The Kanematsu Group’s Value Creation

Message from the CFO

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

ROE

Shuji Masutani
Director, Executive Officer, CFO

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

24

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

(Yen)

25

150

The Kanematsu Group has laid out basic guidelines forcontrolling and managing risk in its Risk Management
Guidelines. Based on said guidelines, we classify anddefine risks, then respond to each appropriately, aiming
to minimize losses to the Kanematsu Group and achievesound business growth and development.
The Group monitors quantifiable risks (market risk,
credit risk, investment risk, country risk, etc.) by regularly
measuring such risks and reporting the results to management. Specifically, to measure maximum possible losses(risk assets) we apply a proprietary weighting scheme
corresponding to the potential loss risk to all assets
included in the Consolidated Statement of Financial
Position as well as off-balance sheet items.
As of March 31, 2023, risk assets stood at ¥55.5 billion andtotal equity attributable to owners of the Parent at ¥128.5
billion, for a risk asset ratio of 0.43. Although this is higher

Our Share Price and Price-to-Book Ratio

Figure 2. ROE/ROIC/WACC

Figure 3. Total Shareholder Returns

(%)

(%)

140

13.8
20

37.6%
34.8%

15

60
14.4

60

34.0%

100

18.6 33.7%

65

75

6

13.3

10

0

2020

12

2021

Consolidated net income (left)
Payout ratio

2022

2023

11.2

90
32.0%

50

16.0

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

150

18

23.5

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

Risk Asset Measurement

Kanematsu’s Foundations

Financial Impact of Tender Offers for Listed
Subsidiaries

Financial and Capital Strategy Going Forward

For fiscal 2023, in light of business performance and theoperating environment, we raised the annual per-share
dividend ¥10 to ¥75 (an interim dividend of ¥37.5 and a
year-end dividend of ¥37.5). This resulted in a consolidated dividend payout ratio of 33.7%, within the total dividend ratio range of 30%–35% targeted in the future 135
medium-term vision.
For fiscal 2024, we forecast consolidated net income of¥23.5 billion and plan to increase the annual dividend pershare another ¥15 to ¥90 (an interim dividend of ¥45 anda year-end dividend of ¥45). As a result, the consolidated
dividend payout ratio is forecast at 32.0%, remaining
within the 30%–35% range (Figure 1).
In light of our financial balance following the tender
offers, for the time being we plan to provide returns toshareholders in the form of dividends, rather than sharebuybacks.
Kanematsu regards the appropriate distribution of
profits to shareholders as an important management
priority. We will continue to pay stable, ongoing dividends based on considerations of business performance,
financial position, and the levels of internal reserves
necessary for future growth.

The Kanematsu Group’s Value Creation

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

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

Shareholder Returns

The Origins of Value Creation

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

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

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

6.4

12.9
9.7

134.2

130

10.5

122.1

120
110

5.3

4.9

5.6

5.6

0

100

100.0

90

100.0

80

2019
2020
2021
ROE
ROIC
WACC

2022

2023

(FY)

124.6

131.8

114.0
108.5

95.0
85.9
90.6

84.1

2018
2019
2020
2021
Kanematsu
TOPIX Total Return Index

2022

2023

(FY)

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

25

The Kanematsu Group’s Value Creation

Message from the Chief Officerof Human Resources

Basic Policy on
Human Capital

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

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

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

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

KANEMATSU Integrated Report 2023

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

Gain and expand
added value

Directionof Growth

Sow seeds to create
new business portfolios

Advance DX acrossthe entire Group

Human capital

Organization/company leveraging
personnel abilities

The values we uphold at Kanematsu

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

Human Capital
Development Policy

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

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

Kanematsu’s Foundations

26

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

Continuous creation of value

The Kanematsu Group’s Value Creation

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

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

The Direction of Our Growth

The Origins of Value Creation

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

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

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

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

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

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

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

27

The Kanematsu Group’s Value Creation

Message from the Digital Transformation Committee Chair

DIGITAL
TRANSFORMATIONSTRATEGY

General Meeting of Shareholders
Audit &
Supervisory Board

Board of Directors

Advisory committees

Digital Transformation Committee (launched July 2021)
Chair

Members

Expert members

Kanematsu Corporation

Kanematsu
Corporation

Kanematsu
Electronics Ltd.

Two executive officers

System Engineering
Division General
Manager

Masahiro Harada
Managing Executive Officer
and COO Electronics &Devices

AdvisorGroupwide DX sectional meetings
Sectional
meeting

Sectional
meeting

Sectional
meeting

Secretariat

Kanematsu Corporation

Secretariat
Coordination• IT Planning Department
DX Project Office28

Accenture
Japan LtdKANEMATSU Integrated Report 2023

Kanematsu
Electronics Ltd.
• DX Promotion Office

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

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

Solutions&

Consulting/training

Security&

Network

Tools&

Services

Audit &
Supervisory

MasahiroManaging
and Chief O
Electronics

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

&コンサル / 教育

セキュリティ

&ネットワーク

ツール

&

サービス

Se
m

• DX Project• IT Planning

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

Integrated web ordermanagement

Wait line management

Inventory management

Kanematsu
SaaS
Ecosystem

Customer call management

POS registers

Mobile ordering

Image search AI

KANEMATSU Integrated Report 2023

Secr

Kanematsu

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

Dig

Kanemats

Kanematsu’s Foundations

Management Committee

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

The Kanematsu Group’s Value Creation

DX Promotional Framework

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

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

The Origins of Value Creation

Creating NextGeneration KanematsuGroup Businesses
through DX

Initiatives

29

The Kanematsu Group’s Value Creation

Message from the Green Transformation Committee Chair

Initiatives

Kanematsu Sustech’s Eco Wood Pile Construction

GX Committee
Board of Directors

GX Committee
Chair

Eiji Kan

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

Secretariat

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

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

Accelerators

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

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

30

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

KANEMATSU Integrated Report 2023

Eiji Kan
Senior Managing Executive Officer
Green Transformation Committee Chair

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

Samsara Eco’s laboratory

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

Kanematsu’s Foundations

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

Members
Executive officers(COO or Chief
officer)

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

Ground improvement using lumber that has undergone preservation treatment

The Kanematsu Group’s Value Creation

Creating Enterprise
Value by Addressing
Environmental Issues

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

The Origins of Value Creation

GREEN TRANSFORMATION STRATEGY

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

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

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

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

KANEMATSU Integrated Report 2023

31

The Kanematsu Group’s Value Creation

Special Feature: Innovation Investment

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

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

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

CNT filament

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

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

Kanematsu’s Foundations

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

CNT film

The Kanematsu Group’s Value Creation

Plastic waste, a serious social issue

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

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

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

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

A Skyports vertiport terminal

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KANEMATSU Integrated Report 2023

KANEMATSU Integrated Report 2023

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