三井倉庫ホールディングス（9302） – [Delayed]Notice of Establishment of New Group Philosophy and Medium-term Management Plan 2022

May 10, 2022 To whom it may concern MITSUI-SOKO HOLDINGS Co., Ltd. Company Name: Name of Representative: Hirobumi Koga, President & CEO Code Number: Contact: Phone: 9302 (TSE Prime) Takeshi Nishimura Senior Executive Officer, Strategic Planning Div. General Manager +81-3-6400-8015 Notice of Establishment of New Group Philosophy and Medium-term Management Plan 2022 The MITSUI-SOKO Group has established a new Group Philosophy (Purpose, Vision, and Values) and formulated a new five-year plan, Medium-term Management Plan 2022, with the fiscal year ending March 31, 2023 being the first year and the fiscal year ending March 31, 2027 the final year. Recently, the environment surrounding society has changed drastically due to the global pandemic of the novel coronavirus infection, increasingly severe disasters, and a destabilization of the international situation. The logistics industry is also undergoing a major transition, with rapid changes, such as the advancement of digitalization, labor shortages, and the move toward decarbonization. Under these circumstances, we recognize the need to reconsider our raison d’être as a corporate group in order to make a further leap and achieve sustainable growth, and we have recently renewed our group philosophy and repositioned it as the highest management concept. In addition, by promoting our newly formulated mid-term management plan under this new group philosophy, we will strive to enhance our corporate value in the long term, build a sustainable society, and meet the expectations of our stakeholders and of society. 1 1. Group Philosophy (Purpose, Vision, and Values) The Group Philosophy is the highest management concept and consists of Purpose (meaning of our existence), Vision (what we want to become in the medium- to long-term span), and Values (corporate values and action guidelines). The renewed group philosophy reflects our determination for the Group to continue to “solve problems and create value through logistics” in the future. Based on this group philosophy, we aim to implement our medium-term management plan and other management strategies to enhance the corporate value of the Group and achieve sustainable growth for society and our customers. [Conceptual Diagram of the Group’s Philosophy] ■ Purpose (meaning of our existence) Empower society, encourage progress Our recently enacted Purpose— Empower society, encourage progress —is the role that the Group should play and embodies our solid belief in the value we create for society. Logistics plays an important role as a social infrastructure and is the very foundation of modern society, supporting economic activities and people’s lives. The MITSUI-SOKO Group has been in the logistics business for over 100 years, connecting countries with countries, industries with industries, people with people, and all other subjects in support of the evolution of society. Even in times of rapid change, there is no change in the role played by the Group. By fulfilling this Purpose, we aim to move the world in a better direction and help to realize a mindful and sustainable society. 2 ■ Vision (what we want to become in the medium- to long-term span) The co-creative logistics solutions partner. For everyday, emergency, and always will be Over our more than 100-year history, the Group has fostered trust with our customers, and as their logistics partner, we have supported their growth and walked alongside them. Even at this time when supply chains and logistics networks are being disrupted by the impact of the pandemic, the combined strength of the Group is mobilizing to keep our customers’ businesses connected with no stop in physical distribution. As social issues become more complex and the social structure changes drastically, supply chain management will become increasingly important, and logistics companies will be required to not only receive and transport goods but also build a sustainable supply chain. As a link in the evolution of our customers and society at any given time, the Group aims to be a logistics solutions partner that improves our customers’ corporate value by co-creating with all stakeholders, not limited to only within the Group. ■ Values (corporate values and action guidelines) – Responsibility and pride in empowering our society – PRIDE CHALLENGE GEMBA RESPECT – Strive to create and execute sustainable proposals for both our customers and society – – Our frontline: The base of potential, power, and progress – – Embrace diverse ideas, co-create new value – In order to realize our Vision under our Purpose, we have established four Values: PRIDE, CHALLENGE, GEMBA and RESPECT are the values to be treasured by each employee and organization, and serve as guidelines for action. In accordance with these Values, we will realize a corporate group in which each and every employee can maximize their potential and create value over the medium to long term. 3 2. Medium-Term Management Plan 2022: Be the First-Call Company “Going on the Offensive by Deepening” In order to realize our Vision— The co-creative logistics solutions partner. For everyday, emergency, and always will be —the Group has formulated a new five-year plan, the Medium-term Management Plan 2022, beginning in the fiscal year ending March 31, 2023 continuing until the fiscal year ending March 31, 2027. In our previous Medium-term Management Plan 2017, we positioned the first three years as a reversal period, focusing on strengthening our business profitability and rebuilding our financial base. In the last two years of the plan, we primarily worked on the three key areas for sustainable growth: Construction of Overwhelming Field Capabilities, Establishment of End-to-end Integrated Solution Services, and ESG Management. As a result, we successfully achieved all of our numerical targets, attained the reversal of our business, and laid the foundation for sustainable growth in the future. Under the new Medium-term Management Plan 2022, we aim to achieve further growth by deepening our efforts to date. As the first-call company that can be trusted by our customers, we will go on the offensive with aggressive investment, focusing on the three pillars of our growth strategy: Top-line Growth by Mobilizing the Group’s Collective Strength, Reinforcement of Operational Competitiveness, and Building Management Foundations to Support the Deepening. (1) Growth Strategy Top-line Growth by Mobilizing the Group’s Collective Strength We will promote a deepening of our integrated solution services, which is our unique business model, expanding our sustainability-oriented business with our competitive abilities to make and execute proposals, and digging deeper into our inter-industry operations by making the most of the Group’s broad customer base and various logistics features. Reinforcement of Operational Competitiveness By deepening our efforts toward thorough standardization, we will realize our “overwhelming field capabilities” that combine the power of people with the power of technology. We also aim to secure a competitive advantage by improving the quality of our operations, and furthermore, to improve profitability by lowering the cost of operations. Building Management Foundation to Support the Deepening We will strengthen our management base in the following four aspects: DX: Transformation of business models and reform of corporate culture Co-creation: Creation of mechanisms to generate innovation and the strengthening of alliances with various platformers Business Assets: Development of new office buildings and logistics facilities, enhancement of the asset value of existing facilities, and the improvement of the work environment ESG: Reinforcement of efforts to realize a decarbonized society, an expansion of investment in human capital, and the enhancement of governance 4 (2) Financial Strategy In the Medium-term Management Plan 2017, we restrained investment and reduced interest-bearing debt in order to rebuild our financial base. In the Medium-term Management Plan 2022, we aim to achieve both proactive investment and enhanced shareholder returns based on the financial base and profitability established in the previous medium-term management plan. Make an investment of 130 billion yen in total. – – 100 billion yen for strategic investment in growth areas, such as DX investment, investment in new equipment (physical distribution/real estate), and M&A 30 billion yen for ordinary investment (investment in maintenance/renewal of existing facilities) Strengthen shareholder returns based on a payout ratio of 30%. Procure and operate based on the optimal debt-to-equity ratio of 1. Set a target of return of equity (ROE) of over 12%, aiming to maintain a high level of capital efficiency. (3) Numerical Targets (as of March 31, 2027) Operating revenue 350 billion yen Operating profit Operating cash flow 23 billion yen 30 billion yen [The philosophy system and mid-term management plan] 5 End Medium-term Management Plan 2022“Going on the Offensive by Deepening”Be the First-Call Company May 10, 2022MITSUI-SOKO HOLDINGS Co., Ltd.AGENDAMedium-term Management Plan 2022Be the First-Call Company Ⅰ. Looking Back on the Medium-term Management Plan 2017p. 2Ⅱ. Medium-term Management Plan 2022p. 71. Overall View of the Plan2. Growth Strategies for Achievement(1) Top-line Growth by Mobilizing the Group’s Collective Strength p. 14(2) Reinforcement of Operational Competitiveness(3) Building Management Foundation to Support the Deepening3. Policy Summaryp. 8p. 13p. 19 p. 21p. 301AGENDAMedium-term Management Plan 2022Be the First-Call Company Ⅰ. Looking Back on the Medium-term Management Plan 2017p. 2Ⅱ. Medium-term Management Plan 2022p. 71. Overall View of the Plan2. Growth Strategies for Achievement(1) Top-line Growth by Mobilizing the Group’s Collective Strength p. 14(2) Reinforcement of Operational Competitiveness(3) Building Management Foundation to Support the Deepening3. Policy Summaryp. 8p. 13p. 19 p. 21p. 302Ⅰ. Looking Back on the Medium-term Management Plan 2017Medium-term Management Plan 2022Be the First-Call Company Summary of the Plan [Basic Guidelines for Business Operations】Medium-term Management Plan 2017:1. Reinforcement of the fundamental earnings power From Reversal to Sustainable Growthof our businesses2. Rebuilding of our financial base3. Development of comprehensive solution services based on customers by strengthening Group management[Dividend Policy]Early return to stable dividends through steady accumulation of earnings[Numerical Targets] (FY2022)Operating profit ¥10.0 billionBalance of interest-bearing debt ¥130.0 billion or lessNet D/E ratio ROE 2.0 times or lessMore than 9.0%3Ⅰ. Looking Back on the Medium-term Management Plan 2017Medium-term Management Plan 2022Be the First-Call Company Status of AchievementResults of Final YearIndicatorOperating profitBalance of interest-bearing debtNet D/E ratioROEIncrease/Decrease Factors5.84.1Target Figures¥10.0 billion¥130.0 billion or less2.0 times or lessMore than 9.0%FY2022 Result¥25.9 billion¥94 billion0.9 times20.4%8.925.9(Billions of yen)7.117.0FY2017Cost reductionTop-line expansionSpecial factorsFY2022✓ The actual value of operating profit reached ¥17 billion, even excluding special factors caused by the pandemic.4Ⅰ. Looking Back on the Medium-term Management Plan 2017Medium-term Management Plan 2022Be the First-Call Company Operating revenue (Billions of yen)Operating profit (Billions of yen) / Operating profit margin (%)Changes in Individual FiguresResultPlan225.5233.233% increase over FY2017241.9241.1253.6301.0Record profits 3 times25.98.6%10.017.77.0%ResultPlanOperating profit margin (Result)Operating profit margin (Plan)12.05.0%11.84.9%5.82.6%7.03.0%FY2017FY2018FY2019FY2020FY2021FY2022FY2017FY2018FY2019FY2020FY2021FY2022Balance of interest-bearing debt (Billions of yen) / Net D/E ratio (times)Dividend per share (yen)ResultPlanNet D/E ratio (Result)Net D/E ratio (Plan)Exceeded target figures(¥130 billion or less, 2.0 times or less)Result(interim + year-end)Plan94.0Increased dividends every fiscal year since resumption168.93.6 157.63.0 142.52.5 127.12.1 107.91.4 130.094.02.00.9 FY2017FY2018FY2019FY2020FY2021FY202225.00.0FY2017FY201812.5FY201925.012.5FY202030.025.035.0FY2021FY20225Ⅰ. Looking Back on the Medium-term Management Plan 2017Medium-term Management Plan 2022Be the First-Call Company Specific Measures and SummaryImportant Measures in the Medium-term Management Plan 2017Completion of ReversalMeasures for Sustainable GrowthReinforcement of the Fundamental Earnings Power of Our BusinessesConstruction of Overwhelming Field Capabilities• Reduced costs by ¥2.1 billion over 3 years from FY2018 via Challenge • Created the Operation Management Division to promote initiatives across 20, full-scale cost reduction measures that left no stone unturned.businesses and regions.•Improved profit margins through thorough income and expenditure management by project.• Operating profit margin FY2017: 2.6% ⇒ FY2022: 8.6%Rebuilding of Our Financial Base• Reduced interest-bearing debt by approx. ¥75 billion over 5 years by curbing nonessential and non-urgent investments and selling inefficient assets and non-core businesses.• Early resumption of dividends in FY2019 and continued dividend increases thereafter.• Developed standard operating procedures (SOPs) as a basis for standardization and enhanced the knowledge base.• Established methodology through standardization efforts at model offices.Establishment of Integrated Solution Service• Strengthened integrated solution sales transcending the boundaries of group companies.Promotion of ESG Management• Established the ESG Team.•• Elected to the FTSE Blossom Japan Sector Relative Index constituents (as of Identified Materiality and established non-financial information KPIs.Strengthening of Group ManagementMarch 30, 2022).• Consolidated customer contact points through the integration of domestic and international sales functions.• Established new cross-group functional departments.• Streamlined the organization.Reform of Corporate Culture • Reformed personnel system / Changed mindset / Improved employee engagement.• Promoted personnel exchange at the management level.• Fostered a sense of group unity as One MITSUI-SOKO.✓ Completed laying the groundwork for a reversal and sustainable growth, and is on the starting line to go on the offensive.6AGENDAMedium-term Management Plan 2022Be the First-Call Company Ⅰ. Looking Back on the Medium-term Management Plan 2017p. 2Ⅱ. Medium-term Management Plan 20221. Overall View of the Plan2. Growth Strategies for Achievement(1) Top-line Growth by Mobilizing the Group’s Collective Strength p. 14(2) Reinforcement of Operational Competitiveness(3) Building Management Foundation to Support the Deepening3. Policy Summaryp. 7p. 8p. 13p. 19 p. 21p. 3071. Overall View of the PlanMedium-term Management Plan 2022Be the First-Call Company Positioning of the Medium-term Management Plan✓ New plan to further deepen measures for sustainable growth and establish our unique business modelMOVE2015Medium-term Management Plan 2017Medium-term Management Plan 2022Reversal PeriodSustainable Growth PeriodGoing on the Offensive by DeepeningPolicyExpansion of business through M&A and capital investmentLaying foundation for rebuilding the financial base and sustainable growth- Deepening the business – Reform of corporate modelcultureMain MeasuresAcquisition of all-round logistics functionsReinforcement of each function through leaner operationsStrengthening of our ability to respond to change by integrating functions and changing our mindset- Top-line growth by mobilizing the Group’s collective strength- Reinforcement of operational competitiveness- Building management foundation to support the deepeningExternal EnvironmentExternalization of logistics is underwayIncrease in logistics costsSupply chain disruption due to the pandemic- Growing sustainability awareness-Increased importance of supply chain81. Overall View of the PlanRecognized EnvironmentMedium-term Management Plan 2022Be the First-Call Company ✓ The social climate, in which supply chains are becoming increasingly important, is a strong tailwind for us.Current of the TimesOur Core CompetenceGrowing need for supply chain transformation due to environmental changes and increased awareness of sustainabilityIndustry especially with drastic changes Mobility related: Healthcare related:Industrial structural reforms due to progress of EV, etc.Increasing sophistication of medical care and aging population B2B2C related (Consumer goods) :Changes in consumer behavior due to expansion of e-commerce and subscriptions All-round logistics capabilities and diverse human resources to handle the supply chain from upstream to downstream Domestic and international network of approximately 400 locations worldwide Logistics design know-how cultivated through provision of 4PL services Ability to respond to changes that kept customers’ trust in the pandemic Customers’ supply chain transformation is a major business opportunity to leverage our core competence. We recognize that industries with drastic environmental changes are areas where we have special strengths. Mobility→ Expertise in handling automotive/electronic components/home appliances Healthcare → Knowledge of advanced and regenerative medicine, experience and quality in handling healthcare cargo with permits and licenses B2B2C→ Experience in technical logistics covering everything from home appliance distribution center management, joint delivery, last one-mile delivery, installation, and maintenance to repair91. Overall View of the PlanFunding and Fund AllocationMedium-term Management Plan 2022Be the First-Call Company ✓ Achieve both proactive investment and enhanced shareholder returns based on the financial base and profitability established in the previous medium-term management plan.Fund Allocation Policy Achieve further growth through strategic investments totaling ¥100 billion, including ¥20 billion yen in DX investment. Aim for flexible shareholder returns linked to business performance, based on a payout ratio of 30%.Image of Funding and Allocation(5-year cumulative total) Shareholder returns (Payout ratio: 30%)¥20 billionprofit growth. Consider share buybacks as a further measure to return profits to shareholders. Continue to strengthen shareholder returns by increasing dividends in line with Operating Cash Flow¥130 billionBorrowing¥20 billionCash InStrategic investment ¥100 billion(including DX investment of ¥20 billion)co-creation.investment. Substantially expand investment in growing areas such as DX and new capital Actively consider disciplined strategic M&A and capital alliances to realize Expand investment in existing facilities from the perspective of increasing asset value and improving the work environment.Normal investment: ¥30 billion Set optimal D/E ratio at 1.0x and utilize external loans.Note:Interest-bearing debt includes lease obligations and does not deduct cash and cash equivalents on hand.Cash Out101. Overall View of the PlanNumerical TargetsMedium-term Management Plan 2022Be the First-Call Company ✓ Continue high level of profit growth while accelerating business scale expansion by aggressive investment.MOVE 2015(FY2017)Medium-term Management Plan 2017 (FY2022)ResultActual value225.5301.0260.05.812.325.923.117.021.0Operating RevenueOperating ProfitOperating Cash FlowImage of Operating Profit Growth(Billions of yen)Medium-term Management Plan 2022(FY2027)6% growth/year6% growth/year7% growth/year350.023.030.0(Billions of yen)23.0(25.9)8.9(21.0)3.017.018.0(17.7)3.514.25.87.012.011.82017201820192020202120222023(Forecast)Note: Underlined figures are actual values of operating profit.2027(FY)111. Overall View of the PlanIncrease/Decrease Factors of Operating ProfitOperating Profit by Segment (Billions of yen)Medium-term Management Plan 2022Be the First-Call Company FY2022 ActualFY2027４．０Change Logistics BusinessReal Estate BusinessOverall EliminationsConsolidated Total14.85.8▲3.617.0Main Increase/Decrease Factors of Operating Profit (Billions of yen)24.52.5▲4.023.0+9.7▲3.3▲0.4+6.0+4.6• Top-line growth by growth strategies• Effect of strategic investments+4.217.0•Increase in handling volume of base businesses• Optimization of fees received23.0▲2.5• Upfront costs associated with strategic investments▲3.6• Multi-tenanting of major properties, etc.10% growth/year6% growth/year+3.4• Lower cost of operations122. Growth Strategies for AchievementOverall View of Growth StrategiesMedium-term Management Plan 2022Be the First-Call Company Medium-term Management Plan 2022“Going on the Offensive by Deepening”Top-line Growth by Mobilizing the Group’s Collective StrengthReinforcement of Operational Competitiveness Enhancement of integrated solution service Expansion of sustainability-oriented business Deep digging in the inter-industry Company-wide penetration of standardization Improvement of operational quality Lower cost of operationsBuilding Management Foundation to Support the Deepening• Transformation of business • Creation of mechanism for modelinnovation• Reform of corporate culture• Active partnerships and M&A with various platformers• Development of new office buildings and logistics facilities• Increase in asset value of existing facilities• Improvement of work environment• Reinforcement of efforts to realize a decarbonized society• Expansion of investment in human capital• Enhancement of governanceHuman resources[Structural reform, human resource exchange, and engagement improvement]132. Growth Strategies for Achievement (1) Top-line Growth by Mobilizing the Group’s Collective StrengthMedium-term Management Plan 2022Be the First-Call Company Enhancement of integrated solution service✓ Deepening our unique business model of Integrated Solution ServicesAll-round logistics functionsMITSUI-SOKO (MSC)MITSUI-SOKO EXPRESS(MSE)MITSUI-SOKO LOGISTICS(MSL)MITSUI-SOKO Supply Chain Solutions (MSCS)MITSUI-SOKO TRANSPORT(MST)Domestic and international assetsHighly secured air transportationExtensive storage know-howToyota-level operational qualityCenter managementLast one-mile support4PL from the manufacturers’ perspectivesJoint delivery (mainly in Western Japan)Yard operationsOperations management expertise MaterialsHealthcareAutomotive partsHome appliances Consumer goodsHome appliances Electronic componentsConsumer goodsSolutions & Quality / Field CapabilitiesDigital PlatformLogistics strategy & planningLogistics data analysisInventory optimizationOptimization of transportation routeOperationQuality improvementOur core systemOther companies’ systemsBuild and utilize a digital platform infrastructure that supports the visualization of SCM information, incorporating the quality that has supported the logistics of Toyota and Sony and logistics design know-how from manufacturers’ perspectives into its all-round logistics functions.SCM Digital Platform142. Growth Strategies for Achievement (1) Top-line Growth by Mobilizing the Group’s Collective StrengthMedium-term Management Plan 2022Be the First-Call Company Enhancement of integrated solution service✓ Meet the growing need for supply chain transformation with services that achieve total optimization.Procure Focus areas:Areas where our “strengths” can be utilized in particularValue provided to customers With a supply chain that SaleProduceoverviews its entirety, eliminating the need for individual optimization by each department and enabling customers to expand their business from a logistics standpoint.TransportStore*Target: EV and connected car key components Mobility[Strengths] Extensive experience in handling automotive parts, electronic devices/components, and home appliances for Toyota, Sony, and other companiesHealthcare[Strengths] Knowledge and advanced quality management systems and operational experience in the manufacturing and regenerative medicine fieldsB2B2C[Strengths] Experience in operating distribution centers for home appliances, joint delivery, and providing integrated services from delivery, installation, and maintenance to repair*Target: Regenerative medical products and high-molecular pharmaceuticals*Target: Home improvement centers, furniture stores, and apparel industry Focus regions: Japan, China, and Southeast Asia15Expected Effects■ Achieve both inventory compression and reduction of shortage rate by introducing criteria that allow each department from procurement to sales to make decisions flexibly.■ Shorten lead time by reducing the size of order lots without raising procurement costs. Improve cash flow significantly thanks to shrinking safety stock.2. Growth Strategies for Achievement (1) Top-line Growth by Mobilizing the Group’s Collective StrengthMedium-term Management Plan 2022Be the First-Call Company Expansion of sustainability-oriented business✓ Establish specialized services ahead of the growing demand for sustainability due to rapid environmental changes (diversification, legalization, and globalization).Environmental risksLabor force risksDisaster risksChallenges Faced by Companies Environmental regulations in both “software” and “hardware” aspects CO2 reduction requests from customers Increasing number of ethical consumers Expansion of the e-commerce market, etc., leading to a greater variety of products in smaller quantities Declining working-age population, labor shortages due to working hour regulationsLoss of or damage to cargo, suspension of shipments and transportation, and loss of sales opportunities due to earthquakes, tsunamis, floods, and other disastersStagnation of cargo and international transportation due to lockdown Delivery delays and logistics outages due to surging stay-at-home demandInnovative service that does not stop customers’ businesses by visualizing and addressing the risks that logistics faceHelping customers achieve supply chain sustainability with SustainaLinkSustainaLinkSpecial Website URL: https://www.mitsui-soko.com/sustainalink/QR code for smartphones▶※ This website will be in Japanese162. Growth Strategies for Achievement (1) Top-line Growth by Mobilizing the Group’s Collective StrengthMedium-term Management Plan 2022Be the First-Call Company Expansion of sustainability-oriented business✓ Try to expand business by leveraging our core competencies and ability to make proposals and execute them.Competitive Advantages of Our ServicesAbility to propose and implement solutions to sustainability issues based on our core competence(all-round logistics functions, diverse human resources, domestic and international networks, logistics design know-how, and ability to adapt to change)Response to environmental risksDisclose and reduce CO2/waste Response to labor force risksEstablish logistics that do not rely on manpower and secure necessary workforceResponse to disaster risksSupport for building a robust logistics system2) Visualize2) Visualize1) KnowKnow the current system and future trends of CO2/wasteVisualize CO2/waste emissions*Step 1Step 2Step 31) Know1) KnowKnow the status and future trends of the labor force risksVisualize work, transportation, office manpower, and man-hoursKnow the logistics risks due to disasters, etc.2) VisualizeAssume and visualize logistics risks such as disasters3) Improve Build a disaster-resistant logistics system3) Improve 3) Improve Reduce and offset Co2/waste emissionsStreamline and automate work and transportation to save manpower*Our CO2 emissions calculation method has already been validated by a third-party certification body.172. Growth Strategies for Achievement (1) Top-line Growth by Mobilizing the Group’s Collective StrengthMedium-term Management Plan 2022Be the First-Call Company Deep digging in the inter-industry✓ Dig deep into inter-industry by fully utilizing the Group’s broad customer base and various logistics features.Image of inter-industry Operations in the Customer’s Supply ChainProcurement logisticsProduction logisticsSales logisticsPlace of shipmentDestinationSupplier(Parts supply)Warehouse(Parts warehouse)Factory(Production)Warehouse(Production warehouse)Airport/Seaport(Export)(International transportation)AirportSeaport(Import)Warehouse(Inspection warehouse)Warehouse(Sales warehouse)StoreF u n c t i o n a l a x i sCustomer axisMaterialsHealthcareAutomotive partsHome appliancesElectronic componentsMSCMSCMSCSMSLMSEMSCSXXX:Scope of services already providedInter-industry operations = Room for growth182. Growth Strategies for Achievement (2) Reinforcement of Operational CompetitivenessMedium-term Management Plan 2022Be the First-Call Company Aims and Specific Measures✓ Secure competitive advantage through “overwhelming field capabilities” based on thorough standardization efforts.StandardizationEstablishment of MethodologyCompany-wide Penetration Visualize current status by checking work processes and quantifying Develop standard operating procedures (SOPs) as a basis for Enhance knowledge base to accumulate know-how as an man-hours.standardization.organization. Roll out measures at model offices to other locations. Standardize in the Group at a high quality level based on manufacturer standards.“Overwhelming Field Capabilities”Improvement of Operational QualityLower Cost of Operations Accumulate improvement steadily through power of people. Implement various measures such as integration of bases, DX of operations using the power of technology.▶ Realize differentiation from competitors by combining the two powers.reorganization of functions, and shift of fixed costs to variable costs by utilizing group-wide standardization.▶ Improve profitability with effective streamlining measures.192. Growth Strategies for Achievement (2) Reinforcement of Operational CompetitivenessMedium-term Management Plan 2022Be the First-Call Company Steps to be Taken✓ Deepen standardization efforts promoted while incorporating the improvement methods of Toyota, our joint venture partner, and achieve overwhelming field capabilities by combining the power of people with the power of technology.Medium-term Management Plan 2017Reversal PeriodSustainable Growth PeriodMedium-term Management Plan 2022“Going on the Offensive by Deepening”Lower cost of operationsDX to improve operational qualityStandardization(Company-wide penetration)Standardization(Establishment of methodology)Establish a methodology to visualize the work process by setting intensity and measuring man-hours.Expand the scope of standardization and build a foundation for improvement and DX.Promote differentiation by combining the power of people with the power of technology.Realize improved profitability through implementation of streamlining measures.202. Growth Strategies for Achievement (3) Building Management Foundation to Support the DeepeningMedium-term Management Plan 2022Be the First-Call Company DX Strategy Framework✓ Create social value by transforming the business model and corporate culture and evolving into a digital logistics company.Drastic Changes in the Business EnvironmentCustomers and Society “Digital Enterprise World”Visualization of SCM digital informationReform of the MITSUI-SOKO Group’s business modelBusiness Transformation (Offensive DX) Provide SCM data and algorithms. Provide SCM platforms. Provide new services through co-creation. Respond to ESG.Improve added valueCreate new value Digitization of SCM informationTransformation of the organization and corporate culture of the MITSUI-SOKO GroupDirection of DXSCM Digital PlatformBusiness Optimization (Defensive DX) Improve existing business. Improve operating profit margin by reducing cost and SG&A expenses. Enhance employee productivity.OptimizationStreamliningAutomationLabor-saving Strengthen customer experience.Existing servicesExisting operations212. Growth Strategies for Achievement (3) Building Management Foundation to Support the DeepeningMedium-term Management Plan 2022Be the First-Call Company DX “Offensive DX”✓ Offensive DX to develop new services for customers by utilizing SCM information on the platformBuilding PlatformCollect information in the supply chain using the scale-free network.API linkageAccumulate the collected data on the platform after setting the data linkage key.Analysis, streamlining, and optimizationNew Services for Customers (Examples)Visualization of Inventory at Multiple LocationsScenario Plan ComparisonCentralized Management of Trade DocumentsSupplierAt seaFactoryStorePlan APlan BPlan CTrade documentsStaffCentrally manage inventory in the supply chain on the platform.Present and simulate plans when considering a new business or route change.Manage trade documents by project so that each staff member can check them in real time.CO2 emissionsTransport costTerminal chargeLead timeSave by projectPossible to check in real time222. Growth Strategies for Achievement (3) Building Management Foundation to Support the DeepeningMedium-term Management Plan 2022Be the First-Call Company DX “Defensive DX”✓ Defensive DX to aim to accelerate smart logistics support by leveraging the latest digital technologiesDigital Warehouse (Warehousing)Digital Forwarding(Cargo Handling) Digital Port(Seaport)Digital Transport(Transportation)Smart LogisticsEffectsAutomated judgmentAutomation and manpower saving of business processesDigitization of goods movementDigitization of paper movementTechnologyArtificial IntelligenceRobotic Process AutomationAbility of a digital computerRobotInternet of ThingsAttach sensors to objects and use the information acquired by the sensorsOptical Character ReaderOptical character recognition function to convert to character dataReservationUnattended receptionOperation instructionMonitoringRemote controlIoTDigitizationOCRAIImageWMSAIShipper’s systemCreate efficient staffing and storage location plans that do not rely on experience or intuition.Reduce driver waiting time through berth reservation and automatic acceptance.Improve safety and manpower shortage by utilizing AGVs for cargo handling and transport in warehouses.Eliminate complexity and reduce human errors through the digitization of trade documents.Trade documentsCargo handling system232. Growth Strategies for Achievement (3) Building Management Foundation to Support the DeepeningMedium-term Management Plan 2022Be the First-Call Company DX Promotion Structure✓Complete structure development to further promote DX and speed up the process. Promoted the Digital Strategy Team to Digital Strategy Division in the holding company as of April 2022. Introduced IT specialist system to strengthen mid-career/new graduate recruitment of DX specialists who play an Organizing DX Promotion Systemimportant role in DX promotion.Functions of the Digital Strategy DivisionDigital Strategy DivisionBusiness Solution FunctionDX Promotion Function Proposes IT solutions in collaboration with the sales division. Designs operations using IT systems. Promote digital strategy and build DX system. Promote smart logistics,Strengthening DX Human ResourcesDX Specialist (DX Promotion Division)DX Generalist (All Employees) Captures customer issues and needs. Embodies services, designs systems, and manages projects. Improves productivity through the use of IT technology/business systems. Plans and proposes on creation/expansion of business opportunities through IT technology.Completion of DX Certification Having completed the development of the DX strategy and structure, we were certified by the Ministry of Economy, Trade and Industry as of April 1, 2022.242. Growth Strategies for Achievement (3) Building Management Foundation to Support the DeepeningMedium-term Management Plan 2022Be the First-Call Company ✓ Accelerate co-creation efforts internally and externally to originate new business and value. Promote internal co-creation aiming to effectively utilize diverse human resources, our core competence, and create a system Promotion of Co-creation Proactively consider M&A, alliances, and other external co-creation opportunities to meet diversifying customer needs and Co-creationthat generates innovation.achieve further growth.Co-Creation InitiativesInternal Co-creationMeasures for Human ResourcesTool Renew and penetrate the “Value” in accordance with the revised Revitalize communication and information sharing by expanding the corporate philosophy. Reform the organizational culture through personnel system reforms and cross-organizational personnel exchanges.functions of the Group Portal website and knowledge sharing platform. Consolidate offices and develop spaces for employee interaction. Proactively partner with various platforms based on the SCM digital platform and develop new services through these partnerships. Consider and implement strategic M&A and partnerships to achieve discontinuous value creation.External Co-creation252. Growth Strategies for Achievement (3) Building Management Foundation to Support the DeepeningMedium-term Management Plan 2022Be the First-Call Company Business Assets✓ Focus on effective use and value enhancement of owned assets and capital investment with market competitiveness in mind.Active investment in Business Assets Promote CRE measures to enhance corporate value by effectively utilizing assets held.Implement strategic investments in next-generation logistics centers and dedicated facilitiesutilizing IoT and robotics. Scrap and build existing assets and invest in maintenance and renewal, including ESG compliance.Invest in New Logistics Facilities in Competitive Areas for Top-line Growth A new warehouse to cope with expansion of handling volume in the mobility/healthcare-related market expected to grow steadily A next-generation logistics center that achieves compatibility for both e-commerce and brick-and-mortar stores, including the introduction of the latest technologyActive Investment in Existing Assets Extensively consider investment in real estate for rent and logistics facilities, including replacement of asset portfolio.Real Estate for RentLogistics Facilities & Offices Effective use of assets held in accordance with location Construction to enhance value, including reduction of environmental impact Renewal work to reform the profit structure Addressing aging logistics facilities to achieve sustainable logistics Developing a safe and comfortable work environment262. Growth Strategies for Achievement (3) Building Management Foundation to Support the DeepeningMedium-term Management Plan 2022Be the First-Call Company ✓ For E (Environment), strongly promote reductions in our CO2 emissions while providing services to reduce CO2 emissions of customers. SGCO2 Emission Trends (t-CO2)64,57456,883Our measures taken so far Endorsement of TCFD Establishment of the medium- to long-term targets for CO2 emissions (compared to FY2013)By FY2031: 50% reduction (-32,287 tons) Switchover of air conditioning and lighting equipment in warehouses Expanded use of in-house solar power generation systems and renewable energy sourcesBy FY2051: Net zero achieved Further acceleration of existing initiatives Introduction of ZEV trucks as technological innovation progresses Utilization of carbon offsets32,287FY2014FY2017FY2018FY2019FY2020FY2021Base year0FY2031FY2051Reduced by 50%Net zeroNote:Scope of coverage: Holding company and core operating companies272. Growth Strategies for Achievement (3) Building Management Foundation to Support the DeepeningMedium-term Management Plan 2022Be the First-Call Company E G✓ For S (Social), actively invest resources to strengthen human capital, the most important management foundation.Measures to Strengthen Human CapitalPersonnel System ReformEstablish a human resource system that takes advantage of the diversity, expertise, and fluidity of human resources and work styles.Creating Job SatisfactionUnderstand organizational issues and promote mutual understanding through dialogue between the company and its employees.Improvement of Work EnvironmentPursuit of employee safety and work comfort through investment in both hardware and software.Improvement of Employee Engagement Set KPI items and target values that lead to employee engagement as follows, and thoroughly manage progress.• Rate of paid leave taken• Ratio of female managers• No. of occupational accidents70 %100 %15 %30 %0Better than previous fiscal year’s level• Health checkup take-up rate • Male childcare leave acquisition rate• Absentee rate282. Growth Strategies for Achievement (3) Building Management Foundation to Support the DeepeningMedium-term Management Plan 2022Be the First-Call Company ✓ For G (Governance), establish structures, systems, and indicators to enhance corporate value over medium to long term. ESSustainability Promotion SystemBoard of Directors The Sustainability Committee is established under the Board of Directors to ensure strong governance.SuperviseReportSustainability CommitteeChairperson: PresidentMembers: Representatives of each operating company, etc. The Committee is chaired by the President and consists mainly of representatives of each operating company that plays a central role in business activities. The Committee thoroughly examines sustainability strategies and policies, and manages the implementation of initiatives.SubcommitteeA cross-group task force in accordance with each initiativecharge of each field.companies in the Group.Management with Capital Efficiency in Mind A cross-group subcommittee for each field is established with the holding company’s responsible department in They develop a roadmap to achieve target KPIs, plan and implement specific measures, and collaborate with Focus on ROEAim to maintain the high level of capital efficiency achieved in the previous medium-term management plan by setting the target ROE at over 12%.Stock-based Compensation PlanIntroduce stock compensation as part of the executive compensation system to increase corporate value over the medium to long term.293. Policy Summary Medium-term Management Plan 2022Be the First-Call Company Medium-term Management Plan 2022“Going on the Offensive by Deepening”Growth Strategies✓ Top-line Growth by Mobilizing the Group’s Collective Strength✓ Reinforcement of Operational Competitiveness✓ Building Management Foundation to Support the Deepening ＜DX, Co-creation, Business Assets, and ESG＞Financial Strategies✓ Investments in a total of ¥130 billion- Strategic investments such as DX investment / new capital investment (logistics & real estate) / investment in growing areas such as M&A: ¥100 billion- Normal investment (maintaining existing facilities / renewal investment): ¥30 billion✓ Strengthening shareholder returns based on a payout ratio of 30%✓ Procurement and operation based on the optimal D/E ratio of 1.0✓ Setting a target of ROE of over 12%, aiming to maintain a high level of capital efficiencyNumerical Targets (FY2027)Operating Revenue Operating ProfitOperating Cash Flow¥350 billion¥23 billion ¥30 billion 30Empower society, encourage progress