The Kamigumi Group Medium-Term Management Plan

• June 10, 2022 “Notice Concerning Revision of the Medium-Term Management Plan”（898KB）

(Reference) Formulation of New Medium-Term Management Plan

The Kamigumi Group’s Goals

Concerning Revision of the Medium-Term Management Plan

Looking ahead to the post-COVID world, we considered it appropriate to return our business performance goals to pre-COVID levels, update our growth strategy, and transition into a more aggressive management plan. In addition, in order to remain oriented toward maximizing shareholder value, we believe it is appropriate to shift to management with a greater awareness of capital efficiency than before, and to expand our business performance. Therefore, we have decided to revise our medium-term management plan.

1. Revise Business Performance Goals Upward

Returned business performance goals to pre-COVID levels.

2. Key Strategies

In addition to the original four key strategies, which are the basis of achieving our business performance goals, we have established a new strategy of trengthening our business through DX.

(Key Strategies Update)

(1) Strengthening Core Businesses

As cargo forms the foundation of the Company, we will continue to expand the volume share of cargos we handle.

Fruit and vegetable distribution and processing center in operation in Kobe

1. Strengthen competitiveness of container terminals
Consolidate and increase efficiency through reorganization of operating terminals

2. Expand orders for fruit and vegetable distribution and processing services
Build a large-scale distribution and processing center

3. Strengthen handling of automobile-related services
Support for electric vehicles (EV) in the export of finished vehicles and maintenance work for imported new vehicles

4. Focus on silo cargo, temperature-controlled and refrigerated and freezer cargo
Continually invest in storage facilities requiring special equipment

(2) Strengthening Profitability of Overseas Businesses

We will scrutinize the profitability and growth potential of each region and business and apply a method of selecting and concentrating, i.e., focus on strengthening profitability in selected regions.

(3) Exploration of New Businesses

We will explore new cargos and customers whose markets are expected to grow and can become new pillars of revenue.

1. Focus on new energy-related logistics
Increase receipt of orders for offshore
wind power and biomass power
generation-related work

2. Expand supply chain management (SCM) operations
Expand SCM operations by building in-house systems and platforms and strengthening material handling

(4) Initiatives to Secure and Develop Human Resources

We will develop a personnel system in accordance with our vision of active human resources and restructure our human resources management system into one that enhances the performance of employees and the organization.

1. Train and strengthen core human resources
Raise the level of human resources and enhance the core human resource pool

2. Recruit and retain competent personnel
Establish a grading system that ensures fairness and diverse career paths

(Add a Key Strategy)

(5) Strengthening Business through DX

We will systemize and automate operations to raise work efficiency and increase flexibility in staffing, which will help address anticipated future staffing shortages. In addition, we will raise overall logistics efficiency by linking with external platforms.

1. Strengthen Business Infrastructure
Raise work efficiency by systemizing and automating operations
→ Flexibility in staffing and response to staffing shortages

2. Improve Customer Satisfaction (CS)
Raise overall logistics efficiency by linking with external platforms
Improve service level by introducing reservation service for warehouse storage and retrieval, etc.

3. Strengthen Management That Pays Consideration to the Cost of Capital

Based on the premise of maintaining financial stability, we will strive to improve capital efficiency (ROE) by setting our capital policy on these three pillars: [1] Use debt to control the cost of capital, [2] Expand investment for growth, and [3] Enhance return of profits.

(1) Use Debt

We will actively allocate a total of about ¥130,000 million, consisting of ¥100,000 million expected operating cash flow and ¥30,000 million expected financial cash flow, to investment and return of profits.

(2) Expand Investment

We will invest a total of ¥72,000 million over the three years through to the end of the fiscal term ending March 2025. This is approximately 2.8 times the amount invested during the previous two years.

(3) Enhance Return of Profits

During this Medium-Term Management Plan, the Company will set the consolidated payout ratio at 40% and acquire treasury stock with a target total payout ratio of 90%. We expect to buy back approximately ¥30,000 million of treasury stock over the three-year period of this Medium-Term Management Plan.

Financial Indicator Goals

We set our ROE target to reach 6.5% by the end of the fiscal term ending March 2025 with the intention of raising ROE through these efforts while keeping an awareness of the cost of shareholders’ equity. Moreover, we aim to reach an ROE of 7% in the long term.