Crisis Response to COVID-19 and Selective Investments, Loans and Asset Management

「Of the approximately 400 operating companies analyzed before formulating “SHIFT 2023,” 101 had been identified for exit or value realization. Following the completion of exits from 32 companies in fiscal 2020, we completed exits from an additional 32 companies in fiscal 2021.」

「As a result of the structural reforms described above, we thoroughly assessed low-profitability businesses and completed exits from 32 operating companies. We also formulated specific plans for approximately 150 operating companies that are expected to generate ¥70 billion in earnings improvement over the next 3 years.」

「In the short term, we are accelerating asset rotation and plan to complete asset rotations involving approximately 40 companies by the end of the period. We are also advancing initiatives to improve the profitability of operating companies. We expect earnings improvement of more than ¥30 billion versus fiscal 2019 over the next 2–3 years through asset rotation and the turnaround of unprofitable businesses, and aim for earnings improvement of more than ¥50 billion, including the turnaround of major projects. In addition, we are pursuing selective investment and lending and cost reductions thoroughly.」

「Under the crisis-response mode, we are working to strengthen cash flow management, including selective investment and lending, while prioritizing the securing and maintenance of liquidity on hand, and are advancing structural reforms in preparation for the next medium-term management plan.」

「Specific initiatives are as follows. • Restructuring unprofitable businesses In addition to delays in enhancing existing businesses, the impact of COVID-19 raises concerns that one-off losses may arise in multiple projects during the current fiscal year. To return to a growth trajectory at an early stage, we will establish a path forward for businesses of concern and unprofitable businesses and shift management resources to growth businesses. • Thoroughly strengthening our earnings power By rebuilding our company-wide portfolio, we will accelerate the allocation of management resources to business fields where our strengths can be leveraged and greater growth is expected. • Advancing sustainability management We will set material social issues and long-term targets, promote initiatives to resolve social issues and enhance corporate value through management that reflects long-term trends in social issues.」

「Accordingly, we have positioned this year as a year of crisis response and will implement specific measures across the businesses of our Group to minimize deterioration in cash flow. With respect to investment and lending, we will review all existing plans from the ground up, select only those that are truly necessary, prioritize them and execute them. We will also undertake thorough expense controls, improve working capital and steadily reduce assets.」