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Gate 3 Medium-term Management Plan

Medium-term Management Plan 2023
—“Transform and Grow”

In line with our renewed corporate management philosophy (MVV) and our Materiality updated in 2019, we have ­formulated Medium-term Management Plan 2023ー“Transform and Grow,” under which we will contribute to the development of society through our growth as a company, encouraging all of our employees to transform themselves, as well as keeping up with the accelerating pace of change in social needs, such as advances in digital technology and increasing interest in the environment.

Transform and Grow: Six Corporate Strategies

Transform and Grow: Six Corporate Strategies

Quantitative Targets

Mitsui aims to quickly return to a growth trajectory by steadily executing the strategies outlined in the management plan, despite the likelihood of a decline in short-term profits due to COVID-19.

Core operating cash flow

Core operating cash flow Core operating cash flow

Profit for the year

Profit for the year Profit for the year

ROE

ROE ROE

Core operating cash flow for the fiscal year ended March 2020 has been revised to deduct payment of lease liabilities.

1 Strengthen Business Management Capabilities

Mitsui aims to quickly return to a growth trajectory by strengthening the profitability of existing businesses. The Company intends to reinforce its business management capabilities as an organization, while allocating management resources including human resources to the businesses where Mitsui is able to take the lead and produce results.

Specific Measures

Improve business
management expertise
  • Expand knowledge across organizations
  • Introduce diverse professional talent
Foster and deploy business
management talent
  • Prioritize placements at important subsidiaries and affiliated companies
  • Internal development, external recruitment
Focus areas
  • Prioritize allocation of management resources, including personnel, in businesses and companies where profitability improvement can be realized

Specific Measures Specific Measures

Strengthening Business Management Capabilities: Leveraging the Corporate Development Division

The Corporate Development Division was set up in 2013 as a Companywide support organization belonging to the Corporate Development Business Unit. In addition to teams in charge of improving management and increasing corporate value at investees, we have created a team of M&A specialists in charge of improving the quality of investment portfolios, and a dedicated team in charge of risk management, drawing from our pool of professionals in Japan. Team composition is unique such that specialists from investment banking, private equity and management consulting firms are recruited actively and those professionals are grouped with talent internally selected. These teams take a hands-on, results-oriented approach to getting involved in business units and important investees. The teams are involved in a broad range of initiatives, from earnings improvement to PMI and organizational reforms.

Based on actual conditions received from hands-on support mentioned above, the division takes the role as a problem-solving leader to propose solutions to the Company’s management regarding managerial issues such as the development of management talent for the entire Mitsui Group. To this end, the division has built a robust collaboration framework with corporate organizations, such as the Corporate Planning & Strategy Division, the Investment Administrative Division, and the Human Resources & General Affairs Division. To improve management at investees, teams in charge work on-site to improve management, and teams play roles in training and grooming business management personnel from the talent pool.

Utilization Scheme of the Corporate Development Division

Utilization Scheme of the Corporate Development Division

2 Evolve Financial Strategy
and Portfolio Management

In addition to maintaining and improving our robust financial base, we pursue flexible and strategic capital allocation to growth investments and additional shareholder returns. We also thoroughly review investment amounts and timelines for projects for which an investment decision has already been made.

With regard to shareholder returns, the Company aims to increase the total shareholder return ratio above the level of the previous medium-term management plan, while implementing capital allocation with a focus on improving capital efficiency and medium- and long-term growth opportunities.

3 Personnel Strategy

Mitsui aims to create businesses and increase value through global talent management, including raising the professionalism of each and every employee, and harnessing their talents in the right place and at the right time, while organically connecting together its diverse pool of professionals.

We are keen to change employee mindsets and behavior patterns, catalyzing “intellectual chemical reactions,” and accelerating the move toward a new working style that combines robust digital platforms and new head office functions.

Local Depth for Global Reach,
Global Reach for Local Depth
  • Promote and appoint personnel regardless of where they were recruited
  • Develop next-generation leaders on a global basis
  • Strengthen global talent management
Diversity & Inclusion
  • Create frameworks and organizations where diverse personnel can thrive
  • Strengthen employee engagement on a Global Group basis
  • Provide an innovative working environment where employees can deliver their best

Diversity & Inclusion Diversity & Inclusion

Strengthen Diverse Individuals
  • Inspire and develop personnel who can take on business management
  • Implement personnel systems and operations that empower the individual to succeed

New Mission, Vision, Values

4 Strategic Focus

Mitsui intends to establish new earnings pillars by selectively allocating management resources to strategic focus areas with an awareness of Materiality, enabling existing businesses to create multifaceted value on platforms.

Energy Solutions

Natural gas, infrastructure,
renewable energy
LNG development and renewable
energy business as central platform
Smart energy services
Business that helps mitigate
climate change

Create an eco-friendly society Create an eco-friendly society

Healthcare / Nutrition

Hospitals and their ancillary businesses
IHH as central platform
Medical data/integrated facility management
Nutrition, food protein

Secure a sustainable supply of products Enhance quality of life Secure a sustainable supply of products Enhance quality of life

Market Asia

Promotion of the
digital economy and DX
Consumer platforms
Next-generation mobility
Emerging economies and Japan

360° business innovation 360° business innovation

5 Strengthen Profitability of Core Businesses and Take on Challenges in New Businesses

In the core businesses of Mineral & Metal Resources, Energy, Machinery & Infrastructure, and Chemicals, we will accelerate our “make strong businesses stronger” strategy. Mitsui aims to optimize its business portfolio to be more competitive over the medium and long term by recycling assets, including divestitures, and investing to maintain and expand reserves of natural resources.

Mineral &
Metal Resources

Iron ore, coking coal, copper, recycling

  • Maintain and expand iron ore volumes, and Raise quality of coking coal assets
  • Expand, and raise quality of copper and Promote recycling business
Energy

Oil, gas, renewable energy, new energy

  • Increase oil and gas production volume and deposits, raise LNG production capacity, and Raise competitiveness of existing assets
  • Increase trading income, and Expand renewable and new energy businesses
Machinery &
Infrastructure

Power generation, marine energy,
gas distribution, automotive, shipping

  • Raise quality of asset portfolio, and Promote DX/optimize operations
  • Transform existing business, upgrading trading functions
Chemicals

Methanol, tank terminal,
coating materials, personal care,
environmental chemicals,
agri-science, wellness

  • Increase sophistication in trading, enhance network
  • Stronger resilience in existing businesses, raise profitability
  • Recycle, reuse, commercialization and application of ­environmental-focused new materials and technologies

Mitsui has created values by connecting various countries, regions and industries, thereby expanding its potential as a general trading company. To instill a “creative” mindset and behavior patterns in its own businesses, the Company will accelerate initiatives centered on the Moon Creative Lab, a business creation platform. Through digital transformation (DX), the Company aims to create new businesses spanning business units, in addition to improving the productivity and competitiveness of existing businesses.

Timing of Earnings Contributions from Quality Business Assets

The chart shown below outlines the timing of earnings contributions from quality business assets fortified during the previous medium-term management plan in the Company’s core businesses of Mineral & Metal Resources, Energy, Machinery & Infrastructure, and Chemicals.

Strengthen profitability and pursue new business

Strengthen profitability and pursue new business

6 Sustainability Management / Evolution of ESG

With a focus on the impact to its operations and public demand and expectations, Mitsui mapped out important sustainability issues to determine the issues it should tackle on a Companywide basis during the period of the management plan, excluding issues toward which it is already engaging. As a result, Mitsui will address climate change, the circular economy, and business & human rights as priority issues under the current medium-term management plan.

Mitsui will continue to strengthen corporate governance and improve the effectiveness of the Board of Directors.

Sustainability Management / Evolution of ESG

Quantitative Targets

In the fiscal year ending March 31, 2021, Mitsui expects profit for the year to fall sharply compared with the fiscal year ended March 31, 2020, due to the spread of COVID-19. However, management estimates that core operating cash flow will be ¥400 billion. Mitsui will steadily execute the corporate strategy outlined in the management plan, and aim to quickly return to a growth trajectory.

Core Operating Cash Flow

Core Operating Cash Flow Core Operating Cash Flow

Profit for the Year

Profit for the Year Profit for the Year

  • Resources & Energy
  • Machinery & Infrastructure
  • Chemicals
  • Other business areas
  • Headquarters & eliminations

Note:Core operating cash flow for the fiscal year ended March 2020 has been revised to deduct payment of lease liabilities.