Message from the President

We will continue to adhere to the ethos of our founder. Specifically, we will be a visionary leader, we will act with integrity, we will value diversity, and we will all continue to take on challenges with passion.

On May 6, ITOCHU announced its financial results for FY2016 and FY2017 Management Plan for the second year of the current medium-term management plan, “Brand-new Deal 2017”.

In FY2016, the first year of Brand-new Deal 2017, we posted net profit attributable to ITOCHU of ¥240.4 billion, approximately ¥90.0 billion yen less than we initially forecast.

In FY2016, we were making good progress in relation to our initial forecast by further reinforcing the earnings base in the non-resource sector and steadily implementing such measures as investing in CITIC Limited in accordance with the basic policies of Brand-new Deal 2017, which calls for (1) strengthening our financial position and (2) building a solid earnings base to generate net profit attributable to ITOCHU at the ¥400 billion level. During the past fiscal year, ITOCHU has consistently strived to deal with future risks at an early stage, thereby minimizing the challenges that we factored into the plan for the new fiscal year.

However, to be a leader in the “new era for the sogo shosha,” we saw a need to anticipate what lies ahead of today’s relatively stable times and decided to make provisions for further reinforcing our financial position. Accordingly, we have moved to build a solid earnings base capable of withstanding any sort of changing economic environment from FY2017 onward, based on the assumption that the growth strategy underpinning a general trading company has shifted from the resource sector to the non-resource sector. More specifically, we took rigorous steps to accelerate the reshuffling of assets and to exit low-margin businesses as soon as possible, regardless of whether they were in the non-resource or resource sector. In addition, we made further improvements to the quality of our assets by adopting the most conservative assumptions in assessing the fair value of goodwill and intangible assets, and making provision for the maximum loss assessable at this point in time.

As a result of accelerating the reshuffling of assets in pursuit of further improvement in asset quality and efficiency, we bolstered cash flow management to strengthen our financial position by substantially increasing our free cash flow (excluding the investment in CITIC) to ¥410.0 billion from the ¥100.0 billion in our initial projection and by reducing net interest-bearing debt.

For FY2017, we have set conservative estimates based on assumptions about resource prices and are planning for a record ¥350.0 billion in net profit attributable to ITOCHU. The subtitle of the FY2017 Management Plan, “Engaging All Employees to Lead a New Era for the Sogo Shosha,” underlines the importance of the ambitious goal we have set for ourselves, and all employees will work in a unified manner to set yet another profit record for ITOCHU. Please see here[PDF] for an overview of our financial results for FY2016 and details of the FY2017 Management Plan.

Last but not least, as for return to shareholders, we have set a minimum dividend payment of a record ¥55 per share for FY2017. The dividend policy of aiming to increase shareholder returns remains unchanged, and we will seek to further increase our record high dividend every year while continuing our guaranteed minimum payments and dividend policy of increasing dividends in line with performance to further enhance shareholder returns.

By continuing to successfully execute specific measures going forward based on the management strategies and policies in “Brand-new Deal 2017”, we will further enhance the growth of the ITOCHU Group and continue to work to satisfy expectations of all our stakeholders. We look forward to your continuing support and understanding as we make steady strides toward our goals.

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Masahiro Okafuji
President & Chief Executive Officer