Issues to Be Addressed

1.Outlook

Looking ahead, the situation is expected to remain uncertain due to various factors. These include the continued rise in resource and energy prices driven by escalating geopolitical risks, persistently high inflation caused by surging labor costs, and the impact of increased tariffs stemming from U.S. trade policy. These factors may lead to significant fluctuations in financial and capital markets as well as a potential decline in domestic demand. Furthermore, the business environment surrounding the Group is undergoing major changes due to structural reforms by steel manufacturers and initiatives by both the government and private sector aimed at realizing a decarbonized society.

2.Issues to Be Addressed

In response to the challenging business environment, the Group is committed to further strengthening sales, improving productivity, reducing various expenses, enhancing its Business Continuity Plan (BCP), and promoting sustainability. Through these efforts, it aims to enhance its corporate and business foundations, thereby contributing to improved business performance and the realization of a sustainable society.

Looking ahead, it will continue to fulfill its vital role of supplying raw materials to key industries while striving for sustainable growth and long-term corporate value enhancement. To that end, it will work to foster mutual prosperity with its stakeholders, including shareholders, business partners, local communities, and employees, and will continue to strengthen its corporate governance.

The Group is also proactively engaged in promoting sustainability. With the goal of achieving carbon neutrality by 2050, it is undertaking various initiatives, such as improving equipment efficiency, introducing energy-saving technologies, reforesting former mining sites, acquiring forest certification for company-owned forests, and generating electricity using renewable energy sources. It will continue to conduct business activities with a strong commitment to environmental responsibility.

Additionally, in order to maintain and enhance its competitiveness, it recognizes human resources as a vital form of capital. It is actively implementing initiatives aimed at maximizing the value of its personnel, thereby contributing to the creation of corporate value.

3.Progress of the Third Medium-Term Management Plan

In its Third Medium-Term Management Plan (the Plan), announced in May 2024 and covering fiscal years 2024 through 2026, the Group presents its long-term vision for the fiscal year 2033, as well as the basic policies to be pursued during the Plan in order to achieve that vision.

Long-Term Vision and Basic Policies under Third Medium-Term Management Plan

Contributing to society through the development and stable supply of mineral resources and harnessing the collective strength of the Group as an integrated mineral resources company to achieve sustainable growth.

Long-Term Management Goal for FY2033

ROIC (return on invested capital)
7% or more

Basic Policies (For period of Third Medium Term Management Plan)

In adopting and using ROIC as a management indicator, we aim for its uptake and entrenchment down from the company to individual business segments and from individual business segments to individual business sites, as well as for improved capital efficiency
Steady progress with Arqueros Mine development and achieve start of operations
Initiatives to optimize limestone supply, centered on Torigatayama Quarry Complex
Continue initiatives to develop new markets (limestone, Polytetsu)
Secure and develop new resources, regardless of interest (major/minor) or approach (greenfield/brownfield)

In fiscal 2024, the first year of the Plan, the Group has positioned the introduction and integration of ROIC-based management as a key initiative. ROIC is being calculated not only by business segment, but also for each business site and affiliated company, enabling responsible managers to better understand their current performance, identify challenges, and formulate and implement appropriate countermeasures.

For initiatives expected to deliver results in a short period, it is responding flexibly and promptly. For those requiring medium- to long-term efforts, it is taking a structured approach by deliberating and formulating plans at important internal meetings, such as the Management Committee and the Affiliated Companies' Medium-Term Plan Review Council, with a clear awareness of achieving a ROIC of 7% or higher—the Group’s long-term management target.

As part of its efforts related to conscious of capital costs and share price, the Group established a dedicated Public and Investor Relations Section in July 2024 and appointed personnel specifically responsible for these functions. It is actively engaging in investor and shareholder relations (IR/SR) meetings.

Based on trends in the capital markets and ongoing dialogue with shareholders and investors, it has also implemented initiatives such as share buybacks and announced both a new shareholder return policy and a policy to reduce strategic shareholdings.

Going forward, the Group will continue striving to achieve a price-to-book ratio (PBR) of over 1.0 by enhancing capital efficiency, reducing capital costs, and expanding shareholder returns.

The Group respectfully asks for the continued support and cooperation of its shareholders.