TOP Message

With the aim of promoting the well-being of the world
in order to continue to serve as a company that is needed
by society, we have launched a new Medium-term
Management Plan to realize our Vision for 2030.

Building on our achievements to date, we will combine
measures in our various businesses with initiatives that
make the world more sustainable.

 

The first medium-term management plan to be created and implemented since I became President (the 2022-2024 MTP) has concluded.

In the first and second years of the plan, we did not achieve our original targets, but in the final year (FY2024), although we fell slightly short of our sales target, we were able to surpass the initially established targets for all other financial indicators.

In the Metals Sector specifically, exchange rates and bullion prices remained higher than expected, and associated inventory factors were favorable, which had a significant effect, but increased sales of mainstay products in the Engineered Materials Sector such as electrolytic copper foil and engineered powders also contributed, enabling Mitsui Kinzoku to set new records for both sales and profits. We were relieved and deeply grateful to achieve such results in a milestone fiscal year that marks the 150th anniversary of our founding.

However, this sense of satisfaction was brief and is already in the past. We have now embarked on a new medium-term management plan, the 2025-2027 MTP. As I have already mentioned herein, my mission and commitment as President is to ensure that we build a rock-solid foundation for Mitsui Kinzoku to continue to contribute to society and remain a corporate group needed by society for the next 50 years, the next 100 years, and beyond.

In FY2025, the Trump administration’s policy of imposing high tariffs has created uncertainty in the global economic outlook, which means we must pay even closer attention to fluctuations in interest rates and exchange rates. As our businesses’ supply chains expand globally, I feel that we also must manage them more closely than before. Unlike the previous year, when business remained strong, we currently expect a decrease in sales and profits this fiscal year based on the assumptions that the yen will appreciate and bullion prices will decline.

Domestically, we are aware of various issues that need to be addressed, such as the ongoing rises in raw material and energy prices, higher inflation, the polarization of consumption associated with rising prices and inflation, and the worsening of the human resources shortage.

Of course, we do not intend to use the current management environment, which is uncertain and extremely challenging, as an excuse. In each of our businesses, we will do everything we should do and can do to exceed our initial sales and profit expectations even if only slightly. Implementing the 2025-2027 MTP is an essential step toward successfully achieving the Vision for 2030 that the Group has outlined.

 

Over the next three years, we will
further solidify the foundation for
continuously creating economic and
social value.

During the 2022-2024 MTP period, we successfully reduced interest-bearing debt by 26.2%, a faster reduction than we had ever achieved before. For this reason, we obtained results exceeding the initial targets for both the consolidated equity ratio, which the 2022-2024 MTP identified as a key financial indicator to be improved, and ROE.

In the 2025-2027 MTP that starts this fiscal year, we aim to increase our cash flow from operating activities, which we will allocate to increasing growth investments and shareholder returns by around 2.5 times compared to the 2022-2024 MTP. Going forward, we plan to further raise DOE (the dividend on equity ratio), which we previously increased from 2.5% to 3.0% by adopting a progressive dividend policy, to the 3.5% level. We also have the option to buy back stock as part of our return policy.

Under the 2022-2024 MTP, we began working in earnest on portfolio management and dynamic management of our business portfolio as well as incorporating business evaluations based on ROIC. Under the 2025-2027 MTP, we will implement rigorous cash flow management while further strengthening management that considers capital costs and stock price.

To shareholders and investors, it may seem that we are progressing slowly in terms of effectively allocating management resources and pursuing capital efficiency. Last fiscal year, I believe we achieved our goals of speeding up decision-making and enhancing discussions at the Board of Directors meetings, especially concerning management strategy and policy, by transitioning to a company with an Audit & Supervisory Committee. In FY2024, we were also able to devote a significant amount of time to discussing management strategy, reviewing the business portfolio, and discussing M&A and organizational restructuring proposals at the Board of Directors meetings. Two years ago, we incorporated achieving ESG indicators as a requirement for directors’ stock compensation; this year, we added ROIC as an indicator for their performance-linked compensation. Furthermore, with the aim of strengthening portfolio management, we have added business segments’ WACC (weighted average cost of capital) and ROIC Spread^*1 as new indicators for business evaluation.

Based on objective business evaluations using ROIC as a yardstick, under the 2025-2027 MTP, we are considering implementing “Big Moves” in several businesses as measures for fundamental cash generation. “Big Moves” refer to measures that will enable a shift toward non-linear growth rather than incremental growth. Based on such measures, we intend to target non-linear growth—in other words, accelerated growth at an unprecedented rate.

During the 2022-2024 MTP period, as a result of an ongoing review of our business portfolio, we decided to sell and completed the sale of several businesses. We have also received inquiries from some investors who want to know if there are any buy-side projects in the works. In fact, we are considering “buy-side M&A” as one of our Big Moves. If something fully meets our investment criteria after we conduct a thorough business evaluation, we intent to proceed boldly and quickly.

Last fiscal year, we also conducted a review of our materiality, which identifies the key issues that the Group must tackle. This review was intended to further link the initiatives in each sector with our CSR, ESG, and sustainability initiatives, in line with the strategy described in the 2025-2027 MTP. We narrowed down the previous 12 items to a total of 7 items: 3 items aimed at contributing to solving environmental and social issues via our business activities and 4 items aimed at increasing the value we provide to society. We have defined these as our new materiality from FY2025.

We have diligently clarified the various issues facing society today and have reassessed what kinds of risks and opportunities these represent for the Group and what kinds of positive and negative impacts our business activities may have on them. Of course, this is also aligned with the Group’s Management Philosophy, Purpose, and Vision.

Along with the financial indicators aimed at improving economic value, these materiality issues are non-financial indicators that will lead to enhancing social value, and we have also set more specific KPIs for various initiatives than we have done in the past.

＊1 The value obtained by deducting WACC (weighted average cost of capital) from ROIC (return on invested capital).

New guidelines for implementing
integrated thinking-based management
from an HR perspective

In addition, we have revised our Code of Conduct and created new “Values.”

The former specifies the standards that must be followed without exception by organizations and individuals in order to maintain our stakeholders’ trust. We revised the Code of Conduct for the first time in nine years in response to the changing needs of society. The latter articulates our organizational beliefs and culture, which provide infrastructure for creating an environment in which every employee can work with enthusiasm and create new value in order to realize the Vision based on our Purpose. The Values express the actions and values that should be emphasized in five phrases.

We have incorporated these values as criteria for individual employees’ targets and personnel evaluations in our performance-based HR system, which is steadily taking root. In addition, one of the items in our newly identified materiality is “human resources who implement our values,” and we strongly expect that fostering a culture in which everyone can work enthusiastically and tackle rewarding challenges will contribute in multiple synergistic ways to maximizing the value of our social capital, such as creating safe, comfortable workplaces, promoting job satisfaction reforms, and diversifying our workforce.

Since we also recognize that intellectual capital (i.e., intellectual property) is an important management resource, we will not relax our efforts in this area. We will continue to seek to diligently acquire and protect the rights to the knowledge that we have accumulated to date as well as to actively promote intellectual property management, which plays a role in enhancing ambidextrous exploration. In the past, it was difficult to visualize this value, but we are now performing indicator-based management using a figure known as the “Patent Asset Index,” thus enabling us to steadily increase our intellectual capital. As part of our system to enhance corporate value and support integrated thinking-based management, we also enhanced our DX efforts during the 2022-2024 MTP period. As planned, we established digital infrastructure for purposes such as addressing information security. The 2025-2027 MTP period has been defined as a digital proliferation period, during which we will focus our efforts on rolling out our digital utilization model group-wide, expanding the use of new shared tools such as generative AI, and cultivating DX talent.

As previously indicated in our Carbon Neutral Roadmap, making steady progress to expand DX will help to stabilize operations in various manufacturing processes, increase production efficiency, and reduce energy use. Moreover, the Business Creation Sector, which is enhancing its R&D competitiveness by promoting DX, is pursuing the development of new businesses, which we are highly confident will contribute to the realization of a carbon neutral society due to synergies between technologies and products that support carbon reduction and elimination.

A deep sense of regret and remorse

Looking back at the past fiscal year, there is one matter that must be mentioned.

As revealed by a whistle-blowing report in October 2024 and announced in the findings of an investigation by the Special Investigative Committee in April, incidents of inappropriate conduct, such as falsifying and fabricating inspection measurement data, occurred at our subsidiary Mitsui Kinzoku Perlite Co., Ltd.

These occurred even though risk management and rigorous compliance were highlighted in the 2022-2024 MTP, and as the President of Mitsui Kinzoku, who is responsible for the entire Group, I am deeply ashamed.

I would like to once again sincerely apologize for allowing this inappropriate conduct to occur, which has violated the trust of our stakeholders, including the customers who have used Perlite products for construction materials, landscaping, and other purposes for many years.

Since this case came to light, Mitsui Kinzoku and Mitsui Kinzoku Perlite have analyzed the underlying causes and urgently implemented initiatives to prevent recurrence, such as enhancing compliance awareness, ensuring the reliability of inspection data, and improving systems. Further, in my role as President, this case has enhanced my awareness of the importance of quality, and I continue to visit various manufacturing sites for the purpose of teaching employees that we must prioritize quality over meeting deadlines or making profits. I firmly promise that this kind of non-compliant behavior and scandal, which caused us to lose the public’s trust, will not happen again.

Based on our Purpose, we are transitioning to integrated thinking-based management in order to pursue a balanced approach to ambidexterity, execute our management strategy based on both economic value and social value, and become a sustainable company in both financial and non-financial terms. To promote the well-being of the world, we will continue to steadfastly pursue these with an unwavering mindset.

Lastly, more than ever before, our senior leadership will proactively share information and communicate with internal and external stakeholders to achieve our Vision for 2030. We truly hope we can continue to count on your valuable support going forward.