Mitsubishi Logisnext : Script/Q＆A for Medium-Term Plan "Logisnext Transform 2026"

Mitsubishi Logisnext Co., Ltd.

FY2024 - FY2026 Medium-Term Management Plan Briefing

March 22, 2024

Event Summary

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Presentation

Moderator: Thank you for your patience. We will now begin the briefing on Mitsubishi Logisnext Co., Ltd.'s new medium-term management plan, "Logisnext Transform 2026." Thank you very much for taking time out of your busy schedule to attend the briefing on our new medium-term management plan.

Today, we would like to review the current medium-term management plan, explain the business environment surrounding our company, and present our long-term management vision 2035 and the new medium-term management plan. I would now like to introduce today's attendees. Representative Director and President, Yuichi Mano.

Mano: I'm Mano. Thank you.

Moderator: Director, CFO, Division Head, General Manager, Corporate Strategy and Planning Office, Takatoshi Uno.

Uno: I'm Uno. Thank you.

Moderator: Head of Engineering Headquarters, Hiroyuki Sugiura.

Sugiura: I'm Sugiura. Thank you.

Moderator: That is all. As for today's proceedings, Mr. Mano, Representative Director and President, and Mr. Uno, Division Head, General Manager, Corporate Strategy and Planning Office, will explain about the new medium-term management plan, "Logisnext Transform 2026."

We will now move on to the explanation of the new medium-term management plan. President Mano, please begin.

Mano: I'm Mano, the president. Thank you very much for joining us today at this very busy time for the presentation of our medium-term management plan.

Today, I will present our new medium-term management plan, "Logisnext Transform 2026," which covers the three-year period from FY2024 to FY2026. Thank you very much for your cooperation.

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The content of today's event is as shown.

I would like to begin in chapter one with a review of the current medium-term management plan.

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See page three.

The current medium-term management plan, LS23, which covers the period from FY2021 to FY2023, has three basic strategies, build up business resilience, accelerate growth strategy, and further develop our brand and regional branding strategies. In the final year of the plan, we targeted net sales of JPY500 billion, operating profit before amortization of goodwill of JPY30 billion, operating margin of 6%, and capital adequacy ratio of 20% or more.

As you are aware, we have already achieved our sales target of JPY500 billion in FY2022 ahead of schedule, and our forecast for FY2023 is JPY690 billion, a figure far exceeding our target.

Operating profit before amortization of goodwill is expected to be JPY55 billion, well above the target, due to the contribution of increased sales, price optimization, and the impact of foreign exchange rates, and operating profit margin is expected to be 8%.

The capital adequacy ratio is also expected to achieve the target of 20%, and all numerical targets are expected to be exceeded.

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On page four, I will explain the achievements and challenges of LS23.

First of all, as achievements, amid the major changes in the business environment due to COVID-19, profitability improved, including efforts to optimize prices in response to cost increases, and all numerical targets are now expected to be achieved. In addition, we believe that we were able to grow our direct sales business in North America, strengthen our corporate resilience by reorganizing our bases, promote growth strategies in the solutions business, and enhance our brand power by establishing a long-term management vision and expanding our public relations function.

On the other hand, as challenges, cash flow and working capital have not improved sufficiently, and improvement of the financial structure remains a challenge. By region, the challenges include improving the profitability of the domestic business, eliminating the risk of overemphasis on the North American business, and strengthening the profitability of the European, Chinese, and APAC businesses.

In addition, Chinese products are perceived as a major threat here. After the pandemic, China's economy has modulated and has been largely steered toward decarbonization. The growth of Chinese-made forklift trucks has been remarkable worldwide against the backdrop of the dominance of Chinese-madelithium-ion batteries in the market.

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In chapter two, I will explain the business environment, which is the premise for the formulation of the new medium-term management plan.

Based on the recent environment of our customers and society, the competitive environment, and our own situation, we recognize that there are three needs surrounding logistics equipment that we should address, safety and security, automation and autonomy, and decarbonization, which are the key concepts of the new medium-term management plan we have formulated.

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See page six. In chapter three, I will explain vision 2035, which is the basis for our medium-term management plan.

Based on our corporate philosophy of "Moving the world forward as the leading provider of innovative logistics and material handling solutions," we have established our purpose and the Values we support.

We then presented a big picture of what the Company should look like in 2035 and examined the next medium-term management plan backcasting from there. This information is also included in the integrated report published last year, but the key point is the purpose shown in the upper left corner of the slide: "We positively impact the lives of people around the world by demonstrating a pioneering spirit and using emerging technologies to deliver safe, automated and decarbonized logistics solutions". Our goal is to achieve further growth under the slogan "Transition from integration to growth" by 2035.

In addition to sales of JPY1 trillion by 2035, we have added new numerical targets of JPY200 billion in sales from the solutions business and electric forklift ratio of 90% or more, and we aim to achieve these targets.

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Page seven.

As part of the promotion of sustainability management in our long-term management vision, we have reflected the purpose's approach on the SDGs' basic policy and revised the second item, promoting customer safety and security, as well as automation and autonomy, and the third item, promoting diversity and engagement.

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In chapter four, I will explain our new medium-term management plan, "Logisnext Transform 2026," which covers the period from FY2024 to FY2026.

First, the basic strategy. On page 10, the basic strategies of the medium-term management plan are represented in a diagram.

In order to achieve a business scale of JPY1 trillion in 2035, we will work to expand the areas as shown on the vertical axis and increase our market share as shown on the horizontal axis, and we will achieve growth by supporting these efforts with the values we place importance on. As a first step toward achieving sales of JPY1 trillion in 2035, we aim to achieve sales of JPY700 billion and an operating margin of 8% in FY2026.

To achieve this, we will work on basic strategic priority policies, such as strengthening logistics solutions, supporting customers' safety and security, and improving fixed and variable costs.

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