profit fell ¥328 million to ¥2,055 million. Profit attributable to owners of the Parent dropped ¥169 million to ¥1,497 million.
Performance in terms of operating profit was as follows. In theaerospace business, domestic aircraft-related transactions withgovernment agencies were solid, offsetting a slump in overseas
transactions involving aircraft parts. The motor vehicles and parts
business recovered slightly from the decline in global demand but
was still affected and remained weak.
In the motor vehicles and parts business, we acquired a dashboard camera development and manufacturing company with theaim of expanding our areas of business. Leveraging this acquisition, we will advance new data businesses in and outside Japan. In
the aerospace business, we formed a partnership in the development of ground-based infrastructure for eVTOL (flying vehicles),which are being hailed as the next generation of mobility. Throughthis partnership, we are building the foundations for business inthis field, which we aim to pioneer in Japan. Moreover, we areworking to establish innovative new businesses through ourinvestment base in Silicon Valley and continue to evolve our­initiatives in business investment and new business creation.

As a result, the equity ratio at the end of the fiscal year underreview was 25.8%. The net D/E ratio stood at 0.3 times.

Kanematsu’s Progress and Strengths

are expanding initiatives in the solar power generation and biomass fuel businesses; and in the plant and ships business, we areworking to achieve greater differentiation from our competitors,
mainly through package project proposals. Through such initiatives, we are taking steps to build a stable business foundation for
the future.

0.6
20,000

0.5
0.4

0.5

0.4
0.3

0

0

FY2017 FY2018 FY2019 FY2020
Net Interest-Bearing Debt

FY2021Net 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

FY2017 FY2018 FY2019 FY2020

FY20210

0

FY2017 FY2018 FY2019 FY2020

FY2021

Total Equity

Total Equity Attributable to Owners of the Parent

Equity Attributable to Owners of the Parent per Share

Equity Ratio*	Kanematsu executed a share consolidation on
October 1, 2017, at a ratio of five shares to one. The
calculation of the above figures assumes that said
share consolidation was implemented on April 1, 2016.

KANEMATSU Integrated Report 2021

61

Business Risks
Below are details of the risks that could affect the business performance and financial position of the Group.
The ­forward-looking statements below are based on information available as of June 23, 2021.
The Group takes all risk that it faces on a daily basis in the course of its business very seriously. Risk control isundertaken through management mechanisms and methods tailored to the nature of each category of risk.

Risk of Macro Economic Change
The Group is engaged in wide-ranging global businesses, including the trading of goods, business investment, and the provision ofservices in and outside Japan. As such, economic deceleration in
Japan, the United States, China, Europe, emerging nations in Asia,
or in the global economy as a whole could cause demand to stagnate, leading to decreases in sales and significant drops in market
prices. Such developments could negatively affect the Group’s
operating results and financial position.

Market Risk
Many of the risks related to fluctuations in currency exchange
rates, interest rates, and the product prices attendant to theGroup’s business transactions are hedged against in the terms oftransactions agreed upon with its business partners. In addition,individual internal units and Group companies set position limits
and loss limits based on risk level and revenue for foreign currency
exchange, interest rates on fund procurement, inventories, andtheir derivative products so that if these limits are exceeded, theGroup can promptly reduce its position. Furthermore, the Grouputilizes derivatives as hedging instruments to reduce the risk offluctuation in the prices of such positions. The status of these positions is regularly reported to the Management Committee. Whena position limit is exceeded, it is promptly analyzed before theposition in question is reduced.

Foreign Currency Risk

Incidental to its export and import trading, the Group is engaged
in foreign currency transactions in a number of currencies andunder a variety of terms. The Group participates in derivatives
transactions such as forward contracts to reduce the risk of currency fluctuations.
The Group also includes local subsidiaries and business corporations overseas. Account balances at these companies are converted into yen at the exchange rates prevailing at the time ofaccount closing for the purposes of preparing consolidated financial statements. Total equity attributable to owners of the Parent
may thus change as a result of translation adjustments related tooverseas operations due to exchange rate fluctuations. This could
affect the Group’s operating results and financial standing.

Interest Rate Risk

The Group raises the majority of funds needed for operating andfinancing activities in the form of borrowings from financial institutions at variable interest rates, with the exception of certain
loans. Such borrowings and fund management are exposed tointerest rate risk, as interest paid by the Group may increase due toa rise in interest rates.
In its asset-liability management, the Group regards the
portion of its short-term investments, long-term assets, and othernon-interest-sensitive assets that are procured at variable interest
rates as constituting its position subject to interest rate risk. The
Group uses interest rate swaps to avoid interest rate risk related
to borrowings, thereby reducing the interest rate risk pertaining
to a portion of this position. However, the impact of interest rate
fluctuations cannot be avoided completely and may affect theGroup’s operating performance and financial standing.

Risk Related to Supply and Demand and Prices of Goods

In its mainstay commodity trading business in Japan and overseas,
the Group deals with grains, meat products, petroleum products
and other products that are readily influenced by market conditions.
Although the Group uses commodity futures trading to reduce therisk of price fluctuations of ­certain goods, when its positions vis-à-vis
such commodities increase, such factors as rapid movements incommodities prices or declines in demand may lead to unexpected
losses and impact the Group’s operating performance.

Price Fluctuation Risk of Marketable Securities, etc.

The Group may hold shares in trade partners as a means of strengthening its relationship with them. There is a risk of price fluctuation

62

KANEMATSU Integrated Report 2021

inherent in these shares, which could have an effect on the financial position of the Group due to changes in financial assets measured at fair value through other comprehensive income.

Credit Risk
The Group extends credit in a number of forms, including accounts
receivable, advance payments, loans, and guarantees, as part ofdiverse business transactions with its trading partners in Japan andabroad. For this reason, deterioration in the financial standing of
its trading partners or other such circumstances may result in late
repayment or default. In the course of forming and carrying out
commodity supply agreements, subcontract agreements, or otheragreements, the Group could also be forced to honor obligations
and thereby incur a monetary loss if a trade partner were todefault on its obligation or contract. Although the Group has set
aside an allowance for such losses in its accounting using certain
estimates, an additional loss could arise if the loss exceeds thescope of the allowance. This could negatively impact the Group’s
operating performance.
For the purposes of extending credit to trading partners inJapan and abroad, the Group regularly rates its trading partners
based on their financial data and other information. It sets credit
limits based on these ratings and the type of credit in question andinsures credit where necessary. The Group ensures that total credit
extended stays within these credit limits. Such credit includes
transactional credit arising from normal business transactions aswell as that related to financing, guarantees, and other activities.
The Group periodically monitors credit collection and delinquency
status and takes steps to protect its interests as needed. However,these control efforts are not a guarantee that credit risk will beentirely avoided. Furthermore, if a business partner’s credit worsens, the Group will reduce its dealings with said partner or takesteps to protect its receivables. Moreover, the Group establishes
resolution policies for use if such a partner were to go bankrupt. In
these ways, the Group strives to collect receivables. However, if
receivables or other forms of credit become unrecoverable, theGroup’s operating performance may be negatively affected.

Country Risk
The Group engages in transactions, loans, and investments inother countries. The collection of receivables may be delayed orrendered impossible as a result of political or economic developments in these countries. To minimize losses that could arise
should a country risk be realized, the Group regularly sets limits
based on ratings given to each country and region according to
the scale of their respective country risk and avoids overexposure
to any particular country or region. The Group takes such steps as
enrolling in trade insurance programs as warranted by ratings andproject details in an attempt to minimize recovery risks. However,continuing relevant businesses and transactions may be difficult if
such risks actualize in certain countries and regions, potentiallyaffecting the business results of the Group.

Business Investment Risk
Under the future 135 medium-term vision, the Group aims for sustainable growth in business fields where it has stable earnings
structures while securing scale expansion and added value
through effective and appropriate business investment in areas ofstrength.
The Group establishes investment criteria for these business
investments, with a focus mainly on investing in areas of strength.
Based on their objectives, content, business profitability estimatedon a cash flow basis, and evaluations and analyses of risk factors,
these investments are deliberated by the corporate areas. Major
projects over a certain size are deliberated by the Project
Deliberation Committee. Investments are made after establishingcriteria for business withdrawal, following which the Project
Deliberation Committee regularly reevaluates and reviews theirbusiness potential and investment value to minimize any loss.
However, the value of business investments may fluctuate

Risk of Impairment on Long-Term Assets
The Group’s property, plant and equipment, goodwill, and intangible assets are exposed to impairment risk. As necessary, if the valueof such an asset decreases, the Group records said decline as impairment, which may affect its operating performance. In particular,
under the future 135 medium-term vision, the Group seeks growththrough business investment and, accordingly, its goodwill andidentifiable intangible assets may increase as a result of corporate
mergers going forward.

The Group procures business capital via borrowings from financial
institutions in and outside Japan, corporate bonds, and othermeans. The Group strives to maintain good business relationships
with financial institutions and effective asset-liability management
as well as to minimize liquidity risk by fundraising as warranted by
its asset holdings. However, disorder in financial markets, a major
downgrading of the Company’s credit ratings from a ratings institution, or other such developments could constrain the Group’s
fundraising ability or increase fundraising costs.

Legal Risk Related to Changes in Laws

Legal Risk Related to Lawsuits and Disputes

Compliance and Improper Conduct Risk

Risk of Climate Change and Social and Environmental Problems
The Kanematsu Group is engaged in business activities across awide range of fields in and outside Japan, and its ability to continue
such activities may be limited by the impact of climate change orworsening social, environmental, or other such problems.
Furthermore, environmental pollution, labor problems, or othersuch issues arising from the Group’s businesses may lead to the suspension of business, costs for removing pollution or the payment ofdamages, or a decline in the Group’s social standing.
The Group has designated and promotes awareness of key
issues to address in its corporate activities (responding to changes inmarket characteristics, mutual development with local communities,
consideration of the global environment, enhancing governance,and promoting respect for human rights, human resource development, and diversity). The Group has also established a Sustainability
Management Committee as a part of a system for proactively solving issues. Nevertheless, unforeseen circumstances or developments
may affect the operating results and financial position of the Group.
KANEMATSU Integrated Report 2021

Financial Section and Company Information

The Group operates businesses to buy, sell, and provide a broadarray of products and services in Japan and overseas and carefully
monitors laws and regulations, including those related to security
export control and other aspects of exporting and importing, thatare established and enforced for these products and services both
domestically and abroad.
To ensure comprehensive monitoring of relevant laws andcompliance, the Company has established the Internal Control andCompliance Committee, which implements regular reviews ofcompliance maintenance and responds to sudden issues.
However, it is difficult to ensure the completely consistent execution of related procedures across the Group’s wide range of
trading operations, which often involve multiple parties. Although
the Group has in place a number of measures to prevent violations, there is a risk that these may fail to prevent a legal violation

Disaster Risk
In the event of an earthquake, major storm, flood, or other natural disaster or extreme weather event, outbreak of influenza,novel coronavirus, or other infectious disease, a major accident,
an act of terrorism, a riot, or other unforeseen circumstance, theGroup’s employees and assets, such as systems, facilities andequipment, including offices, warehouses, and manufacturing
plants in Japan and overseas, may be impacted, impairing business or production activities. The Group also owns cargo being
stored or transported in and outside Japan for business transactions. Such assets may be damaged or deteriorate as a result of
natural disasters, accidents, or other developments, and thebusinesses of the Group may be suspended due to such developments as earthquakes, fires, floods, and riots. The Group takes
steps to mitigate such risk, including the adoption of employee
safety confirmation systems, formulation of disaster manuals
and business continuity plans (BCPs), measures to protect buildings, facilities, and systems from earthquake damage (including
data backup), disaster readiness training, preparation of stocksof necessary supplies, and coordination and information sharing
with business locations and affiliates in and outside Japan.
Nevertheless, depending on the extent of the damage, such incidents may affect the operating results and financial position of
the Group.
In response to the global novel coronavirus pandemic, theGroup is implementing a variety of measures to minimize infection
among the Group and its stakeholders as well as business continuity risk. These include staggered commuting and telecommuting,restrictions on domestic and international business travel andtransfers, spreading awareness of infection prevention measures,and monitoring developments in various regions through its
domestic and international network. In particular, the Group’s policy is to have all employees work remotely, in principle, when a relevant government body issues stay-at-home orders or declares astate of emergency. The Group will continue working to preventthe spread of infection based on the policies, action plans, andrequests of government authorities.

Review of Operations

The Group’s business operations and associated assets and liabilities may become subject in various ways to legal proceedings,
including lawsuits, or other disputes in the course of businessactivities undertaken in Japan and overseas. Such lawsuits andother disputes are generally unpredictable, and resolving them isoften very time-consuming. Furthermore, any prediction of theirresults involves uncertainty. If such lawsuits or disputes arise andlead to unexpected outcomes, the Group’s operating results andfinancial position may be affected.

The Group builds and operates information systems for sharing
information and streamlining its operations. The Group has adopted
information security control rules and takes thoroughgoing steps torealize effective crisis control response to ensure the safety of its
information system operations. However, information systems cannot be made entirely invulnerable to the unauthorized disclosure ofsensitive business information or personal information as a result of
unauthorized access, computer viruses, or other threats, nor to inoperability due to such factors as natural disasters, destruction of information system facilities attributable to accidents and other causes,
and communication line problems. Such issues may reduce the efficiency of operations that depend on information systems and,depending on the scale of damage, seriously affect the businessresults and financial position of the Group.

Sustainability

The business activities undertaken by the Group are subject to awide range of legal regulations in Japan and other countries. The
Group takes the utmost care to abide by these regulations andmay become unable to continue certain transactions because offactors such as unexpected changes in laws, changes in export andimport regulations, including punitive tariffs introduced unilaterally following changes in the international political environment,
and changes in regulations, such as requirements for permits andlicenses related to the sale and handling of products. In addition,
lawsuits or orders issued by the relevant authorities in relation tosuch developments may result in unexpected expenses for theGroup. This risk also includes the risk of changes in tax rates or tax
arrangements imposed by the relevant authorities or between
countries under international taxation arrangements. Changes inlegal systems could thus influence the operating results and financial position of the Group.

Information Security Risk

Management Strategy

Fundraising Risk

or instance of improper conduct. If such violation or conduct ismaterial, the operating results and financial position of the Group
could be affected.

Kanematsu’s Progress and Strengths

according to the financial condition of the investment targets andthe success or failure of the business.
Local laws and relationships with partners may prevent theGroup from executing its policy for operating or withdrawing froma business, leading to the loss of part or all of the investment, or toa need to provide additional funding. This may negatively affect
the Group’s operating performance.

63

Major Group Companies(As of April 1, 2021)* Companies with shares listed on a stock exchangeElectronics &DevicesJapan
Kanematsu Electronics Ltd.*
Nippon Office Systems Ltd.
Kanematsu Sustech Corporation*
Kanematsu Communications Ltd.
Kanematsu Granks, Corp.
Kanematsu Futuretech Solutions Corporation
Kanematsu Advanced Materials Corp.
Kanematsu PWS LTD.
NS Technologies Inc.
Lumonics K. K.
G-Printec, Inc.
Japan Data Exchange Inc.
China
Kanekoh Electronics (Shanghai) Co., Ltd.

Foods, Meat &
Grain

Japan
Kanematsu Foods Corp.
Kanematsu Agritec Co., Ltd.
Kanematsu Soytech Corp.
GPC Holdings Co., Ltd.
Ks’ Meat Solution Co., Ltd.
China
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.
ThailandSiam Aloe Vera (2005) Co., Ltd.
Indonesia
PT. Kanemory Food Service
U.S.A.
KAI Enterprises, Inc.
Sage Hill Northwest, Inc.
KG Agri Products, Inc.

Steel, Materials & Japan
Kanematsu Trading Corp.
Plant

Kyowa Steel Co., Ltd.
Eiwa Metal Co., Ltd.
Kenkosya Co., Ltd.
Kanematsu Petroleum Corp.
Kanematsu Yuso Co., Ltd.
Kanematsu Chemicals Corp.
Kanematsu Wellness Corp.
Kanematsu KGK Corp.
KGK Engineering Corp.
Watachukikai Corp.
Aioi Sekkei Co., Ltd.
China
Kanematsu KGK Trade & Sales (Shanghai) Co., Ltd.
ThailandKGK Engineering (Thai) Co., Ltd.
Vietnam
ATAD Steel Structure Corp.
U.S.A.
Steel Service Oilfield Tubular, Inc.
Benoit Premium Threading, LLC
KGK International Corp.

Motor Vehicles & Japan
Kanematsu Aerospace Corp.
Aerospace
Kaneyo Co., Ltd.
Datatec Co., Ltd.
Ireland
KG Aircraft Rotables Co., Ltd.
PolandAries Motor Ltd.
Aries Power Equipment Ltd.
U.S.A.
Kanematsu Ventures Inc.

Other

64

Japan
Hokushin Co., Ltd.*
Shintoa Corp.
Kanematsu Logistics & Insurance Ltd.
Japan Logistics Co., Ltd.
Indonesia
PT. Dunia Express Transindo

KANEMATSU Integrated Report 2021

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
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
Design, development, and sales of semiconductor production equipment, testing equipment and related components; Technical services
Design, development, and manufacture of IC test handlers
Sales of and maintenance services for wafer marking systems
Design, development, manufacture, sales and maintenance services (OEM) for card printers and related equipment
Data utilization consulting and data exchange support
Design, development, manufacture, and sales of control modules for lithium ion batteries
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 for processed foods
Sales of pet food and other products
Primary processing of meat in Japan
Manufacture of dim sum and delicatessens
Production of processed vegetables and fruits
Wholesale of confectionery and baking ingredients
Primary processing of beef in China
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
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
Sales of petrochemicals, automobile-related chemicals, health food ingredients, and pharmaceuticals
Sales of health foods and provision of medical information
Sales of machine tools and industrial machinery
Repair and sales of machine tools; Sales of paper-manufacturing machinery
Wholesale of cutting tools and peripheral and auxiliary tools
Design, manufacture, and installation of plant equipment
Sales of machine tools and industrial machinery
Sales of machine tools and industrial machinery
Design, manufacture, transportation and install various steel structures
Sales of steel materials for oil excavation
Steel tubing fabrication; Manufacture and sales of oil well-related parts
Sales of machine tools
Sales of aircraft, defense, and aerospace-related products
Sales of bedding, fiber raw materials for industrial materials, and synthetic fiber raw materials
Development and sales of network services for vehicle operation management, driving safety analysis, etc.;
Development and sales of vehicle measuring instruments
Replacement and maintenance of aircraft rotable components; Leasing; Sales
Sales and maintenance of automobiles
Sales of engines, generators, lawnmowers, and other general-purpose machinery
Investment in VC funds; Seeking out advanced technologies; Growth support for startups
Manufacture and sales of medium-density fiberboard
Beverage-vending machine operations; Imports, exports, and sales of aircraft engines
Insurance agency and forwarding business; Consigned freight forwarding business
Warehouse and self-storage operation
Total logistics services

Global Network(As of March 31, 2021)

1

Kanematsu’s Progress and Strengths

Kanematsu supplies products and services through its large network of business bases in Japan and overseas. In addition to theCompany, the Kanematsu Group comprises 126 companies (97 consolidated subsidiaries and 29 equity-method affiliates)
operating global businesses around the world.

6

2

3
4

34
5

33
11
25

8

10

23

7

15
21

24

30
28 29

32
31

9
12
13 14
16

18

17

35

20

NORTH AMERICA

19

28 Chicago

22

29 Somerset

1 London

30 Detroit

2 Dusseldorf

31 Houston

3 Munich

ASIA & THE MIDDLE EAST

26
27

4 Milan

8 Seoul17 Ho Chi Minh City

5 Budapest

9 Shanghai

18 Bangkok

6 Moscow

10 Chongqing

19 Singapore

7 Las Palmas

11 Dalian

20 Manila

26 Sydney

12 Shenzhen

21 Yangon

27 Auckland

32 Silicon Valley

23 Gurugram

15 Hanoi

24 Bengaluru

16 Haiphong

25 Tehran

CENTRAL &SOUTH AMERICA

34 Vancouver

35 Silao
36 Sao Paulo

13 Hong Kong 22 Jakarta
14 Taipei

36

33 Portland

OCEANIA

Management Strategy

EUROPEDOMESTIC OFFICES
4

1 Tokyo Head Office
2 Osaka

Sustainability

Midosuji Office
3 NagoyaOverseas subsidiaries
and their branches
2

Representative offices

3

1

4 Hokkaido

5

5 Kyushu

Branches

Organization Chart (As of April 1, 2021)
Shareholder’s Meeting
Audit & Supervisory Board
Board of Directors

Review of Operations

Management Committee

Marketing Area

Support Area
Foods Division

Steel, Materials & Plant Division

Motor Vehicles & Aerospace Division

Industrial Electronics Dept.

Foods Dept. No. 1

Iron & Steel Foreign Trade Dept.

Aerospace Dept.

Semiconductor Equipment Dept.

Foods Dept. No. 2

Specialty Steel Foreign Trade Dept.

Motor Vehicles & Parts Dept. No. 1

Human Resources & General Affairs
Dept.

Components & Material Dept.

Foods & Grain Planning Office

Functional Chemicals Dept.

Motor Vehicles & Parts Dept. No. 2

Finance Dept.

Electronics Planning Office

Food Safety Management Office

Energy Dept.

Motor Vehicles &Aerospace Planning Office

Accounting Dept.

Electronics & Devices Division

Plant & Ships Dept.

Business Accounting Dept.

Meat Products Dept. No. 1

Steel, Materials & Plant Planning Office

Legal & Compliance Dept.

Meat Products Dept. No. 2

Food Safety Management Office

Credit Control Dept.

Foods & Grain Planning Office
Food Safety Management OfficeGrain, Oilseeds & Feedstuff Division
Grain Dept.

Financial Section and Company Information

Meat Products Division

Traffic & Insurance Dept.
IT Planning Dept.
Internal Auditing Dept.
Corporate Planning Dept.

Food & Grain Material Dept.
Grain & Feedstuff Dept.
Domestic Sections
Foods & Grain Planning Office
Food Safety Management Office

KANEMATSU Integrated Report 2021

65

Japanese and Overseas Offices (As of June 30, 2021)

Japan

Overseas

Tokyo Head Office

ASIA & THE MIDDLE EAST

2-1, Shibaura 1-chome, Minato-ku,
Tokyo 105-8005, Japan
TEL: 81-3-5440-8111
FAX: 81-3-5440-6500

Osaka
Awaji-machi Dai Building, 1-9, Awaji-machi
3-chome, Chuo-ku, Osaka 541-8560, Japan
TEL: 81-6-6205-3111
FAX: 81-6-6205-3322

Midosuji Office
Midosuji Daiwa Building, 6-8, Kyutaro-machi
3-chome, Chuo-ku, Osaka 541-0056, Japan
TEL: 81-6-6251-7700
FAX: 81-6-6251-7770

Nagoya9-3, Sakae 2-chome, Naka-ku,
Nagoya 460-0008, Japan
TEL: 81-52-202-5111
FAX: 81-52-202-4605

Hokkaido
Sapporo-Kokusai Building, 4-1, Kitashijou-nishi,
Chuo-ku, Sapporo 060-0004, Japan
TEL: 81-11-261-5631
FAX: 81-11-261-5630

KyushuTenjin Twin Building, 6-8, Tenjin 1-chome,
Chuo-ku, Fukuoka 810-0001, Japan
TEL: 81-92-715-7820
FAX: 81-92-715-7830

Kobe Head Office
119 Ito-machi, Chuo-ku, Kobe,
Hyogo 650-0032, Japan

KOREA
Kanematsu Korea Corporation
Seoul

Koreana Bldg. 602, 135 Sejong-Daero,Jung-Gu, Seoul 04519, Korea
TEL: 82-2-737-5795
FAX: 82-2-737-5799
CHINA
Kanematsu (China) Co., Ltd.
Shanghai Head Office
Shanghai Branch

18th Floor Raffles City (Office Tower), 268 Xi Zang
Middle Road, Shanghai 200001, China
TEL: 86-21-6340-3456
FAX: 86-21-6340-4290
Chongqing Liaison Office

Room 2106, International Trade Center, No. 38
Qingnian Road, Yuzhong District, Chongqing
400010, China
TEL : 86-023-6323-5676
FAX : 86-023-6323-5650

Kanematsu Vietnam Company Ltd.
Ho Chi Minh City

Suite 608, 6/F, Saigon Tower, 29 Le Duan St,
District 1, Ho Chi Minh City, S.R. Vietnam
TEL: 84-28-3910-5536, 5537
FAX: 84-28-3910-5539
THAILAND
Kanematsu (Thailand) Ltd.
Watana Inter-Trade Co., Ltd.
Bangkok

25th Floor Thaniya Plaza Building, 52 Silom Road,
Suriyawongse Bangrak, Bangkok 10500, Thailand
TEL: 66-2-632-8060
FAX: 66-2-632-8083, 8084
SINGAPORE

Dalian Branch

Room 602, Furama Hotel, 60 Renmin Road,
Dalian 116001, China
TEL: 86-411-8263-9105
FAX: 86-411-8280-5534

100 Tras Street, #12-01 100 AM, Singapore 079027
TEL: 65-6320-6000
FAX: 65-6320-6041
PHILIPPINES

Shenzhen Branch

Kanematsu Corporation
Manila Branch

Room 8, 10/F, Office Tower,
Di Wang Commercial Centre,
5002 Shen Nan Dong Road, Luohu District,
Shenzhen 518001, China
TEL: 86-755-8235-4850
FAX: 86-755-8223-8980
Kanematsu (Hong Kong) Ltd.
Hong Kong

Rooms 1116-1117, 11/F, The Metropolis Tower,
10 Metropolis Drive, Hunghom, Kowloon,
Hong Kong
TEL: 852-2821-6200
FAX: 852-2527-0465
TAIWAN

10F., No. 451, Changchun Rd., Songshan Dist.,
Taipei City 10547, Taiwan R.O.C
TEL: 886-2-2717-1222
FAX: 886-2-2717-7927, 7928
VIETNAMThe Representative of Kanematsu
Corporation
Hanoi

Room No. 1209, 12th Floor, Daeha
Business Centre, 360 Kim Ma St., Ba Dinh Dist.,
Hanoi, S.R. Vietnam
TEL: 84-24-3771-5642
FAX: 84-24-3771-5641

KANEMATSU Integrated Report 2021

Room 2, 1st Floor, F1 Building 315-HK03,
Waterfront City, Vinh Niem, Le Chan,Hai Phong, S.R. Vietnam
TEL: 84-225-368-6371
FAX: 84-225-368-6373

Kanematsu (Singapore) Pte. Ltd.
Singapore

Kanematsu Taiwan Corporation
Taipei66

Haiphong

17th Floor Tower 2, The Enterprise Center 6766,
Ayala Avenue, cor. Paseo de Roxas, Makati City,
Philippines
TEL: 63-2-8-845-2017
FAX: 63-2-8-887-0030
MYANMARThe Representative of Kanematsu
Corporation
YangonUnion Business Centre (UBC) Suite 03-08, Nat
Mauk Road, Bo Cho Quarter, Bahan Township,
Yangon, Myanmar
TEL: 95-1-860-4370
FAX: 95-1-860-4380
INDONESIA
P.T. Kanematsu Trading Indonesia
Jakarta

ATRIA@SUDIRMAN 15th Floor,
Jalan Jend. Sudirman Kav. 33A, Jakarta
10220, Indonesia
TEL: 62-21-572-1230
FAX: 62-21-572-1188, 1237
INDIA
Kanematsu India Private Ltd.
Gurugram

Tower-4, Block-A, Unit No. 03-04, Ground Floor,
DLF Corporate Park, Gurugram,
Haryana-122002, India
TEL: 91-124-400-1461, 1462, 1362
FAX: 91-124-400-1371

SPAIN

2nd Floor, 216, Raheja Chambers,
Museum Road, Bangalore,
Bengaluru (Bangalore) Urban,
Karnataka 560001, India
TEL: 91-80-4866-3677, 91-80-4146-0112

The Representative of Kanematsu
Corporation
Las Palmas

IRAN
Kanematsu Iran Ltd.
TehranEUROPEUNITED KINGDOM
Kanematsu Europe PLC.
London Head Office

160 Euston Road, London NW1 2DX,
United Kingdom
TEL: 44-20-7529-8124
FAX: 44-20-7387-4582
GERMANY
Kanematsu GmbH
Duesseldorf Head Office

Munich BranchKarl-Theodo-Str.55, D-80803 Muenchen, Germany
TEL: 49-89-307-481-712
FAX: 49-89-307-481-729
ITALY
The Representative of Kanematsu GmbH
MilanoCalle Eduardo Benot 51, Edificio Atlansea,
4-izqda, 35008 Las Palmas de Gran Canaria,
Spain
TEL: 34-928-275634
FAX: 34-928-275632

CANADANEW ZEALAND

205-8988 Fraserton Court Burnaby, B.C.
V5J 5H8, Canada
TEL: 1-604-689-0550
FAX: 1-604-689-0655

Kanematsu New Zealand Ltd.
AucklandLavender House, 27 Lilburn Street, Warkworth 0910,
New Zealand
TEL: 64-9-302-5660
FAX: 64-9-309-3877

The Representative of Kanematsu
Corporation
Vancouver

CENTRAL & SOUTH AMERICAMEXICO
Kanematsu Mexico S. de R.L. de C.V.
Silao

NORTH AMERICA

Suite C, Multitenant III, Av. Mineral de
Valenciana No. 202, Col. Parque Santa Fe, C.P.
36275, Guanajuato, Puerto Interior Silao, Gto.,
Mexico
TEL: 52-472-748-9187, 9327, 9329
FAX: 52-472-748-9221

U.S.A.
Kanematsu USA Inc.
Chicago Head Office

543 West Algonquin Road, Arlington Heights,
Illinois 60005, U.S.A.
TEL: 1-847-981-5600
FAX: 1-847-981-6760

BRAZIL
Kanematsu America do Sul Importacao e
Exportacao Ltda.
São Paulo

Somerset Branch

Alameda Santos, 122 - CJ. 501 e 502 - Paraíso,São Paulo - SP, CEP 01418-000, Brazil
TEL: 55-11-3266-3967

Review of Operations

41700 Gardenbrook Rd., Novi Garden Office B,
Suite 140 Novi, Michigan 48375, U.S.A.
TEL: 1-248-347-3216
FAX: 1-248-347-3219
Segment Information:
Number of employees and number of Group companies (As of March 31, 2021)
Number of Employees(consolidated basis)

Number of Affiliated Companies

Electronics & Devices

4,253

24 (Japan:16, Overseas:8)

Foods, Meat & Grain

788

29 (Japan:14, Overseas:15)

Steel, Materials & Plant

1,205

29 (Japan:14, Overseas:15)

Motor Vehicles & Aerospace375

12 (Japan:4, Overseas:8)

Others224

14 (Japan:12, Overseas:2)

Companywide (common)

451

Overseas subsidiaries
Total

Financial Section and Company Information

Tverskaya 16/2, Building 1, Business Centre,
125009 Moscow, Russian Federation
TEL: 7-495-935-8940
FAX: 7-495-935-8948

4380 SW Macadam Avenue, Suite 170, Portland,
Oregon 97239, U.S.A.
TEL: 1-503-224-7755
FAX: 1-503-228-5067

Suite 1 Level 15, 15 Castlereagh Street, Sydney
NSW 2000, Australia
TEL: 61-2-9283-3347
FAX: 61-2-9283-3095

Detroit Office

The Representative of Kanematsu
Corporation
Moscow

Portland Branch

Kanematsu Australia Ltd.
SydneyHUNGARYRUSSIAN FEDERATION

2154 Paragon Drive, San Jose, California 95131,
U.S.A.
TEL: 1-408-501-1400

AUSTRALIA

Via Filippo Turati n.26 20121 Milano, Italy
TEL: 39-02-6749-3538
FAX: 39-02-3668-0998

H-1034 Budapest, Becsi ut 126-128. Building “C”,
3rd floor, Room no.: 310, Hungary
TEL: 36-20-410-2641

Silicon Valley Branch

OCEANIA

100 Randolph Road, Somerset,
New Jersey 08873, U.S.A.
TEL: 1-732-271-7300
FAX: 1-732-271-7357

The Representative of Kanematsu GmbH
Budapest

1800 Augusta Drive, Suite 390, Houston,
Texas 77057, U.S.A.
TEL: 1-713-975-7200
FAX: 1-713-975-7966

Sustainability

Oststrasse 34, D-40211 Duesseldorf, Germany
TEL: 49-211-3689-0
FAX: 49-211-3689-111

Houston BranchManagement Strategy

Unit #5, 3rd Floor, Monaco Building, No. 27,
Ordibehesht, Mahmudiyeh St., Parkway, Tehran
1986645416 IRAN
TEL: 98-21-2265-9069
FAX: 98-21-2265-5171

Kanematsu’s Progress and Strengths

Bengaluru Branch

18
7,296

126

Notes:
1. Number of employees on a non-consolidated basis is 795.
2. Of affiliated companies, 97 are consolidated subsidiaries and 29 are equity-method affiliates.

KANEMATSU Integrated Report 2021

67

Corporate Profile

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

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

Domestic: T okyo Head Office, Kobe Head Officeand branches 5
Overseas: 36
Number of Employees* 795 (Consolidated: 7,296)* As of March 31, 2021

Investor Information(As of March 31, 2021)

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 260,758 treasury shares)
100
20,288Financial institutions

42.38%

Foreign institutions
and individuals

32.93%

Individuals and others(including treasury shares)18.16%
Other corporations

5.27%

Securities firms

1.26%

Principal Shareholders

Number of shares held (thousands)

Percentage of voting rights (%)

Custody Bank of Japan, Ltd. (trust account)

10,70912.71

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

6,460

7.66

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,322

2.75

MSIP CLIENT SECURITIES

2,235

2.65

SSBTC CLIENT OMNIBUS ACCOUNT

1,972

2.34

Custody Bank of Japan, Ltd. (trust account 9)

1,681

1.99

MUFG Bank, Ltd.

1,417

1.68

GOVERNMENT OF NORWAY

1,369

1.62

The Norinchukin Bank

1,249

1.48

The Bank of New York Mellon Corporation 140042

1,224

1.45

Note: Calculated after deduction of treasury shares (260,758 shares)

Stock Price/Trading Volume
Trading Volume

Stock price(¥)(Thousands of shares)

1,800

40,0001,200

30,000600

20,0000

10,000

0
16/4

6

8

10

12 17/2

4

6

8

10

12 18/2

4

6

8

10

12 19/2

4

6

8

10

12 20/2

4

6

8

10

12 21/2

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

68

KANEMATSU Integrated Report 2021

Kanematsu stock has been selected for inclusion in the JPX-Nikkei
Index 400 and the JPX-Nikkei Mid and Small Cap Index for,respectively, the last eight and five consecutive years.

Our Website
Detailed additional information about the Kanematsu Group isavailable on our website in English, Japanese and Chinese.
Content includes information about the Company and its
businesses, press releases, investor relations materials, and details
on its sustainability activities and other topics.

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

KANEMATSU Integrated Report 2021

69

For more information on this Integrated Report, or to obtain
additional copies, please contact:
Public & Investor Relations Section, Finance Department,
Kanematsu Corporation
2-1, Shibaura 1-chome, Minato-ku, Tokyo 105-8005, Japan
Tel: 81-3-5440-8000
Fax: 81-3-5440-6503

Printed in Japan