CEO Message

Sustainable enhancement of corporate value is
the mission of management.
Drawing on our history and staying true to
the merchant philosophy
we have developed over the years,
we will continue to strive for new heights.

Under our Management Policy, “The Brand-new Deal,” we achieved record-high profits in FYE 2025. For FYE 2026, we are committed to lean management and deepening our growth investments, aiming to achieve record-high profits for a second consecutive year and secure the Triple Crown among general trading companies in market capitalization, consolidated net profit, and ROE.

Masahiro Okafuji
Chairman & Chief Executive Officer

The Japanese Dream

When we talk about the American Dream, we think of stories of people achieving great wealth and success in the United States. I’m sure everyone has dreamed of this at least once. But what does the Japanese Dream mean to you? In Japan, we sometimes hear stories of people who have successfully started businesses and amassed great wealth, but most people probably feel that this only applies to a very limited number of people. It may sound like a distant dream, especially to a typical company employee.

Not too long ago, a female employee visited me to say farewell upon her retirement. She joined ITOCHU Corporation in the mid-1970s after graduating from junior college and spent more than 40 years working in administrative roles in our Textile Company. Over those years, she steadily accumulated ITOCHU stock. There were times in the late 1990s when our stock price fell below ¥200. However, she continued to believe in the Company and kept investing. What surprised me about her story was the number of shares she held at the time of retirement. The number of shares has now exceeded 100,000 with a market value of approximately ¥800 million, and dividend income alone reaching ¥20 million per year. She told me, “I will be able to enjoy a prosperous life for the rest of my days. Thank you so much.” Her facial expression remains vivid in my memory. At that moment, it suddenly occurred to me that this story could also be worthy of being called the Japanese Dream.

I have always believed that management’s “scorecard” takes the form of how much it is able to enhance corporate value. I continue to believe that enhancing corporate value, or in other words increasing market capitalization and stock price, is my responsibility as CEO. Hearing this employee’s words, I once again felt the weight and value of my responsibility. The sustainable growth and enhancement of ITOCHU’s corporate value brings happiness not only to our employees, but also to all those who hold our shares, including institutional investors. Currently, the Tokyo Stock Exchange and Japanese stocks are attracting global attention. This has only strengthened my resolve as CEO to share the fruits of our growth—in other words, the Japanese Dream—with our investors through our Company.

One development I am extremely pleased about is that the management capabilities of general trading companies were highly praised in Berkshire Hathaway Inc.’s shareholder letters in February 2025. In this letter, Berkshire Hathaway Inc. mentioned that it would moderately relax the previous 10% limit on its shares of the five major general trading companies, and that it would hold those shares for long term in the future. I was greatly surprised when Mr. Warren Buffett announced he would retire as CEO at the shareholders’ meeting in May, but it is truly an honor for Japanese general trading companies to be highly valued by one of the world’s leading investors. Berkshire Hathaway Inc.’s investments in Japanese general trading company shares have been highly successful, and this too can be described as a part of the Japanese Dream. However, we have no intention of resting on our laurels. From the time I get up to the time I go to bed, I’m constantly thinking about management, and I strive each day to fulfill my mission of sustainably enhancing our corporate value.

Regaining the Top Position Among General Trading Companies

In the “My History” daily column I wrote for the Nikkei newspaper in January 2025, I looked back on my life, including my setbacks and hardships. What I wanted to convey through this series is my belief that if people persevere through hardships and continue to work hard, they can achieve steady growth. This also applies to corporate management.

The business environment rarely unfolds as initially expected. Just as a hang-glider must adapt to ever-changing wind directions in order to fly accurately to its destination, I believe it is the responsibility of management to do everything in its capacity to adapt flexibly and meet targets in any business environment. Under this type of “hang-glider management,” ITOCHU has steadily achieved its targets and grown, year by year. In FYE 2021, we attained the Triple Crown among general trading companies in consolidated net profit, share price, and market capitalization, and were poised to solidify our position. However, the deterioration of the situation between Russia and Ukraine led to a surge in resource prices. As a result, given that the proportion of resource-related businesses in our portfolio is relatively low, we experienced a challenging period in our financial results. While waiting for the surge in resource prices to eventually subside, we steadily accumulated growth over the past four years, preparing to regain the top position. We have avoided investing large amounts in areas with high uncertainty and which will take time to contribute to profits. Just as we worked as one group in the past to expand FamilyMart’s earnings base while increasing our shares in the company, we have continued to expand our investments in Group companies whose operations we understand deeply, and projects where synergies can be reliably predicted.

Some examples include CTC, DESCENTE LTD., and DAIKEN CORPORATION, which have been private, as well as our expanding business collaboration with Hitachi Construction Machinery Co., Ltd. and Nishimatsu Construction Co., Ltd. As a result of these steady initiatives, we achieved a record-high profit of ¥880.3 billion in FYE 2025, further solidifying our foundation for the next stage of growth. Recently, there are some headwinds in the current business environment, such as a repeated downward revision to economic growth forecasts triggered by the uncertainty surrounding the Trump administration. However, rather than adopting a passive, defensive approach with plans to reduce profits, we have set a target of ¥900 billion in profits for FYE 2026, which would be a record high for the second consecutive fiscal year, by evolving our hands-on management and the steady accumulation of growth investments. （→ CFO Interview）

As in the previous fiscal year, we intend to accumulate up to ¥1 trillion in growth investments under one of the pillars of our long-term Management Policy, “No growth without investments.” The current state of uncertainty in the business environment also presents an investment opportunity for us. By discerning changes in the times and among customers, we will accelerate downstream-driven investments and further build on our strengths, in line with our long-term Management Policy’s concept, “Profit opportunities are shifting downstream.” In recent years, each Division Company has developed a good foresight and effective investment strategies in its respective field. We will make investments that raise the performance of the Group as a whole, leveraging each business field’s strengths without concentrating on any specific area. （→ COO Message）

In addition to growth investments, there are key concepts we are rigorously instilling on the front lines to achieve record-high profits under the current management environment: lean management and a market-oriented perspective. These concepts, which emerged through honest reflection on our history and past failures, are the core of my management philosophy. I would first like to explain the meaning of these two important concepts for our Company.

The Essence of Lean Management

Let me share a story from when I was young. When an overseas client visited Japan, they were so busy that I was asked to visit their hotel early in the morning. After having a cup of coffee at their breakfast table and finishing our conversation, I discovered that my subordinate had already paid for the client’s meal. How would you feel about this? Some people may think it natural for us to pay, since the client traveled from overseas. However, being invited by the client for breakfast and then covering the cost seems inconsistent with the usual business practice that “the inviter pays.” It is essential for those in charge of management to always have a sense for what is truly necessary to expand business. Conversely, everything else should be cut down as much as possible. This is the essence of lean management.

I often discuss my “Earn, Cut, Prevent” principles. The “Cut” is not merely about reducing costs, however. For example, we must always question whether entertainment or business trips are really necessary for business. We must also be sensitive to seemingly minor things like leaving chairs out in meeting rooms, lights left on, or previous visitors’ teacups being left out in the reception area. If we are indifferent to such things, we will also be less sensitive to the accumulation of inventory and accounts receivable in actual business. The same applies to organizational management. If we overhire in response to calls for more staff, we may later be forced into layoffs if performance deteriorates. We must always be proactive from a long-term perspective, streamlining organizations, optimizing personnel allocation, and leveraging AI for operational efficiency to maximize productivity.

While the “Earn” in “Earn, Cut, Prevent” principle requires specialized expertise and cannot be easily replicated, “Cut” is a basic management skill with very high reproducibility if the right mindset and methods are acquired. For all employees to become outstanding managers, I want them to master lean management through the “Cut” aspect of the “Earn, Cut, Prevent” principles. There are many cases of employees dispatched as managers to Group companies who have improved performance by applying ITOCHU’s management approach. （→ Succession Plan）

From the perspective of strengthening Group management, most employees will be involved in managing Group companies, either now or in the future. The first thing they can do may not be “Earn,” which is difficult, but rather practicing and learning sensitivity of lean management, which leads directly to enhanced corporate value.

The Sensitivity of a Market-Oriented Perspective

Recently, I met with the CEO of a leading Japanese financial group. He explained that, in preparing his management message for his company’s integrated report, he used generative AI, trained on his past statements, lectures, and exemplary messages from other companies, to draft content on specified themes and points. As someone who racks his brain every year over what message to deliver, I was struck by the rapid progress of generative AI and the pace of societal change. In the coming age, if we fail to adapt to these revolutionary changes brought about by AI, we will not be able to survive. （→ CXO Interview）（→ Digital Strategy for the Sustainable Enhancement of Corporate Value）

However, AI is merely a tool; for merchants, the most essential quality in business remains sensitivity to even the smallest customer needs and requirements.

Many hit products have originated from such sensitivity. For example, in Judaism, Shabbat, the day of rest, extends from Friday until sundown on Saturday. During this period, no work of any kind is permitted, and it is a practice strictly observed by devotees. “Work” includes using fire as well as electricity. As a result, even opening a refrigerator becomes an issue, as the interior light would come on every time you open the door to get food. Samsung Electronics Co., Ltd. addressed this by developing a refrigerator that can be set so the interior light does not turn on during this period, a hit product born from such sensitivity. The key to creating popular products is to be sensitive to the issues customers face and devise ways to satisfy those needs. This is a good example of how a consumer issue can be addressed with just a little ingenuity, without the need for advanced development.

Today, consumers hold the initiative. The era in which companies succeed through a product-out approach, telling customers what they need and what to buy, is over. We need to have a market-oriented sensitivity that allows us to carefully observe our customers, sense what their issues are, and proactively propose ideas that will help address these issues. As I often say, merchants need to be like water: the core of a merchant is to change shape like water to fit the vessel of customer needs. No matter how much technology advances, I maintain a strong sense of urgency that business in the future will not be possible without this kind of sensitivity.

The True Meaning of Corporate Brand Value

In April 2025, something happened that shocked me as a person who has been involved in the brand business for a long time. In the European (Paris) stock market, luxury brand companies dominate the top ranks by market capitalization. For the first time in 26 years, Hermès International SCA overtook LVMH Moët Hennessy Louis Vuitton (LVMH) for the top position. LVMH owns a wide range of brands, including Louis Vuitton, Moët Hennessy, Tiffany, and Dior. In contrast, Hermès International has focused exclusively on the HERMÈS brand, targeting the wealthy and emphasizing rarity over scale. While HERMÈS has many famous items that everyone desires, there are also some products that miss the mark. Even so, receiving something bearing the HERMÈS brand is universally welcome. It is likely due to the power of brand that HERMÈS has been able to stay on top.

I think the same can be said for companies in general. Business performance may fluctuate with the business environment, but once a brand—in other words, corporate value—is established, its value can be maintained and enhanced through ongoing refinement, no matter the circumstances. Under our Management Policy, “The Brand-new Deal,” we have committed to continuously enhancing ITOCHU not only in quantitative but also qualitative terms. Strengthening ITOCHU’s qualitative aspects is core to our brand. For example, this year we were ranked first overall in six out of the seven major rankings of most desirable employment destinations, and first among general trading companies in all seven rankings. These rankings, based on reputation and corporate image as judged by students who have not yet joined the workforce, are a direct reflection of how society evaluates us. While high rankings directly help us secure outstanding talent, we place even greater value on them as indicators of our corporate brand value. Our efforts extend beyond recruitment to areas such as IR and sustainability, which are of strong interest to market participants. I am confident that the corporate brand value we have cultivated, like HERMÈS, is the very foundation of our corporate value. （→ CAO Interview）

Expanding Investment Opportunities through Trust

Corporate brand value can also be described as trust and credibility. When people hear that someone is from ITOCHU, they have confidence in doing business with us. When ITOCHU invests in a company, stakeholders expect us to enhance its corporate value through governance and leveraging our management resources. This is the image we strive to achieve. Conversely, if the poor behavior of even one person causes customers to have a negative impression of ITOCHU as a whole, it will damage the value of ITOCHU’s corporate brand. In other words, corporate brand value is the trust and credibility for which every member of the ITOCHU Group is responsible. Just as HERMÈS has honed its brand value, it is essential for all of us in the ITOCHU Group to continue rigorously refining our brand value.

In contrast, some of the activities of certain activists that have become prevalent in recent years are contrary to the ideals we aim to achieve. For example, we are particularly concerned by excessively short-term-oriented and arguably self-centered activities, such as demands for short-term turnaround of business performance through restructuring and asset sales, and excessive shareholder returns by drawing down internal reserves. If once-excellent companies lose their strength and the competitive environment collapses due to restructuring-centered cost competition and the maximization of short-term profits, it could lead to job loss, the shrinking of regional economies, a weakened supply chain, and the deterioration of products and services for customers, ultimately undermining the vitality of the Japanese economy. Just as the spirit of “Sampo-yoshi” (good for the seller, good for the buyer, good for society) has supported our sustainable growth for over 160 years, if we can create a shared understanding not only between our investee companies and ourself, but also with our customers and society, then everyone connected with the investment and business can demonstrate their full potential. By improving our performance and building trust in ITOCHU through our business, we are actually expanding new business opportunities.

For example, our capital alliance with Hitachi Construction Machinery Co., Ltd., launched in 2022, was executed in response to the selection and concentration strategy of its parent company, Hitachi, Ltd. By leveraging our expertise to support the expansion of Hitachi Construction Machinery Co., Ltd.’s North American business and finance business, we aimed to become their top partner. The positive reputation from this synergy has led to further alliances with Kawasaki Motors, Ltd. and AICHI CORPORATION, including building a retail finance business in the U.S. for Kawasaki Motors, Ltd. With Nishimatsu Construction Co., Ltd., where we invested in 2021 for relief from activists, we have built various synergies, including the construction of our company dormitory for female employees, and have reached an agreement to increase our equity share for even deeper collaboration. As a result, we are seeing more opportunities for investment based on trust in our Company. （→ Expanding Collaboration with Leading Domestic Companies by Leveraging “Trust and Credibility”）

In the business reconstruction of WECARS Co., Ltd., we are not only expanding our business platform as Japan’s largest used car marketplace but also contributing to employee retention and restoring trust across the industry. By steadily accumulating such results, we are simultaneously enhancing corporate brand value and expanding new investment opportunities.

Becoming a Company that Represents Japan

To be honest, when my columns for the “My History” series began, I was nervous about how readers would react. As the series progressed, I was relieved to receive much more positive feedback from the public than I had expected. I even received a letter from a young person who wrote, “You gave me courage.” If I have been able to encourage many people, nothing could make me happier.

People form impressions of companies based on their interactions with individuals. Regardless of title or position, every employee, including new hires, shapes ITOCHU’s brand. One reason I wrote “My History” was to take the lead as CEO in raising ITOCHU’s brand value.

The longer I have been involved in ITOCHU’s management, the more acutely I feel the challenge of competing with general trading companies associated with the former zaibatsu that have inherited vast assets. But I cannot make excuses. I am determined to win back the Triple Crown among general trading companies based on consolidated net profit, market capitalization, and ROE, and ultimately achieve ¥1 trillion in consolidated net profit. Beyond competing within the sector, I am committed to raising our market capitalization as soon as possible to consistently be among the top 10 companies on the Tokyo Stock Exchange. At Berkshire Hathaway Inc.’s shareholders’ meeting, Mr. Buffett remarked that investment in general trading companies would last more than 50 years. We must strive to be a company that meets these long-term expectations. I want ITOCHU to be the type of company, with the type of management, that allows every investor and stakeholder to experience the Japanese Dream through the sustainable enhancement of corporate value. I will continue to devote myself every day to making this possible.