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.

A message from President & Chief Executive Officer Masahiro Okafuji. On May 2, we released our FY2016 earnings and our Short-Term Management Plan for FY2017, the final year of our current Medium-Term Management Plan "Brand-new Deal 2017"

FY2016 net income attributable to parent company shareholders was 352.2 billion yen, the highest in our Company's history.

Brand-new Deal 2017 outlines the basic policy of " strengthening our financial position" and " building a solid earnings base to generate net profit attribute to ITOCHU at the ¥400 billion level ". To lead the " new age of trading companies" , we have aimed to build an income platform focused on non-resource sector.

In FY2015, the first year of the plan, we implemented specific policies in line with the basic policies of Brand-new Deal 2017, including expnding our revenue platform for non-resource sector and conducting investing in CITIC Limited while also accelerating asset replacement and implementing initiatives aimed at eliminating future concerns. As a result, net income attributable to parent company shareholders was 240.4 billion yen but substantially we secured free cash flow of 410billion yen in profit to strengthen our financial structure.

During FY2016, the second year of the plan, income from sources not influenced by resource prices, including contributions from steady income growth in non-resource sector and year-long contributions from investing in CITIC Limited, helped us achieve record high earnings of 352.2 billion yen. At the same time, we began implementing forward-looking measures to address even minor risks and ensure the strongest platform possible for our efforts in FY2017. We also recorded substantial free cash flow of 300 billion yen, which combined with FY2015 results total approximately 700 billion yen in profit. This means that even after conducting a 600 billion yen for investing in CITIC Limited, in the past two years we have had a cash influx of 700 billion yen. Our net D/E ratio reached 0.97, a record high, indicating that of the two basic policies in Brand-new Deal 2017, we successfully "strengthened our financial platform" during the second year of the three-year plan.

FY2017, the final year of Brand-new Deal 2017, will represent our drive to achieve the second basic policy, " building a solid earnings base to generate net profit attribute to ITOCHU at the ¥400 billion level". Setting a target of 400 billion yen in net income attributable to parent company shareholders, every employee at Itochu will unite as one toward setting a new record high for income. See here[PDF] for the FY2016 earnings summary and details on our Short-Term Management Plan for FY2017.

Lastly, I would like to touch on shareholder returns. In FY2017, in order to further expand shareholder returns, in addition to share buybacks, we are planning to set a guaranteed minimum dividend payments that is 9 yen higher than FY2016, increasing the amount to 64 yen per share, the highest in our company's history.

We will steadily implement detailed measures based on the management strategies and policies of Brand-new Deal 2017 to promote the expansion of the Itochu Group and continue to meet the expectations of all our stakeholders. I ask for your continued support and understanding.

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Masahiro Okafuji
President & Chief Executive Officer