The 26 Medium-Term Management Plan
(FY2025 to FY2027)

May 14, 2024

Contents
I.

Future Vision of the Taiheiyo Cement Group

II.

Review of the 23 Medium-Term Management Plan

III. Outline of the 26 Medium-Term Management Plan
・Recognizing the Social Environment
・Fundamental Policies
・Management Targets and Guidelines
・Cash Allocation
・Investment Strategy
・Maximizing Earnings
・Revitalizing Domestic Business・Global Strategy

・Promoting Sustainability Management
・Carbon Neutral Strategy
・DX Strategy
・Human Capital Strategy
・IR Strategy

Appendix
・Net Sales and Operating Income by Segment
・Business Strategies
・Strategy for Research and Development
・Intellectual Asset Strategies2024©TAIHEIYO CEMENT

2

I. Future Vision of the Taiheiyo Cement Group

Mission of the Taiheiyo Cement GroupOur mission is to contribute to social infrastructure development by
providing solutions that are environmentally efficient, enhance ourcompetitive position and bring value to our stakeholders.

Future vision targeting 2050
・Deploy around the world the Group’s overall capabilities and revolutionary technologies including carbon neutrality.
・Become a leader in the global cement industry.

・Become a corporate group that supports a safe and secure decarbonized/recycling-based society.

Taiheiyo Vision 2030
・Expand the Group’s presence in the Pacific Rim by utilizing its overall capabilities.
・Contribute to the achievement of carbon neutrality and circular economies.
・Become a robust corporate group that grow sustainably.
2024©TAIHEIYO CEMENT

31. Future Vision of the Taiheiyo Cement Group

Vision of the 26 Medium-Term Management Plan

3D Approach for Sustainable Future—Three-dimensional approach toward the realization ofa sustainable society—
The Taiheiyo Cement Group aims to promote a combination of three initiatives
toward the realization of a sustainable society to widely share the benefits
gained through such initiatives with its stakeholders.
・Revitalize domestic business・Further promote global strategy
・Promote sustainability management and contribute to carbon neutrality

Achieve a sustainable society
Safe and secure living
environment

Creation of circular
economies

Robust social
infrastructure

Prompt disaster
response2024©TAIHEIYO CEMENT

4

II. Review of the 23 Medium-Term Management Plan
(1) Benefits and Challenges of the 23 Medium-Term Management Plan
23 Medium-Term Management Plan
(FY2022-FY2024)
Profitability

Review◆Operating income on sales 6.4%
◆ROE 8.2%◆Growth investments

・Acquisition of the Redding Plant (U.S.)・Acquisition of the cement sales business of Denka Company
Limited・Construction of a new cement distribution terminal in Luzon island(Philippines)◆Strengthened our business foundation

・Green Innovation Fund Project (C2SP Kiln®)
・Upgrading of plant production management
・Development of the Shin-Tsukumi Quarry and the Toumi Quarry

Returns toshareholders◆Steady dividend payments andFinancial
structure◆Net DER 0.52 times

repurchased Taiheiyo Cement Corporation shares・Total return ratio 89% (3-year cumulative total)
・Maintained steady dividends (70 yen per share)・Repurchase of Taiheiyo Cement Corporation shares 10 billion yen

Benefits

・Proceeded growth investments asplanned・Steady progress in initiatives toachieve carbon neutrality
・Provided steady returns to shareholder

Challenges

・Strengthen the earnings capacity ofdomestic cement businesses
・Improve financial structure

・Net interest-bearing debt 290.3 billion yen

2024©TAIHEIYO CEMENT

5

II. Review of the 23 Medium-Term Management Plan
Domestic cement demand (unit: 10,000t), operating
income (unit: Billions of yen)
65.1(2) Management Targets and Guidelines

66.0

10,000 t

61.0

56.4

4,000

Management
Targets

FY2024
TargetOperating incomeon salesROE

FY2024
Results

60

46.7

50
40

3,500

30
4,187

4,258

4,097

3,867

3,788

3,728

3,457

2017

2018

2019

2020

2021

2022

2023

3,000

11% or more

20

6.4%

Operating income on sales, ROA

10% or more

8.2%

(Billions of yen, unless otherwise stated)

10.2

10.7
9.2

10.3
8.2

8
4

886.2

Operating incomeon salesTarget for FY2024:
11%

6.6
7.5

750.0 or more

ROA Target for
FY2024: 10%%

12

Net sales

Billions of yen

63.6

7.2

6.9

7.4

6.4

5.9
0.6

0

Operating income

85.0 or more

56.4

2017

2018

2019

2020

2021

2022

2023

Guidelines

Net interest-bearing debt (unit: Billions of yen), net DER (unit: times)

EBITDANet debt/equity ratio(DER) (times)
Net interest-bearing
debt / EBITDA ratio(times)145.0 or more
Around 0.4

122.8

Net debt/equity ratio (DER) (times)
FY2024 target: around 0.4

Billions of yen

400

0.52

0.5

2.4

0.6

0.5
0.4

200

1.5 or less

0.8

0.7

0.6

Times

0.4

0.4
234.8

223.0

214.4

175.0

210.3

323.6

290.3

2017

2018

2019

2020

2021

2022

2023

0

0

2024©TAIHEIYO CEMENT

6

II. Review of the 23 Medium-Term Management Plan
(3) Analysis of the Current Situation
External
environment

・Decrease in domestic cement demand and various rising costs
・Increasing need for blended cement

Internal
environment

・Lower earnings capacity in domestic business・Maintained financial soundness

ROE (%) and PBR (times)
16

% 1.2

Times

1.1

0.7

0.7
0.5

8

0

10.2

10.7

9.2

0.5
10.3

0.6

5.6

ROE

8.2
(6.6)

(8)
2017

2018

2019

2020

2021

1.0

2022

2023

0

Decreased ROE due to energy price hikes andother factors is picking up, but return on capitalneeds to be improved to steadily exceed cost ofcapital.
(The cost of capital recognized by the Company isapproximately 8%.)PBR
(at end of
FY)

PBR from March to April 2024 is around 0.7x. We
aim to achieve a PBR of over 1x at the earliest
possible time.
2024©TAIHEIYO CEMENT

7

II. Review of the 23 Medium-Term Management Plan
Decomposition of ROE
ROE = net profit on sales x total asset turnover x financial leverage％％

The Company’s ROE has a high correlation with net
profit on sales (operating income on sales).

10

10

ROE

5
4.4

4.7

4.4

5.4

5
4.9

4.1

Net profit on
sales

0

0
(4.1)

Net profit on sales and operating income on sales
need to be improved to increase ROE.

Operatingincome on sales

(5)

(5)
2017 2018 2019 2020 2021 2022 2023
％
10

％

Times
0.9

0.9

0.9

1
0.8

0.7

0.7

2.7

5

ROE

0

(5)

4

10

0.7

0

Times

Total asset
turnover

2.5

2.4

2.3

2.2

2.4

2.5

5

2

ROE

0

0

Financialleverage(5)2017 2018 2019 2020 2021 2022 2023

2017 2018 2019 2020 2021 2022 2023
2024©TAIHEIYO CEMENT

8III. Outline of the 26 Medium-Term Management Plan

Recognizing the Social Environment
Unprecedented natural disasters have occurred frequently in Japan as well as around the globe. A labor shortage hasarisen associated with work style reform, declining birth rate and an aging population.
The Group aims to maximize its corporate value while addressing social issues where it can make contributions.

Social environment
Demographics
・Declining birth rate and an aging population(decreasing working population)
・Population decline
・Concentration of population in urban areas

Human capital

Environment
・Intensifying natural disasters

・Societal demand for carbon neutrality
・Growing demand for reducing impact on

Our mission
Supply of critical materials for national
resilience
Key player in the formation of circular
economies

the environment

Steady transition to carbon neutrality

Technology＋

・Diversification of work styles

・Advancement of AI technology

・Globalization

・Sophisticated communication technology

・Mobilization of human resources

・Expanding opportunities to utilize big data

Engagement with stakeholders2024©TAIHEIYO CEMENT

9III. Outline of the 26 Medium-Term Management Plan

Fundamental Policies
Sustainable growth and enhancement of corporate value of the Taiheiyo Cement Group“Improve profitability” and “Pursue growth potential”
Improve capital efficiency
・ROE: 10% or more
(ROIC: 7% or more)

Maximize earnings

・Operating income on sales: 10% or
moreMaximize corporate value

Returns to shareholders

・Total return ratio: 33% or more・ Annual dividend per share: 80 yen or
more(achieve a PBR of over 1x at
the earliest possible time)

Revitalizing domestic business

Interdivisional
cooperation

Global strategy+
Promoting sustainability management

Carbon neutral
strategy

DX strategy

Human capital
strategy

IR strategy
2024©TAIHEIYO CEMENT

10III. Outline of the 26 Medium-Term Management Plan

Management Targets and Guidelines

Managementtargets

FY2024
Results
Operating incomeon sales

FY2027
TargetOperating income on sales, ROE(unit: %)
10
8.2

6.4%

ROE Target for
FY2027: 10% or more

10

10% or more

Operating incomeon salesTarget for FY2027:
10% or more

6.4

ROE

8.2%

10% or more
2023

2026

Guidelines(Billions of yen, unless otherwise stated)

Net sales

886.2

1,000.0 or
more

Operating income

56.4

100.0 or more

Net sales, operating income(unit: Billions of yen)

Net sales: 1,000.0 billion
yen or more
Operating income: 100.0
billion yen or more
1,000.0

886.2
100.0

Net debt/equity
ratio (DER) (times)

0.52

Around 0.5

ROIC

4.3%

7% or more

56.4

2023

2026

2024©TAIHEIYO CEMENT

11III. Outline of the 26 Medium-Term Management Plan

Cash Allocation
New investment aimed atsustainable growth
Capital expenditure, and investment and financing: 360 billion yen

Operating cash flow

400 billion yen(3-year cumulative total)

Returns to shareholders
Total return ratio: 33% or more

Maintaining steady dividends: Annual dividend per share of 80 yen or
more
Agile acquisition of treasury shares

Maintaining financial soundness
Execute investment and provide returns to shareholders while
maintaining financial discipline2024©TAIHEIYO CEMENT

12III. Outline of the 26 Medium-Term Management Plan

Investment Strategy
Growth investments
Growthinvestments
andconcentrated
investments
220 billion yen

・Investment for expanding blended cement (U.S., etc.)
・Expansion of business areas
・Development of carbon neutral technology

150 billion yen

Investment that strengthen the business foundation to support oursustainable growth (Priority strategy)

Strengthening plant facilities

・Renewal of large-scale key machinery
・Production process innovation
Ordinary
maintenanceinvestments
140 billion yen

20 billion yen

Strengthening mines

・Shin-Tsukumi Quarry (Oita Prefecture)・Development of the Mount Kurohime summit (Niigata
Prefecture)

50 billion yen

2024©TAIHEIYO CEMENT

13

III. Outline of the 26 Medium-Term Management Plan

Maximizing Earnings
1. Revitalizing Domestic Business

2. Global Strategy(1) Fundamentally revise pricing policy(1) Strengthen our earnings base forexisting businesses

・Shift from an emphasis on market share toan emphasis on profitability (operating
income on sales of 10% or more)・Deepen U.S. business・Expand the Philippines business(2) Provide total solutions(2) Further expand business areas(3) Optimize production systems(3) Expand trading business・Strengthen interdivisional collaboration andimprove efficiency of sales systems

・Kiln allocation(focusing on blended cement for export)

・Explore and implement M&As
・Expand to unexplored areas andundeveloped businesses

・Expand blended cement
・Strengthen logistics network2024©TAIHEIYO CEMENT

14

III. Outline of the 26 Medium-Term Management Plan

Revitalizing Domestic Business(1) Fundamentally revise pricing policy
・Worsening profitability due to decreased
demand・Further contribution to a recycling-basedsociety・Renewal of aging facilities

Transition to asustainable business・Profitability-oriented sales policy
・Shorten the cycle of passing on cost
increases
・Share recognition of medium- and long-term
price levels aimed at a carbon-neutral society(2) Provide total solutions

・Duplicated sales resources
・Improve interdivisional collaboration
・Advance DX in sales

Improvement ofvalue provided

・Improve efficiency of sales systems
・Shift to one-stop service
・Introduce sales information sharing tools

2024©TAIHEIYO CEMENT

15

III. Outline of the 26 Medium-Term Management Plan

Revitalizing Domestic Business(3) Optimize production systems(1) Maintain a balance between expansion of blended cement forexport, where demand is increasing, and stable supply to thedomestic market
・Capital investment to expand blended cement
・Increase the capacity to export a variety of cement products at
plants in bay areas
・Long-term contracts for stable supply

Southeast Asian markets where theshift to blended cement is progressing

Japan

Thailand

VietnamSingapore(2) Contribute to society by maximizing waste disposal
・Expand use of fuel-related wastes
・Introduce sewage sludge pre-treatment facilities, etc.
(3) Reduce costs and promote carbon neutrality
・Introduce the latest clinker coolers (energy saving)・Convert fuels for on-site power generation: from coal to methaneand e-methane (planned)

Philippines

Indonesia
Blended cement usage ratio
30 to 50%
50% or more
Japan: approx. 18% (FY2024)

2024©TAIHEIYO CEMENT

16

III. Outline of the 26 Medium-Term Management Plan

Global Strategy: Deepen U.S. business・Stable and growing U.S. market
・The shift to blende cement is accelerating with a background of carbon neutral/green procurement trends⇒ We aim to increase added value of blended cement to promote carbon neutrality while contributing to earnings
Growth strategy utilizing carbon neutrality
・Expand business in cementitious materials (SCMs)* including slag and fly ash by
expanding silos of import terminals
・Promote blended cement
Limestone-blended cement (Type IL), ternary blended cement (Type IT)
・Develop and introduce innovative technologies (industry-academia-government
joint development, consideration of acquiring technologies from startup
companies)
・Strengthen human capital (development) by establishing CPC college (tentative
name)Anchorage

Japan-U.S. collaboration in production and R&D
Share strategy for business utilizing SCMs
SeattleTaiheiyo Cement (China) Investment

Redding
Stockton
Las Vegas
MojaveTaiheiyo Cement U.S.A.
Orogrande
Los Angeles
RillitoSan Diego

DalianNanjingShanghaiHong Kong
Hanoi

TaipeiTaichung
Kaohsiung

Nghi Son
BangkokNinh Thuy
Ho Chi Minh

Cebu

Singapore

Growth strategy through businessexpansion・Investigate investment opportunities incement business to expand businessareas
・Investigate M&As in ready-mixed
concrete and aggregate businesses

Strengthen our supply chain
・Import and sale cement through Semen
Indonesia Group (construction of pier at
Tuban Plant, Solusi Bangun Indonesia(SBI))
・Shift to blended cement at import sources

Portland

Taiheiyo Cement Singapore
Jakarta

Lae

Cement andSCMs (slag and fly ash)
Cement Terminal

Tuban Plant, SBI (Indonesia)

Stockton Import Terminal(California)

・Expand strategy for business utilizing SCMs to Japan and Southeast Asia
business*Cementitious materials (SCMs): fly ash, slag, etc.
2024©TAIHEIYO CEMENT

17

III. Outline of the 26 Medium-Term Management Plan

Global Strategy: Deployment of Blended Cement and SCMs

KamiisoCPC

Oita
Hong Kong Taiwan● : Shipping bases

Guisson

TCPI

SCMC
SBI/SITo Ivory Coast: Terminals, ports: Blended cement: SCMsBlended cement
・Accelerating global trend to reduce clinker ratio (shift to limestone blended cement (Type IL) asa first step)・Shipment of Type IL cement from production bases in Vietnam, Indonesia and Korea to the U.S.
(over 1.5 million tonnes)
・Development of Type IT (ternary blended cement) with even lower clinker ratio as the next step
SCMs (mainly for ready-mixed concrete)・Overseas development of fly ash from Japan (Saiki Ash Center)・Development of slag through Indonesia and Vietnam2024©TAIHEIYO CEMENT

18

III. Outline of the 26 Medium-Term Management Plan

Promoting Sustainability Management

TargetTargetingYear

Zero carbon

Reduction in specific net CO2 emissions per tonne(compared to 2000)

10.2%

10% or more

2025

Reduction in specific net CO2 emissions per tonne
throughout the supply chain (compared to 2000)

9.2%

20% or more

2030

Development of DX human resources‒

450 or more in
total

2026

Fatalities (Group) (cases)

20Every year

Ratio of female employees

9.6%

10% or more

2026

Ratio of female managers

2.0%

5% or more
(3% or more)

2030(2026)

Human capital

FY2023

DX

Sustainability Targets

2024©TAIHEIYO CEMENT

19

III. Outline of the 26 Medium-Term Management Plan

Carbon Neutral Strategy: Road Map
Initiatives to achieve carbon neutrality in the entire supply chain
by 2050

2024

Reduce by at least 20% specificnet CO2 emissions per tonne(compared to 2000)

2026

CarbonNeutral

2030

2050

Innovative Approach— World-leading technology development—

Measures forcarbonneutralDevelopment ofinnovative technologies

Existing technologies:
CO2 reduction
Existing technologies:
CO2 absorption

CN modelbusiness
Measures against
intensifying disasters

Progressive Approach—Deepening of existing technologies & lateral development of newtechnologies—
Immediate Approach—Maximum utilization of existing
technologies—➢ Accelerate shift to blended cement➢ Improve procurement systems forblended materials➢ Promote alternatives to fossil fuels➢ New standardization of blended cement(expansion of use)
➢ Gas firing (methane, hydrogen, etc.)➢ Low-CO2 cement (CARBOFIX®)➢ Development of new grinding aid➢ CO2 mineralization (CARBOCATCH®)

Cooperate with Zero Carbon Island
Concept of Yakushima Town

➢ CO2 capture (C2SP Kiln®)➢ CCU (methanation, etc.)➢ CCS (purification and shipping technology)

Realize a “CN Model Plant” at DC CO., LTD.

Application of proprietary technologies and development of new technologies
e.g., ground improvement material, world’s strongest concrete, etc.
2024©TAIHEIYO CEMENT

20

III. Outline of the 26 Medium-Term Management Plan

Carbon Neutral Strategy: Initiatives to achieve carbon neutrality

Carbon neutralization of cement by applying existing technologies
Raw materialderived
Japan

Overseas・Increase the amount of cement admixtures for ordinary
Portland cement
・Study and practically apply new blended cement standards

Limestone fine powder

・Develop new blended cement that meets the needs of each business area
・Promote blended cement by utilizing new cement admixtures and grinding aids, etc.

Energy-derived
・Promote alternatives to fossil energy
Gas temperature distribution inside the kiln
and waste plastic tracking (example)

Promote the use of blended cement
aimed at carbon neutralization of cement2024©TAIHEIYO CEMENT

21

III. Outline of the 26 Medium-Term Management Plan

Carbon Neutral Strategy: Initiatives for Carbon Neutral Business (1)Participation in the Carbon Neutral Concept at domestic and overseas locations of theCompany and Group companies
Study incorporation of various innovativetechnologies developed under the Green
Innovation Fund Project, etc. to actual plant“CN Model Plant” concept(Kawasaki Plant, DC CO., LTD.)
CO2 Capture
C2SP Kiln®

CO2 Utilization
Cement Plant

Methanation

CO2 Utilization
CO2 mineralization

CO2 Storage
CO2 purification & shipment

Innovative cement production process(C2SP Kiln® experimental unit,
Yamaguchi Prefecture)2024©TAIHEIYO CEMENT

22

III. Outline of the 26 Medium-Term Management Plan

Carbon Neutral Strategy: Initiatives for Carbon Neutral Business (2)Cooperation with Zero Carbon Island Concept of Yakushima Town

1. Promote local production and local consumption of renewable energy (hydropower)・Development of EVs, electric industrial machinery, and EV chargers
2. Support natural environment development
・Support for activities that lead to theconservation of water resources
・Forestation by companies that nurture theenvironment

Abundant water resources
Renewable energy: hydroelectric
power generation 99.5%

Support for natural environment
development

3. Investigate businesses utilizing renewableenergyPromotion of local production andlocal consumption of renewableenergy2024©TAIHEIYO CEMENT

23

III. Outline of the 26 Medium-Term Management Plan

Carbon Neutral Strategy: Countermeasures against intensifying disasters associated with climate change: our proprietary technologies andfuture development—Corporate activities and technical proposals to prepare for intensifying disasters associated with climatechange and to respond to early recovery and restoration—
Recycling of disaster waste into cement
resources
Contribution through experience in responding to theEast Japan and Kumamoto earthquakes
Promotion of technological development fordisaster mitigation and restoration

Deployment
andpopularizationof proprietary
technologies

Newdevelopment
proposals

Popularization of high-durability
and high-strength technologies
・SFPC®, Ductal, PFC®
Technology for resilience (soilstabilizer)

150N class high-strength concrete technology
Technology for preventive maintenanceDisaster mitigation, preventive
maintenance and preparedness

Popularization of rapid-hardening
materials and methods
Disaster waste disposal
technology

Inspection of newly built
structures, repair materials
and work
Disposal technology for
difficult-to-treat wastes

Disaster recovery

Proposal of
rapid-hardening
materials andmethods

Promotion of precasting
Rapid construction andlabor-saving construction
technologies

Early restoration

2024©TAIHEIYO CEMENT

24

III. Outline of the 26 Medium-Term Management Plan

DX Strategy
We strive to improve efficiency and implement labor saving in all processes in our supply
chain, and systematically develop DX human resources to serve as the driving engine toprepare for labor supply constraints.
(1) Production process innovation (smart factory)(2) Operation efficiency innovation (smart office)・Assignment of cement tankers using AI
・Automated dispatch of cement transport trucks
・Improvement of efficiency of management tasksAI
optimizationengineDigital space(3) DX human resource
development

Real space2024©TAIHEIYO CEMENT

25

III. Outline of the 26 Medium-Term Management Plan

DX Strategy
Production process innovation (smart factory)(1) Evolution of kiln operation
・Establish a centralized control system for kiln operation
at domestic and overseas plants and support system byexpert operators
・Establish automatic kiln operation system
・Study unmanned operation during nighttime(2) Advancement of facility inspection methods
・Automatic collection of on-site instrument data and service
life prediction using AI
・Introduction of equipment inspection system using drones(3) Automation and labor saving of plant site work・Introduction of remote operation system for heavy machineryand unmanned truck delivery
・Automation of cement bag loading
・Introduction of ICT for access control management and safety education

2024©TAIHEIYO CEMENT

26

III. Outline of the 26 Medium-Term Management Plan

DX Strategy
Improving efficiency of administrative
operations (smart office)Improve productivity by promoting DX・Streamline business processes using digital technology
Utilization of operation automation tools, data analysis tools, etc.
・Improve productivity and allocate effectively human capital throughcentralization of administrative functions
Centralization of administrative operations at headquarters and reduction oftransfer opportunities
・Eliminate borders between work locations utilizing remote work
Promotion of diverse work styles by eliminating borders between work
locations, remote work and telecommuting

Establish an efficient organizational structure to prepare for labor supply
constraints
Maximize human capital value by creating new work styles and job
satisfaction2024©TAIHEIYO CEMENT

27

III. Outline of the 26 Medium-Term Management Plan

DX Strategy
DX human resources development

Develop more than 450 DX human resources through collaboration between IT
Planning Department and business divisions
Image of DX human resources
development

Improvement of IT literacy through in-house learning programs, external education, and field experience・ Core human resources in digital planning (150 permanent department
in business divisions)
Expand the number oftarget employees
according to the level

Role: Solve issues and improve operational efficiency within departments utilizing
digital technology

・Highly skilled human resources in digital utilization (300
department staff in business divisions)
Role: Utilize operation automation tools, data analysis tools, etc.

・Company-wide information literacy training (bottom-up
approach for all employees)→ Raise the level of knowledge on DX, latest IT technologies, information
security, etc.
2024©TAIHEIYO CEMENT

28

III. Outline of the 26 Medium-Term Management Plan

Human Capital Strategy

Human resources that match theGroup’s management strategy

Human capital investment
Development of
global humanresource

・Enhance “Overseas Trainee Program”
・Exchange personnel among overseas subsidiaries

Promotingdiversity

・Actively recruit external expert personnel
・Recruit experienced personnel and conduct employeereferral hiring and alumni hiring
・Continuously promote women’s participation andadvancement in workplace

Development ofmanagement
personnel

・Enhance executive development program and nextgeneration leader development training
・Promote reskilling and relearning
・Exchange personnel among group companies

2024©TAIHEIYO CEMENT

29

III. Outline of the 26 Medium-Term Management Plan

IR Strategy
Promote communication with investors and information disclosure
Aiming to improve understanding of the Company and reduce cost of capitalthrough dialogue

Expand opportunities
for dialogue

Enrich information
for dialogue

・Hold IR meetings with participation of management
・Hold IR-DAY (ESG briefing sessions, business briefing sessions,facility tours, etc.)
・Hold interviews with outside directors

・Enhance contents of reference materials of financial results
・Promote simultaneous disclosure in Japanese and English

2024©TAIHEIYO CEMENT

30

Appendix

2024©TAIHEIYO CEMENT

31

Appendix

Net Sales and Operating Income by Segment
The following assumptions have been applied for the period covered by the 26 Medium-Term Management Plan.
Estimated domestic cement demand: 35 million tons per year
Estimated exchange rate:
145 yen/US$(Unit: Billions of yen)

Net Sales
FY2024 Results
CementBusiness

Operating Income

FY2027 Target

FY2024 Results

FY2027 Target

Japan

295.1

350.0

(1.4)

35.0

Overseas

334.7

410.0

34.1

45.0

Sub-total

629.8

760.0

32.7

80.0

Mineral Resources
Business

87.6

100.0

8.4

11.0

Environmental
Business

68.2

89.0

6.1

10.0

Construction Materials
Business

73.4

92.0

4.2

7.0

Other Business

89.3

100.0

4.6

7.0

Intergroup Elimination(62.3)(71.0)

0.1

0.0

Sub-total

886.2

1,070.0

56.4

115.0
2024©TAIHEIYO CEMENT

32

Appendix

Business Strategies: Cement Business (Japan)◆Revitalization of our cement business in Japan through cement priceoptimization■Optimize cement price・Establish a mechanism to pass on cost increases to prices throughout our supply chain■Increase Taiheiyo Cement's presence in the domestic distribution market
・Increase orders for dams, the Linear Chuo Shinkansen Line, and redevelopment projects in the Tokyo
metropolitan area
・Develop and expand sales of new soil stabilizer that contributes to national resilience■Succeed the cement business from Denka Company Limited

Construction site for Naruse Dam

・Succeed the cement business through optimization of production and supply system within the Taiheiyo Cement
Group■Maintain a stable production by strengthening plant facilities
・Introduce the latest facilities and digitalize facility management■Strengthen transportation system and response to the shortage of drivers
under the revision of regulation in 2024
・Support as a consigner to maintain and strengthen marine and land transportation capacity, and ensure a stablecement supply

Liquefaction prevention construction site
for road embankment in Kagoshima
Prefecture■Implement initiatives aimed at achieving carbon neutrality

・Investigate market needs for Low-CO2 blended cement and consider the commercialization
・Shift to manufacture vessels with superior energy-saving performance and introduce the mixed combustion withbiodiesel fuelCement transport trucks
2024©TAIHEIYO CEMENT

33

Appendix

Business Strategies: Cement Business (Overseas)◆ Expand business by utilizing SCMs

—Increase the added value of blended cement to promote carbon neutrality
while bringing profitability—■Strengthen earnings base for existing businesses

・Maximize production volume at plants in the U.S., utilize slag, and shift to Type IL
cement, and expand SCMs/blended cement business through the expansion of terminal
silos
・Expand sales following the completion of renewal project in the Philippines,
construct terminal in Luzon Island, and expand sales of FA cement

CalPortland Redding Plant(California, US)■Further expand business domain

・Approach to Oceania (Australia and NZ)・Explore and Implement M&A projects in the U.S. and Southeast Asia
・Promote commercialization of soil stabilization and other projects in Indonesia■Expand trading business・Stabilize cement supply to the U.S. and support the expansion of blended cement
through slag exports
・Establish logistics network in Asia including Indonesia
・Expand blended cement in Asian countries by utilizing Saiki Ash Center

Taiheiyo Cement Philippines(Cebu, Philippines)

Solusi Bangun Indonesia Tuban
Plant (East Java, Indonesia)2024©TAIHEIYO CEMENT

34

Appendix

Business Strategies: Mineral Resources Business◆ Diligently work on medium- to long-term resource policies to build the foundation for growth◆ Establish earnings structure unaffected by cement demand fluctuations◼ Strengthen existing core businesses

・Acquire an “ability to form market conditions” by leveraging ourresources
・Build a strong supply chain・Study and introduce comprehensive soil treatment business◼ Improve profitability of affiliates

・Maximize synergy from mutually complementary and mutually
beneficial relationships among group companies◼ Build a long-term stable supply system forresources

Shin-Tsukumi Quarry (Hachinohe area under construction to remove topsoil
and aggregate wash plant )・Steadily implement the development of the next areas for ourlimestone quarries
・Build optimal production systems for aggregates and mineralproducts◼ Expand new businesses in Japan andoverseas・Expand local business in Vietnam and other countries
・Expand functional materials business

New Minamisode aggregate yard under construction (Sodegaura City)
2024©TAIHEIYO CEMENT

35

Appendix

Business Strategies: Environmental Business♦ Simultaneously promote carbon neutrality and circular economy to create new added value
while achieving sustainable growth■Enhance competitive advantage in existing businesses

・ Further focus on waste collection contributing to cost reduction
Intensify review of waste disposal prices
Increase acceptance of waste that can be a substitute for thermal energy
・Make the most of ash centers nationwide
Support the expansion of FA cement exports■Create new added value

・ Initiatives to achieve carbon neutrality
Secure sources to increase the ratio of blended cement
Develop renewable energy and increase its own consumption
Participate in the Reconstruction Farm project (Namie-cho, Futaba-gun, Fukushima
Prefecture)・ Launch new businesses contributing to the circular economy
Business for the treatment of waste photovoltaic panels
Business related to phosphorus recovery from sewage sludge resources anddemonstration of fertilizer conversion
Establish technology to recover precious metals and remove heavy metals frommunicipal waste incineration ash

Saiki Ash Center, where classification facility is
being installed (scheduled to be completed inJune 2024)

Phosphorus recovery and fertilizer conversion
facility (B-DASH project)2024©TAIHEIYO CEMENT

36

Appendix

Business Strategies: Construction Materials Business◆Strengthen profitability of existing businesses by optimizing selling prices, investing in DX, etc.
◆Introduce new products in the market and enter into new business areas including overseas markets■Further strengthen earnings base・Steadily reflect various rising costs in selling prices
・Promote DX-related investments (improve productivity and secure logistics and construction
capabilities)
・Promote M&As in infrastructure maintenance business■Enter into new business areas including overseas market

・Explore markets for soil stabilizer and high-performance premix products in Indonesia
・Promote soil improvement business for effective use of construction soil

Multi-axial screening equipment integrated withcrushing, classifying, and mixing■Launch new products to achieve carbon neutrality

・Introduce environmentally friendly products to the market (grouting materials for offshore wind
power generation, low-CO2 admixtures)
・Expand application of CO2 effective utilization technologies such as CARBOCATCH® toexisting productsContinuous block foundation for guardrailswith CARBOCATCH® slurry applied2024©TAIHEIYO CEMENT

37

Appendix

Strategy for Research and Development
Aiming to enhance R&D capabilities to the world's highest level to contribute to
management
Vision targeting 2030: Strengthen functions as a think tank for the Taiheiyo Cement Group andbuild a base for group cooperative development
Develop technologies to achieve carbon neutrality

Contribute to business expansion and earnings improvement☆Development of carbon neutrality technology andstandardization strategy☆Development of Technologies that contribute to measuresagainst severe disasters☆Contribution to the expansion of overseas business, ourgrowth area
☆ Contribution to earnings improvement of domestic businessincluding group companies

Research and development for sustainablegrowth☆Early commercialization of functional materials☆Proposal of themes that contribute to business expansion
and incubation

Evolve into a group-wide research institute☆Concretization of the concept of a group-wide research
institute and human resource development☆Development of technologies that contribute to achieve carbon
neutrality and preservation of natural capital2024©TAIHEIYO CEMENT

38

Appendix

Intellectual Asset Strategies
Steadily build a patent network supporting the promotion of carbon
neutrality
カーボンニュートラル関連
Carbonneutrality-related
30％３０％

National resilience-related
国土強靭化関連25％ ２５％

知的財産権管理委員会
Management CommitteeIntellectual Property Rights

Recycling-based society

循環経済の形成関連
formation-related
１０％

Innovative
materials and future革新的材料・将来技術分野
oriented ３５％technologies
35％

Promotion of patent applications to support business strategies(FY2024 results)

Steadily expand intellectual capital to support business(patents)
（件）
2,000
2,000

1,500
1,500

国内
In
Japan
Overseas
海外

1,451
1,451

1,000
1,000
1,235
1,235

1,511

1,273
1,273

1,726
1,726

1,812
1,812

1,596
1,596

1,335
1,335

Intellectual Property
知財戦略会議Strategy Meetings

IPランドスケープ活動
IR landscape activities*

Research and研究開発部門Development Department

Intellectual Property
Promotion
知財推進会議Committee
Meetings

Business
divisions
事業部門

Group companies
グループ会社Group Intellectual Property Promotion
グループ知財推進会議
Committee Meetings

1,439
1,439

1,509
1,509

500
500

0

Intellectual Property
知的財産部
Department

10％

216

238
238

261
261

287
287

303
303

2019
2020

2020
2021

2021
2022

2022
2023

2023（年度）
2024 (FY)

Promotion of intellectual property activities throughinterdepartmental cooperation*IP landscape activities: Activities of analyzing intellectual property
information, etc. to utilize it for R&D andbusiness development

Promotion of patent rights acquisition to support business2024©TAIHEIYO CEMENT

39

This document is a translated version of the Japanese original for reference purposes only. In the event of any discrepancy between this translated document
and the Japanese original, the original shall prevail.

(Note)
Plans and other forward looking statements in this document are based on information available to the Company as of the date of the release of this document
and on certain assumptions the Company deems reasonable, and therefore are subject to risks and uncertainties
As such, we do not offer any promise or guarantee that planned results and measures included in this document will be realized in the future Actual results may
differ significantly due to a variety of factors.