Edited Transcript of 8001.T earnings conference call or presentation 8-May-20 10:59am GMT

The consolidated net amuse entire during the fiscal 2021 is JPY 400 billion. during since the other companies, they are no disclosing their concrete targets. However, during we are focused above the commitment-based management, we wanted ought emerge our resolution ought arrive this net amuse entire of JPY 400 billion.

Please become ought Page 11. JPY 400 billion amount includes the negative impact above amuse due ought the pandemic during each segment. Larger than usual loss buffer of JPY 50 billion is during noise included. We used to similar ought pattern sure that we product the commitment-based management beneath any circumstances once again this year. when we begin ought visit some clarity into the future, based upon the necessity, we confide that we energy exist reviewing and revising the forecast.

As during the dividend, during you visit above Page 12, fiscal 2020, the officer amount is JPY 85 per share. And during fiscal 2021, we plot ought allowance JPY 88 per share. We've continued ought dine the progressive dividend payment. during since the section buyback, we assassinate actively and continuously looking at the money flow. during since the medium- ought long-term shareholder returns policy, we will steadily assassinate it. There has been no reform ought that.

That concludes my divide of presentation. Our CFO, Tsuyoshi Hachimura, will now concord you the details of the fiscal 2020 bargain results and fiscal 2021 management plan.

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Tsuyoshi Hachimura, ITOCHU company - CFO, Senior Managing Executive officer & Director [2]

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This is Hachimura, CFO of ITOCHU Corporation. I'd similar ought now concord the details of the fiscal 2020 bargain results and fiscal 2021 management plot using the PowerPoint presentation material.

Page 2 shows 5 chief bullet points representing the bargain results. The consolidated net amuse exceeded JPY 500 billion even 2 years at a queue and achieved JPY 501.3 billion, the highest record 4 years at a row. middle operating money river was above JPY 600 billion, a record tall number. Looking at the amuse and loss, remains slice and money flow, you visit the asterisks, they describe the record tall numbers. Fiscal 2020 results were strongest quantitatively at our history.

Now 3-year management plan, Brand-new bargain 2020, our entire was ought arrive net amuse of JPY 500 billion. We achieved this entire 2 years at a queue and completed this a year earlier.

Going ought Page 3, allow me interpret the net amuse by segment. at comparison ought the foregoing year, the iron ore prices increased, and with the higher bargain dividends, Metals & Minerals amuse grew by JPY 32.6 billion ought JPY 111.4 billion. This was the chief driver. during you visit at the bottom left, the nonresource percent was down 2 points and reached 75%, calm the nonresource amuse increased by JPY 300 million and reached JPY 378.3 billion, which is another record tall number.

In machinery, at fiscal 2019, there was a impairment loss of the North American IPP. at fiscal 2020, the Yanase's profitability improved, and ship-related transactions showed a firm performance. hence net amuse increased by JPY 9.6 billion ought JPY 56.7 billion.

In Food, the Prima meat Packers were made into the subsidiary, and NIPPON ACCESS showed noise results. Compared with the foregoing year, the net amuse improved by JPY 3.6 billion and reached JPY 49.9 billion.

So those companies showed the higher profit, calm at Textile, due ought the hot winter and the coronavirus impact and during noise the provision during the foreign receivables, we examined the wealth identical closely, and we booked JPY 10.5 billion special loss. hence the amuse decreased by JPY 20.7 billion year-on-year and reached JPY 9.1 billion net profit.

In the foregoing year, at might & Chemicals, there was a apply above sales of the North sea oilfields development company.

In the commonplace Products & Realty, the pulp impartial allowance declined, and there was an impairment loss at Japan, Brazil Paper and pulp and the fewer logistics facility development projects.

With the absence of special gains, profits of ICT & econmic bargain and The 8th company declined.

CITIC equity pickup is included beneath the others. CITIC is showing the force at the econmic sector, excluding the section impairment loss. at fiscal 2019, the equity pickup was JPY 58.3 billion. And from that, we saw the expand of JPY 8 billion ought attain JPY 66.4 billion. Dividend that we received at ITOCHU company increased by JPY 2 billion ought JPY 18 billion.

The impact of the coronavirus above the fiscal 2020 bargain results at Q4 is almost JPY 5 billion negative, chiefly at the Textiles. calm we desire those negative impact ought expand from the Q4 and Q1 of fiscal 2021.

Now the middle profit, excluding the special amuse and losses, increased JPY 13.5 billion year-on-year ought attain JPY 485.5 billion, which is a record tall number. Usually, the special gains direct ought the higher amuse after the sales. And the middle amuse basis of JPY 485.5 billion is the #1 at our industry.

Aside from higher iron ore prices and higher received dividend payment at Metals & Minerals, ICT & econmic Business, which is supported by the CTC too during other domestic businesses, it was identical strong. And the machinery, which had the improved action of Yanase, increased. might & Chemicals was flat. And at commonplace Products & Realty, pulp impartial allowance declined. at Textile, amuse declined, chiefly at April due ought the weaker consumption. The profits of food and The 8th company during noise declined.

Now amuse become ought Page 6, which shows the special gains and losses. at fiscal 2020, special apply was JPY 16 billion. Up ought the Q4, the cumulative special apply was JPY 64 billion. And due ought the lower performance, it's chiefly at the consumer-related sector, too during the impact due ought the coronavirus, and the conservative quiz of the wealth toward fiscal 2021, there was an impairment loss. And the Q4 amount was JPY 48 billion. The details are shown here. at Q4, special loss at other gains and losses related ought investments was JPY 5.5 billion. And the impairment loss at foreign company and fertilizer-related company are included here. And at fixed asset-related too during the equity method-related, the loss was JPY 42 billion. And the bottom precise shows the JPY 11 billion Japan, Brazil Paper and pulp too during the provision during the fever supply-related JPY 1 billion. There are 7 other items. hence sum is 9 items.

Page 4 shows the money flow. The operating money river was the record tall expand of the JPY 400 billion, reaching JPY 878.1 billion. The impact of the conversion of the FamilyMart into the subsidiary was JPY 170 billion plus. And iron ore-related is JPY 60 billion. And operating revenue increased at other companies. The middle free operating money river was a record tall at 4 years at a row, reaching above JPY 600 billion level. after the adjustment of the money and the deposit, the net investment money river was sure at JPY 290 billion. The middle free money river was JPY 312 billion.

Going ought Page 27. The middle free money river was JPY 312 billion, and the dividend payment per year of JPY 85 per share, and the section buyback that we completed at June final year was JPY 62 billion. at combining sum this is almost JPY 190 billion shareholder return. And middle free money river after the shareholder returns is almost JPY 123 billion positive.

Despite the dividend expand each year, at supplement ought the JPY 300 billion at fiscal 2019. at 2 years, we dine kept JPY 420 billion, and we enhanced the shareholders' chief too during paid experience some of the debt.

But unfortunately, during since the 100 million section buyback plan, the third and final side was planned, and we announced JPY 70 billion buyback at June final year. calm our section prices dine updated the highest record number. during a result, we could no buy experience any of the shares after that.

Now going ought Page 26, I'd similar ought pattern some definition above the investments of the fiscal 2020. sum investment of the fiscal 2020 is JPY 470 billion. And the fixed asset investment too during the CapEx is almost JPY 200 billion. at Q4, the chief investments contain the Pan Pacific International Holdings acquisition by FamilyMart and the fixed asset investment too during the underwriting of the third-party allocation of the new shares of the Tokyo Century and the investment ought the Paidy, which is the online payment service. The sum is JPY 140 billion.

EXITs, during asset replacement, contain the sale of the shares held by FamilyMart at Q4 and during noise the sale of the fixed asset by businesses which accounted during JPY 35 billion. during the entire year, the EXIT of JPY 180 billion was done. The details are no disclosed here, calm 2/3 -- a small less than 2/3 is during the consumer-related and 1/3 is during the basic industry-related sector. The resource sector EXIT is virtually 0, which has almost -- less than 10% of the sum asset. And during a result, net investment, during I mentioned, was JPY 290 billion. during the fiscal 2020, the middle free money river after the shareholder reply was positive. at the 4-year at the row, the investments too during the shareholders' reply were within our middle operating money flow.

At the beginning of the term, at direction ought advance the future growth, combining with JPY 300 billion carried at from the fiscal 2019, we plot ought pattern the investment during the good investment opportunities. calm during we announced at the midterm bargain results announcement final year, we during noise needed ought prepare during the deceleration of the econmic at the second half, and we concentrate above the shorten and obstruct ought product the lean management. hence we became more selective at the investments, and we did no detect the noise investment opportunities which could exist profitable.

Going experience ought Page 5. allow me interpret the remains sheet. sum wealth were JPY 10.9 trillion, up JPY 800 billion, which is the highest hence far. And with the application of the new accounting standard, it increased by JPY 970 billion. And with the Prima meat Packer becoming subsidiary, it increased by JPY 140 billion. And the Hoken no Madoguchi conversion into the subsidiary pushed up the asset by JPY 40 billion. However, with the tall appreciation of the yen, the asset came down by JPY 160 billion.

As you visit above the right-hand side, at comparison ought the forecast, the interest-bearing debt, net DER and ROE are improve than our expectations, calm shareholders -- sum shareholders' equity too during the ratio of the shareholders' equity ought sum wealth were lower than our expectations. after the exchange worthy version adjustments, almost JPY 120 billion, and valuation loss of the asset was a small less than JPY 90 billion. Those were the unexpected impact, and those are the reasons why the shareholders' equity did no excel the JPY 3 trillion level. hence JPY 4 billion short, calm the shareholders' equity is calm at a record tall at JPY 2.996 trillion.

In fiscal 2020, the impact of the IFRS new accounting standard was JPY 210 billion sure at condition of the operating money river and JPY 970 billion expand at condition of the sum assets.

As during the changes at the exchange rate, the noise yen impact was negative above the amuse after impose by almost JPY 9 billion, sum wealth down by JPY 160 billion and the net interest-bearing debt down by JPY 20 billion, and shareholders' equity down by JPY 120 billion.

That concludes the bargain results. And now allow me oration almost the fiscal 2021 management plot from the quantitative perspectives. amuse progress ought Page 11. Fiscal 2021 consolidated net profit, including the JPY 50 billion loss buffer, is expected ought exist JPY 400 billion. We desire lower profits. calm during we dine a noise econmic position, based upon the median ought desire language shareholders' returns policy, we will digest with the progressive dividend payment. We plot ought allowance JPY 3 higher dividend that is JPY 88 per section at fiscal 2021.

With the coronavirus outbreak, we desire the global econmic ought become decoupled. calm during one of the principal companies, it is our obligation ought pattern the best impose and start up with the forecast during the next year. And at direction ought emerge the entire numbers that we can arrive based upon our commitment-based management, we attempt ought conservatively journal sum the businesses and segments. And during a result, we desire the impact of the coronavirus above the economic activity ought exist chief at the Q1, calm will exist alleviated at the Q2. at the second half, we desire ought visit some clarity, calm we fulfill no desire a V-shaped recovery during this fiscal year.

We during noise absence ought desire the second wave and the third wave of the coronavirus disperse or the pandemic. hence it will exist risky ought desire the hasty recovery of the economy. calm if, fortunately, the pandemic is resolved earlier, then we will exist revising our forecast of JPY 400 billion. Based above this manner of thinking, starting with the JPY 500 billion at fiscal 2020 with the changed assumptions of the exchange worthy and ware prices, we desire a negative JPY 50 billion or higher than that. And during noise based upon the impact of the coronavirus above the various businesses, we desire almost a 10% refuse during the year company-wide. And during noise including the special gains of JPY 50 billion that we desire during the asset replacement, we desire the amuse after taxes during fiscal 2021 ought exist JPY 450 billion. calm during there are a fate of uncertainties of the management environment, we included JPY 50 billion buffer loss at maximum. And during a result, we desire our amount ought exist JPY 400 billion. hence we dine triple layers of the conservative factors.

Now allow me become ought Page 13 ought oration almost some of the changes of the assumptions. These are more conservative assumptions than the recent impartial level. The exchange worthy is JPY 105. FRB has lowered the amuse rate. during a result, the disperse amid Japan and U.S. is smaller, and the Brent grease allowance is expected ought exist $30 per barrel. Looking at the plane fuel and the gasoline demand, due ought the limited motion of masses and goods, we desire this ought exist lower. And iron ore and coal prices, during usual, due ought the NDA with our partners, we cannot disclose. calm with the mild and hardwood pulp prices, we are keeping this conservative assumption.

Going experience ought Page 11. The impact from coronavirus is included at each division already. There are differences depending above the segments. calm if you watch at the company-wide impact, it's almost 10% negative after taxes. Now we fulfill no expose each factor or each amount of Textile, the segment, calm at Textile, we desire lower apparel-related sales due ought the closed department stores and decoupled supply chain. at machinery, we desire that car-related amuse ought start down due ought the deceleration and the stopping of the product and the lower consumer emotion and a lower amuse due ought the controlled CapEx at the construction machinery and industrial machinery. at Metals, we desire that lower absence of the steel materials due ought the lower absence of the teach production. at might & Chemical, we desire the reduction of the industrial chemicals. at Food, we desire lower consumption of food too during the inbound consumption. during the commonplace Products & Realty, we desire the lower housing starts and will dine an impact above the bargain of construction materials and authentic goods businesses. at ICT & econmic Business, we desire lower amuse of domestic and overseas consumer finance bargain due ought the weaker consumption and at a higher provision during ill debt.

Now during various segments, we desire a sum of JPY 50 billion during special gains. And already, some of the projects dine started, and we are no disclosing these items.

If I can comment above the various segments, lower iron ore prices and the rough grease prices are impacting the Metals too during might & Chemicals segment, which will exist higher than the foregoing year. hence no resource percent at fiscal 2021 is going ought progress up by 9% ought 84%. at machinery, we desire the JPY 9 billion refuse at amuse year-on-year, and this is chiefly due ought the lower auto-related bargain due ought the coronavirus outbreak. beneath those circumstances, the ICT too during consumer-related sectors are defensive sector and are considered ought exist strong. hence CTC, FamilyMart, NIPPON ACCESS fulfill dine plans ought desire a higher profit. And during noise The 8th Company, food and the commonplace Products & Realty and ICT & econmic bargain desire ought visit higher profits. during noise at Textile, we had special loss, chief one final year, and we desire this middle amuse ought progress experience ought the creative level.

Now the genuine bargain results during fiscal 2019 and 2020 and during noise the details of the 2021 plot are shown from Pages 16 ought 25. The companies which are expected ought exist listed at the future are no mentioned above those pages.

Going experience ought Page 11. allow me oration almost the JPY 6 billion during others, which contain the JPY 50 billion loss buffer and CITIC equity pickup of JPY 62 billion. final year, it was JPY 66.4 billion, and now it's down by JPY 4.4 billion year-on-year during of our explanation of the corona impact. Now CITIC Limited does no expose the first zone results, calm 90% of their amuse is that of CITIC Corporation, which was already disclosed, which is almost JPY 160 billion during a arise of the Q1. And CITIC coast financial-related bargain was identical noise despite the corona impact. hence our equity pickup is almost JPY 16 billion. And CITIC bargain is trending identical strongly.

Now concerning remains slice and money flow, we are showing the qualitative numbers during we did the year ago due ought the many uncertainties. Now net amuse will exist JPY 100 billion lower year-on-year. hence accordingly, the middle operating money river will exist lower, and we will progress experience ought our regional management policy focused above shorten and obstruct and attempt ought product lean management. And we'll digest ought career above the effective chief management. Our force is the high-efficient management, and we will digest ought fulfill this.

Now during since the growth investment after the pandemic. at the zone that we are strong, we used to digest ought invest. if we detect some of the companies whose values were undervalued, we'd similar ought pattern sure that we will detect the investment opportunities and ought pattern the investment during the future.

Going ought Page 12. This is the shareholder reply above fiscal 2021. during we mentioned, fiscal 2021, we plot ought allowance JPY 88 per share, JPY 3 increase. And despite lowering profit, we will digest ought allowance the progressive dividend. Based upon the latest management surroundings too during the money reserves and the investment projects, concerning the JPY 100 million (sic) [100 million] section buyback at the median ought desire term, we calm dine 40 million shares ought progress or JPY 70 billion, and we will digest ought career above this.

Thank you.

[Statements at English above this transcript were spoken by an interpreter concord above the dwell call.]