SNAPSHOT

Strengthening Profitability and Financial Base

ITOCHU's earning capabilities, financial soundness, and capital efficiency have improved beyond recognition over the past 10 years.
We have completed preparations for shifting to a phase of even stronger growth.

Improving Profitability

Growth Yardsticks—Gross Trading Profit and Net Income Attributable to ITOCHU

The past decade has seen ITOCHU's earning capabilities grow dramatically. ITOCHU has undergone a transformation since the late 1990s by reducing underperforming or inefficient assets while concentrating investment on growth areas—such as the Natural Resource / Energy-Related Sector and China—and areas in which it has strengths, such as the Consumer-Related Sector.

Building a Robust Financial Base to Proactively Seek New Opportunities

Financial Soundness Benchmark—NET DER

Establishing NET DER as an important indicator in financial soundness, ITOCHU has strengthened its financial position by the reduction of interest-bearing debt and increasing stockholders' equity through the accumulation of earnings. NET DER has improved significantly from more than 13.7 times in fiscal 1999 to a record low of 1.4 times in fiscal 2011. Even in phases of expanding investment, we will maintain and improve financial soundness by keeping NET DER between 1.5 times and 2.0 times.

Cash-Generation Capabilities Support Aggressive Investment

Cash Flows from Operating Activities

ITOCHU has ensured cash flows from operating activities by accumulating earnings, monitoring the collection of receivables from customers stringently, and heightening the dividend payout ratios of equity-method affiliates. The resulting abundant cash flows have enabled recent major investment initiatives.

Improving Capital Efficiency

Capital Efficiency Benchmark—ROE

We have raised ROE by taking into account capital efficiency through the corporate-wide portfolio management. Having gone through an adjustment since the financial turmoil in fiscal 2009, ROE is expected to recover and once again rise above 15%. While enriching stockholders' equity, we intend to keep ROE high.

Enhancing Returns to Stockholders

Dividends

Consistent and stable distribution of returns to stockholders has long been ITOCHU's basic policy. The new medium-term management plan increases the transparency of ITOCHU's stance on distribution of returns by setting out a dividend payout ratio.
Under this medium-term management plan, our annual dividend targets will be:
• a dividend payout ratio of 20% on net income attributable to ITOCHU up to ¥200.0 billion and
• a dividend payout ratio of 30% on the portion of net income attributable to ITOCHU exceeding ¥200.0 billion.
Based on this policy, for fiscal 2012 we plan to pay a full-year cash dividend of ¥33.0 per share, comprising an interim cash dividend and a year-end cash dividend.