Mitsui & Co., Ltd. (8031) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you very much for joining us for Mitsui & Co. Investor Day 2020. I'll be serving as moderator today. I am the Head of IR, Masaya Inamuro. Please be reminded that today's event is being webcasted. I would like to ask for your kind understanding. From the URL sent to you by e-mail in advance, you have access to the feedback sheet. Please help us improve future Investor Day events by filling out the feedback sheet to give us your input. Now we'll be starting the program with the first item on the agenda. On the stage from our company are: Representative Director, President and CEO, Tatsuo Yasunaga; and Representative Director, Executive Vice President, CFO, Takakazu Uchida. Now our President, Yasunaga, will give us opening remarks and review on the Medium-term Management Plan. Over to you.

Good afternoon, and thank you for joining us today for Mitsui's Investor Day 2020. We're holding the event mostly online this year as a precaution against the spread of COVID-19, although there will be a hybrid event with a small number of participants joining in person. Whether you are joining us online or in person, as in previous years, we invite you to submit questions or comments in order to gain a deeper understanding of our management approach and our path to sustainable growth. We announced our Medium-term Management Plan 2023 - Transform and Grow in May this year as COVID-19 cases were on the rise throughout the world. In the intervening 6 months, we have taken stock of the new issues facing the company in the -- with corona environment while reaffirming that the direction we are taking with the corporate strategy set forth in the Medium-term Plan is the correct one. In today's Investor Day, we will present the current status and progress of initiatives towards that corporate strategy. I would like to begin with an overview of the current business environment and our outlook for the fiscal year ending in March 2021. I also discussed this at our IR meeting on 6-month period financial results last week. Even as the spread of the new coronavirus continues, economic activity is picking up in some industries and regions such as China, showing a rapid recovery, and the United States where consumer spending, including automobile sales, is improving. Nevertheless, the pace of recovery remains slower in areas where behavioral patterns have been heavily affected such as in travel, fashion and dining out. The pickup in economic activity has been sporadic across regions and industries, and uncertainty persists. At Mitsui, we do not assume that our businesses that are at risk of a prolonged impact for the pandemic will return to pre-corona conditions with the passage of time, and our management is aware of the need to respond quickly to changes in industry, social structure and business models. As part of this effort, in the portfolio review held every autumn, we reaffirmed our progress in improving profitability through the implementation of the corporate strategy set forth in the Medium-term Management Plan as well as the quantitative and qualitative targets of the plan in the context of the current business environment. For businesses that have been more seriously impacted by the pandemic than we had assumed at the beginning of the fiscal year, we once again held in-depth discussions with business units as when the Medium-term Management Plan was formulated to identify what is needed to achieve an early return to a growth trajectory. As a result, we concluded that we needed to intensively reevaluate certain businesses in Mineral & Metal Resources, Energy and Machinery & Infrastructure segments with a view to increasing corporate value over the medium to long term. We further concluded that we could not eliminate the possibility of temporary losses in the process. This is why in our business plan, we have left the forecast for profit after tax for the current fiscal year unchanged at JPY 180 billion. However, because our ability to generate core operating cash flow is recovering faster than planned, we have revised our original forecast upwards by JPY 80 billion to JPY 480 billion. Next, I would like to discuss the impact of COVID-19 on Mitsui. In May, we announced an estimated negative impact of approximately JPY 200 billion on profit for the year. In the first half of the year, the impact was negative JPY 80 billion, including negative approximately JPY 40 billion from nonresources. We now expect the full year impact to be approximately 30% less than our initial forecast, amounting to approximately JPY 140 billion. This means that the impact has been reduced by about JPY 60 billion. Of that JPY 60 billion figure, JPY 50 billion is accounted for by resources, specifically price factors in iron ore; and JPY 10 billion is accounted for by nonresources, primarily from base profit. In terms of resource prices, while coal prices were sluggish, partly due to a lockdown in India and other high-demand countries, iron ore prices were strong, supported by strong demand in China. In oil prices, too, we are seeing a faster pace of recovery than initially assumed, and on the whole, we now expect the factors driving a decline in market prices to be less severe. In nonresource areas, on top of the steady growth of ICT business, there has been a speedy recovery in automotive sales business and a gradual recovery in demand in the hospital business, but the foodservice and fashion sectors are still heavily affected. The coronavirus has forced us to take defensive measures such as crisis management and thorough cost-cutting in some businesses, but we are moving forward with speed to implement concrete measures for future growth and to strengthen our competitiveness. In the retail sector, we have pursued consolidation of intermediate distribution subsidiaries, while in the sugar sector, we led the restructuring of the domestic sugar industry with our affiliated companies as the main drivers. In addition, we have businesses where we are demonstrating strong business management and on-site capabilities and which are achieving profit amid the current business environment. For example, trading in chemicals, petroleum products and copper generated a certain amount of profit in the first half of the year in an environment characterized by increasing supply and demand distortions and price volatility. This profit was not simply the result of increasing volatility. In the case of chemicals, for example, we have been able to generate profit by responding quickly to changes in the market by utilizing customer networks and logistics such as specialized vessels, and we have also been able to accommodate operation constraints due to lockdown. ICT and some food businesses are capturing changes in consumer behavior and -- such as nesting demand, which is contributing to stable growth. Mineral & Metal Resources, Energy and IPP businesses continue to operate normally despite the pandemic supporting earnings. Furthermore, at AIM holdings and others in Lifestyle segment, we are providing food support for health care workers in Japan. And at IHH, we are treating coronavirus patients and dispatching medical staff and equipment to national hospitals, actively providing community support through our business. Europe and the United States are experiencing second and third waves of the coronavirus, and we must persevere in our response to social issues. We will stay close to our business partners and customers and remain in tune with the needs of society, responding quickly to changes in the business environment and steadily implementing measures that will lead to growth. Next, I will discuss our quantitative plan for the financial year to March 2023 and our measures for achieving it. As I mentioned at the onset, last month, we affirmed the feasibility of our Medium-term Management Plan, both quantitatively and qualitatively, and we had thorough discussions with business units at a strategy meeting follow-up. As a result, while there are concerns about the prolonged impact of the pandemic on mobility, Iron & Steel Products and certain businesses in Lifestyle, we believe that there is room for further growth in the chemicals and innovation and corporate development segments, which are being resilient through the pandemic. And as such, have determined that we can achieve our quantitative targets of JPY 550 billion in COCF and JPY 400 billion in PAT. 10% in ROE target is maintained for the year despite uncertainties of the pace of economic recovery going forward. Although not included in the public documents, nonresource areas account for JPY 240 billion of the PAT figure, breaking down as follows: Machinery & Infrastructure, JPY 100 billion; Chemicals and Iron & Steel Products, JPY 50 billion; Lifestyle, JPY 50 billion, for example, JPY 30 billion in food and retail; JPY 20 billion in HC, ICT, CD, JPY 50 billion. CF allocation, including shareholder returns, have been left unchanged. And while we have revised output, our forecast of grow operating cash flow by JPY 80 billion for the fiscal year to March 2021, there is still uncertainty regarding the quantitative impact and timing of the reassessment of our business portfolio. Once things settle down in the fiscal year to March 2021, we intend to solidify our policy of additional shareholder returns, including share buybacks. Next, I will introduce some of the key initiatives that we are working on to achieve transformation and growth. Energy Solutions, Healthcare/nutrition and market Asia, which we have identified as strategic focuses in the Medium-term Management Plan 2023, will serve as a compass for Mitsui, both in terms of overcoming the impact of the coronavirus pandemic and rebuilding a resilient business portfolio. ESG is becoming increasingly important in the recovery from the pandemic, and the Japanese government has declared that it will reduce domestic greenhouse gas emissions to virtually 0 by 2050. Increasingly, society as a whole, including end consumers, is bearing the cost of realizing a sustainable society. Energy management, for example, downstream electric power requires collaboration among Mitsui business units to perform multiple functions and demonstrate value in such areas as power generation, sale, storage, et cetera, of electricity and energy management. This fiscal year, with a newly established Energy Solutions Business Unit as a driving force, we will leverage our collective strengths to take advantage of the opportunities presented by efforts to address climate change. In Healthcare/nutrition, although the hospital business has been significantly affected by the pandemic, IHH has started new initiatives such as online treatment. We view this as an integrated business area that encompasses everything from treatments to disease prevention, and we aim to create businesses from the patients' perspective by leveraging IHH's large amount of patient data. The idea of the user perspective also applies to market Asia. In Asia, which is experiencing a demographic dividend, we will take a consumer perspective and aim to capture consumer needs and demand for quality services and robust social infrastructure. In Japan, deregulation and structural reforms are expected under the Suga administration, and we aim to use our existing businesses as platforms to pursue new initiatives in this environment. We will discuss our initiatives in Energy Solutions and Healthcare/nutrition in more detail later in the program. Mitsui will continue to focus on strengthening the profitability of our core businesses, which are our strength. As I discussed earlier, we will reevaluate the potential of businesses in the Mineral & Metal Resources, Energy, and Machinery & Infrastructure segments, specifically coal, E&P and travel businesses. And rebuild a portfolio with an eye on the new normal to strengthen the base for future growth. To steadily implement the initiatives I have just described and have them contribute to profit creation, it is important that we strengthen our business management capabilities and accelerate our digital initiatives. We will introduce concrete measures for these, too, later in the program. In closing, I would like to speak about personnel. Changing the mindset of each employee is essential to implementing the initiatives I have just described and achieve even greater heights. We are planning to revise our personnel system to improve output and organizational productivity. We will evaluate results and contributions appropriately and ensure pay to performance. To maximize the potential of our diverse talent, we are establishing a selection system for young employees aimed at developing the next generation of leaders and a new expert band to ensure that they have the opportunity to continuously demonstrate a high level of expertise. We are also promoting the active participation of overseas human resources. The introduction of the employee stock-based compensation plan announced this year is part of this personnel plan. Amid the uncertainty brought by the coronavirus pandemic, we will accelerate transformation by strengthening our business management capabilities and promoting DX while taking aggressive measures to establish future revenue pillars in strategic focus areas. Thank you.

Thank you very much, President Yasunaga. Now I would like to take questions, and the 2 members on the stage will answer those questions. If you have questions, please raise your hand. The staff will be bringing the microphone to you, so please identify yourself and your affiliation before you ask questions. Those of you who are participating online, please fill out the question form, and there will be one question per person. In interest of time, sometimes we may limit the number of questioners, so please be reminded of that. Now I would like to take questions.

The President has explained the outset, but the long-term portfolio is something that I'd like to ask about. How are you going to go about running that portfolio? The core is resources, machinery and Chemicals. So you are more skewed to heavy, thick, long and large industry. But there's a COVID-19, and there is a trend of ESG. So there is increasing pressure to this heavy, thick, long, large industries. So in 10 years' time, are you going to change your portfolio? Or are you going to add to your core business currently? How are you going to change the portfolio is my question. And as for the speed of change, so you may be undergoing fundamental restructuring of your business. So that also included, can you give us your thoughts?

Thank you for the question. As you rightly said, the heavy, thick, long, large industry has been affected, I would say, directly by the pandemic of COVID-19 in some areas. And in those areas, as I said, the reevaluation is now underway. For some projects, we may not hesitate to go for exit, and there will be a thorough review on the durability on the downside or project life will be also reviewed under the influence of COVID-19, how has they been reduced in time. And we're talking to the head of business units for -- responsible for those projects. And especially in the second half of this year, March 2021, we are going to be proactively doing the reshuffling of portfolio. And as for the core businesses, I'd like to add to some comments. You have to have a scale to be competitive on the global stage. And there are some existing projects or businesses that have the scale, but we have to consolidate that as well. As for iron ore, in terms of the resources reserve, we are the fourth largest. And as for LNG, if some projects that are underdevelopment are started up, then we will be one of the largest in Asia. And on the other hand, as you said, as for energy, decarbonization is the global trend, and we are facing a headwind. We will be moving to carbon neutral. But obviously, coal -- thermal -- coal-fired thermal power station or coal demand in and of itself will be reduced. So coal-related assets, as part of the reshuffling of portfolio, will be focused most. So we'll be more blatant and audacious in here. And with regard to oil, so far, if you did more than the proven reserve or recoverable reserve will be reduced. So securing the recoverable reserve has been always the basic policy in our energy business. But for oil, the equity on the reserve, securing that equity is something that we will throw our way. In the short term, of course, oil is necessary resources. However, the crude -- for us, for crude oil, we will be more selective in picking up the projects. So improving the quality of existing projects will be our main focus. And together with that, E&P organizations, if you look at them, there are E&P organizations in overseas countries, and those include Middle East, U.S. and Australia and Asia. So E&P organizations spreading in those countries will be consolidated. And as for gas, mid to -- for the mid- to long term, it is -- it can be positioned as important hydrocarbon resource. Relatively speaking, the emission is smaller for gas, and gas-fired power generation can be changed in the operating rate or capacity factor easily and renewable energy, which has -- which is more variable. So combining these 2, we have best combination or power mix. Obviously, with the advance of technologies, the power storage cost is to be reduced. And if that happens, then renewable energy plus power storage would be the direction that we should be headed for. But if you look at the time frame until 2050, there will be still the demand for gas. And as for transport fuel, for example, if you look at the vessels or commercial vehicles, there will be more gas fuel to be used, and there's acceleration on that trend. So in that sense, gas could be -- could stay a viable business. Therefore, first of all, the Mozambique that is under construction and Arctic that is also under construction, those should be started up successfully. That will be the biggest target. And on the other hand, with regard to gas, as I said, with regard to E&P, basically, what we already have is something that we should welcome. And for new -- any new projects, we should be very strictly selective. In the assets that we already have, if there is less competitiveness or if there's less presence for us amongst the whole project, then we may be exchanging the portfolio or reshuffling the portfolio. And as for passenger transport, the mass transit like railway and airline, in those areas, the disappearance of demand because of the suspension of people's traffic is something that we are seeing. And the passenger transport businesses around the world are struggling because of this. But on the other hand, there is social significance of those businesses to that local area or to that particular country. This is essential infrastructure. So we have to work with the local government to figure out how you should proceed with damage control. And so we have people stationed in the local site to reduce costs, salary or ask for cooperation from the local entities. But in any case, in this area, once the coronavirus or COVID-19 settles down, how much recovery are we going to see? Work from home has taken root. So we don't expect the demand to go back to pre-COVID-19 level. So the deficit suspension plan with -- in the Europe with corona, that should be taken into account as we talk to the local governments. And last but not least, heavy, thick, long, large industry is the industry that we are skewed to. However, as we reshuffle the portfolio and the strategic focus, we will be shifting the human and management resources fundamentally. So with the COVID-19, I believe that this has been further accelerated, and the demand in society is also transitioning in that direction. And of course, our business is more for -- more mindful of ESG as we consider energy mix or consumption behavior and people's movement. And in accordance with that, we will be shifting people and resources as well. Thank you.

So let us move on to the next question.

I do have 2 questions. The first question is as follows. This was also asked previously. And again, as you have explained, in 2050, you have the net zero-emission goal and to oil reserves you mentioned, and I do understand the direction that you are willing to take to attain this goal. But when you look around the world, for instance, in European markets, and perhaps, there are environmental activists in the background, I feel that they are very quick. They're very speedy. So can you illustrate to us a time frame? So in the current Mid-term Management Plan by the year ending March 2023, what will be the speed that you will actually focus on to reshuffle your portfolio? Because we believe that if you do not attain speed, we cannot confirm from the outside that you are really changing. So if you can perhaps follow up on the time line that you are considering for this shift. Now my second question. The cash flow allocation, 3 years, I understand that you will keep things unchanged. It's only been 6 months since you've launched your new Mid-term Management Plan. However, the management allocation that you have, JPY 300 billion to approximately JPY 500 billion, so I think that remains. So for the past 6 months, have you changed your direction or your thinking in approaching this?

Thank you very much for the question. So we will have Yasunaga-san respond to that question.

Thank you very much for the question. Now the portfolio time frame that you questioned, to what extent will we be speedy in shifting. So for instance, coal or coal-fired power generation or metallurgical coal, we obviously sustain that at the moment. But for thermal coal, we are already exiting. So then what do we do with the coal-fired power as well as metallurgical coal? Now originally, by the year of 2030, we had planned to reshuffle our portfolio and take a pragmatic approach in divesting these assets. However, as I mentioned earlier, and obviously, this has been pointed out to us as well, there are -- there is heightened speed surrounding this market. So for coal-fired projects, this will have to be supported by a very solid, tangible cash flow and where we can see that there is a possibility to sell that electricity. So this means that we will not sell cheaper just for the sake of exiting. This does mean that if there is an appropriate price, then we are always considering the possibility of selling. And this is what we are discussing with our business unit leaders. So if we do have an appropriate buyer that follows this criteria, then we may be divesting next year even. However, we are entrusted with money from our shareholders, and this is also a very solid or important profit base as well. So we do have to sell at an appropriate price. So that will be the prerequisite. And based on that, we will find a proper exit path, so that is where we stand at the moment. Now for metallurgical coal, based on the furnace legislations, it is a necessity. However, there is pressure, obviously, on iron ore as well. And so, for instance, direct from the furnace, how can we shift our actions, and that is obviously the route that needs to be taken. So at this point in time, how do we consider the time line or the time frame? Since we do have the responsibility to supply as well, we cannot disclose anything at this point. However, our basic thinking is that we will have a solid exit plan. Now, management allocation, I believe, was your next question. At the beginning of the fiscal year, we estimated that the impact of COVID-19 would be quite large. And so that is why we slated a JPY 400 billion number. But things have settled down a bit. And we can -- believe we can generate something close to JPY 500 billion even this year. And for next year and onwards, we do expect a recovery. And so in the 3-year time frame, JPY 500 billion plus can be generated if you average this out. So this will be the cash-in level that we can anticipate. So I have repeatedly said that we will reshuffle our portfolio, but this does mean that it's not just about selling and buying. It's also about the entry cost when you purchase because the entry cost has elevated. So we have to be, again, very, very selective in the projects that we participate in. And on the contrary, we need to take a 360-degree approach as to the existing projects and businesses that we have and extend that to perhaps new opportunities for the future for investment. Areas that we can have the advantage in controlling or managing that business, and we have to create an environment that will allow us to do it. And so that is our management policy at the moment. So once again, maximizing profit for existing business, revamping existing business and in the peripheral areas or adjacent markets, where do we find the seeds for a new business, and we need to make sure that we capture those new seeds as well. So that will be our overall approach. So for cash-out as well, this will also mean that we will be extremely focused as well. So in totality, the management allocation, the number or the magnitude of the number remains unchanged. However, just because we have a residue, do we give back? Again, as I mentioned in the onset, for this fiscal year, we will be focusing on reestablishing specific businesses. And what will be the impact on PAT as a result? We have to strike a balance and ultimately consider share buyback as well as giving back to our shareholders as well. So that will be my current response to that question as well. Now for management allocation, the importance of management allocation is that for the future of Mitsui & Co., areas that we feel that are strategically important, a new business platform -- acquiring a new business platform, this will be obviously the base for future growth for Mitsui. So if there's an opportunity to advantageously acquire such an opportunity, then we will be very quick to make that investment. So investments for growth is needed. Thank you.

Thank you very much for the question. Next? Yes. Next question, please.

I have 2 questions I'd like to ask. The first question, in the Medium-term Management Plan, it's been 6 months since it has been announced. And how to expand that profitability, I'm sure, is something that you are thinking of. Compared to the previous Medium-term Management Plan, do you have any reviews that you have made to improve from the previous plan to this new plan? That is my first question. And my second question, you mentioned earlier, from the perspective of ESG, can you talk about asset replacement? You talked about coal-fired energy. You are not thinking of selling it cheaply, and that is going to differ in your opinion from the investor side as well. I think timing is going to be important going forward. But as time goes by, I think the selling environment is going to worsen, and I think that is a general view. What kind of discussions are you having in-house? What are the techniques that you are going to leverage on, so that you'll be able to secure profitability?

Thank you very much for your questions. So Mr. Yasunaga will answer your question.

Thank you very much for a very difficult questions. Well, in the previous Medium-term Management Plan, the review was conducted. And as I mentioned earlier, the profitability to be enhanced for the existing businesses was something that we would like to work on. And we are not going to not continue spending without thinking to gain new assets. But we want to enhance our existing businesses, and that is how we'd like to continue spending. And maximizing that idea initiative is something that we wanted to work on. But last fiscal year, we were able to achieve the targets that we had set for the previous Medium-term Management Plan, and that is the journey we had grown along. And 6 months has passed, and looking back, we believe that was not sufficient. In other words, the business environment has changed. And we cannot foresee post-corona. However, what is clear is that in the pre-corona era is something that we will not be able to go back to. Therefore, I may be repeating myself, but by business units, each businesses need to think about its expiry date. What we need to do within that term is something that we need to thoroughly work on to move on to the next stage. But for some projects, we may need to exit. For some other projects, we need to immediately exit. And for other projects, we may stop profitability. And if there is room for turnaround, of course, we will thoroughly work on its recovery and, depending on the price, think about exit strategy. That is something that we need to do, so selection is something very important. So depending on the domain, we need to put new resources, new investments. Some areas we may need to give new personnel and areas that we need to focus for the future. I think the boundaries are becoming more clear. So in this Medium-term Management Plan, I think we are more careful in the selection. And in Mitsui, I believe that they are very highly qualified talents. So the ability and skill of the personnel is there. However, I think there is room for more improvement. So personnel system is going to be reformed, as I mentioned earlier. So not depending on age or sex or nationality or career, those with ability will be put to positions that they will be able to put their talent to, and that is a personal reform that we are going to focus on. So personnel, there are 42,000 personnel. So they need to be in positions where they can perform best, and that is something that we are going to work on. That is something that we were working on in the previous Medium-term Management Plan, but in the environment we are in, I think this is something that we need to foster further. We will have dialogue with workers union. And we are going to work on this further so that in next fiscal year, we'll be able to start with the new personnel system, and that is what we are focusing on. And as for coal-fired power, how are we going to determine -- its lifelongness is something that we need to think about. How long we'll be able to sell electricity and what the position of that power plant has in different countries is something that we need to think about, whether that power plant is close to where the demand is or in the operation history of that power plant what were the weak areas and what are the demand from the grid side. Are we going to be able to increase the continuity of the operation? These are the factors that we need to think about. When it comes to coal, there are 4 projects that are running, and they are key power plants that are working in each of the countries they are positioned in. So they are advantaged in that sense. So as long as we hold on to that power plant, I believe that the cash flow will be there for the next few years. That is the kind of asset it is. So how long we are going to hold on to it, as you have just indicated, it is a question. So depending on the contract, because it bears the profitability, is it good to continue to hold on to it? Maybe the energy mix of that country will change going forward. So how are we going to take responsibility for its operation is something that we need to think about. In the emerging countries, the energy mix may change going forward, but that doesn't mean that they are going to abolish coal-fired energy. I don't think it's easy for them to transform to renewable energy that easily because of cost and also because of the growth in energy needs. I think that is something different from the advanced countries. Therefore, we need to look at the -- each country's energy policy. But if the price is right, I think we are at a time and juncture in which we can sell. So how to justify that? That is something that we have not disclosed. But as we have just said, we need to give proper explanation to our shareholders. And if we are able to sell, with that reasoning, we will not contemplate and sell at that price. Thank you.

So what you told us is that previously you have been explaining to the media, by 2030 coal-fired power generation will be divested. So that could stay the policy, but you have this awareness that this should be accelerated. So closely watching the situation, you'll be divesting earlier than you had expected. Is that correct?

Well, not slightly earlier, but we are accelerating significantly. That's how I feel.

Thank you very much. Thank you very much. We have used up all the time available. Ideally, we would have been able to -- we should have been able to say that this will be the last question, but we have to wrap up this session. And the -- our 2 members on the stage will now leave the stage. So next will be a presentation regarding Energy Solutions Business Strategy. We will rearrange the stage.

Thank you very much for waiting. We would now like to explain to you our Energy Solutions Business Strategy. From Energy Solutions Business Unit, COO, Toru Matsui, will be presenting.

My name is Matsui from the Energy Solutions Business Unit. This is a new business unit established on April 1 this year with the purpose of realizing a low or carbon-neutral society and expanding and accelerating our efforts in the area of energy solutions, which centers on the growth areas of the energy management and next-generation fuels businesses. Today, I will talk about the strategy of this unit. First, I would like to explain how we see the environment surrounding our business area. The global economy is expected to grow in line with population increases and an expanding middle class, mainly in developing economies in Asia and industrial development. However, societal concerns with regard to addressing climate change is growing day by day. Accordingly, business world places more importance on SDGs and ESG activities than before. While governments across the world take action to promote the introduction of green energy, the feasibility of business in the form of technological innovation and cost reduction is increasing, and new business opportunities are emerging in relation to addressing climate change. We recognize that this trend is accelerating after the COVID-19 pandemic. Europe swiftly took action to address climate change as part of economic recovery measures from COVID-19. Similarly, Japan has set a goal to become carbon-neutral by 2050. And China, the world's largest emitter of CO2, has set a goal to become carbon-neutral by 2060. Backed by the policies of governments across the world, it is anticipated that the relationship of economic growth and CO2 emissions, which used to be correlated, will diverge more or so-called decoupling of these are expected to increase from now on. Under this environment, Mitsui considers the following to be future growth areas: the spread of renewable energy, a further shift to decarbonization; electrification and hydrogen SCVs and mobility; the promotion of energy conservation through decentralization, optimization and disfoundation; and the shift to low-carbon fossil fuel. Please refer to the next slide. Now this graph shows the promotion of green energy as the primary energy source and the anticipated annual investment necessary to materialize the Paris Agreement's 2-degree scenario. It is thought that the necessary volume of investment in green energy will increase year-on-year. As a result, the portion of green energy as the primary energy source worldwide will increase sharply from 14% at present to 36% by 2040. Investment is already concentrating in certain areas. And while this has led to a sudden rise in enterprise value, we see such investments shall drive the cost reduction and technological innovation, which would lead to increasing business opportunities. We are expanding our business into this growth area, combining competitive technologies and services with our regional and product expertise, needs of our Japanese and international customers and strength of our partners in which we have cultivated through our existing business. The Energy Solutions Business Unit will focus its effort on 4 areas: The first is energy management, including renewable energy, represented by the distributed solar power and battery business; the next area is the next-generation fuel business such as low CO2-emitting bioethanol and all alternative jet fuels; third is the hydrogen business set to be the ultimate clean energy; the final area is the smart cities business and carbon management assisted businesses, the sale and creation of emission rights. We will commercialize and expand the scale of our business in all these areas to create a future earnings panel. Now, let me move on to the role of our business unit. At a time when the energy market is undergoing major structural reform through the deregulation of the market and emergence of new businesses due to technical innovation, we believe that combining our experience, expertise and networks to propose and implement industrial solutions to climate change will be our big strength. Gathering Mitsui's diverse expertise and specialists from energy, mobility and infrastructure projects, we established the Energy Solutions Business Unit. The Energy Solutions Business Unit aims to leverage the internal and external networks of its personnel who originate from business units across the company and drive the reorganization of the company-wide business portfolio, acting as a unifying force for the creation of clean and sustainable business. Our business unit has 3 strengths: business development capabilities, comprehensive strength and our global network. First, let's address our business development capabilities. We have cultivated foundation for our business management capabilities from consumer business such as distributed power and automotive retail business as well as the project formation capabilities through our large-scale power generation and resource development businesses thus far. Next, there is Mitsui's comprehensive strength, a powerful weapon. We have been a firm presence in the energy industry for many years, including the LNG fuel, while at the same time, we have a broad footprint that covers the power generation and automobile industries and energy-consuming industries such as the steel industry. We believe we occupy a unique position globally, able to reach partner companies across industries and offer new value and business models. Finally, let's discuss our global network. Our local talent who possess regional and product expertise are the source of our strength. Those out in the field enable agile development of our business across the globe. They identify advanced environmental technologies and business models and quickly map out paths to commercialization. This is what we see as our strength. As an example of the first strength I discussed, our business development capabilities, I would like to introduce to you one of our renewable energy projects. ForeFront Power is Mitsui's U.S.-based solar power development company. This video shows how they introduced their solar power-generation business to Japanese companies and schools in California. [Presentation]

In 2017, Mitsui established ForeFront Power LLC, an incorporated and wholly owned company that provides distributed solar power generation. We acquired and then integrated the distributed solar division of SunEdison Inc. and are expanding its operations. ForeFront has seen great success in providing solar power facilities at schools and local governments in California. It also provides green energy to multiple business locations of large corporates, including Anheuser-Busch. The video you've just watched explain our efforts in comprehensive energy management centered on distributed solar power generation. Renewable energy in the U.S. and Europe benefits from an economy of scale in the form of cost reductions due to an expanding market and technological innovation. Renewable energy has become more affordable for customers these days, increasing the volume of renewable energy generated, which is easily affected by the weather, faces numerous challenges, including the increased burden on electricity grids and complex electricity supply/demand adjustments. Customers and electricity grids require complex solutions. For example, we have seen expanding needs for offerings of systems that package both solar power and battery storage through ForeFront Power. In the last 2 years, Mitsui has contracted for more than 50 megawatts of this kind of offering. In the U.S., where there is a deregulated electricity market, there are customer needs to supply excess power to electricity grids and so-called mobility management or the efficient charging and operation of EVs. Our aim is to become a comprehensive energy management operator that addresses these needs with turnkey solutions and believe that we can provide our comprehensive strengths. Mitsui is developing its distributed solar power business in multiple countries outside the U.S., and we are pursuing to tackle on issues accordingly by looking at the development of needs in each country. Next, I would like to give an example of how we use our global network, one of our strength, to pursue the commercialization and global development of new technologies. I will talk about our efforts with LanzaTech, a company which uses waste gases to produce ethanol. Biofuels are another growth area, after renewable energy, as a necessary energy to meet both global energy demands and the transition to clean energy sources. With initiatives like E10 regulations, automotive gasoline containing 10% ethanol, global ethanol consumption for use in fuel is expected to rise. First-generation ethanol produced mainly from corn and sugarcane have limits to expand production as these raw materials are also foods. Now because of this, it is fair to say that the technology developed by LanzaTech, which enables the production of ethanol from waste gases, is essential to the spread of biofuels. Predicting that LanzaTech's technology would bring tremendous change to the energy sector in the future, Mitsui invested in LanzaTech in 2014, when it was still an R&D-focused start-up. This investment was a bold move to acquire R&D functions necessary to establish new businesses and leverage the company's business innovation project framework, which supports our entry into new business areas. And Mitsui and LanzaTech then jointly proceeded with commercialization of LanzaTech's technology in China where the market is predicted to expand backed by government's E10 mandate. In 2018, we established our first project with the Shougang Group. And since then, we have been expanding our business space in line with projections. Going forward, we will continue to leverage the same technology to expand the business globally to areas including India and Europe. In addition, the airline industry have also set a target not to increase CO2 emissions after 2020 and to reduce CO2 emissions to 50% of the 2005 level by 2050. All alternative jet fuels will be essential to achieving this goal. Mitsui is also participating in the business of LanzaTech who has alternative jet fuel technology. With a strong interest and inquiries from our customers to conventional jet fuel, we will pursue the commercialization and global development of the same technology. Finally, I will talk about our hydrogen business, an area which demonstrates our comprehensive strength and which we are developing with a long-term focus. To realize the carbon-neutral society by 2050, we have high hopes for hydrogen fuel, a fuel with no environmental burden and the ultimate clean energy as a replacement for fossil fuels. The hydrogen fuel market is currently worth JPY 10 trillion with the potential to grow to JPY 160 trillion by 2050. However, to realize the hydrogen-based economy, it will be important to create demand in various sectors, and reducing cost by scale will be key. We will strengthen our cross-business unit initiatives, which we are uniquely able to provide as a trading company that comprises businesses from across a range of industries and work with our many partners and customers from energy, automobile, ship and mineral resources industry in order to succeed in the creation of a hydrogen business. One of our recent activities was an investment in FirstElement Fuel, Inc, California's largest developer and operator of hydrogen stations. California is one of the largest markets in the world with 8,500 SCVs, where environmental regulation and subsidy system to promote low carbonization are established. In the short to medium-term, Mitsui will proceed with business initiatives for local production and local consumption such as FirstElement Fuel, conscious of both consumer needs and environmental regulations to promote the introduction of hydrogen. In the long term, we plan to establish a large-scale hydrogen transportation value chain with the aim of leveraging hydrogen as fuel for power generation and others, based on our expertise and accomplishments cultivated over many years in the LNG business development. As a hydrogen pioneer, Mitsui will work to create demand and proceed with the commercialization of the hydrogen business. Now up to this point, I've given an overview of our business unit business. Through the realization of Mitsui's materiality, which includes the aims to enhance quality of life and create a eco-friendly society, we are also proceeding with initiatives for the long-term vision to create a future earnings pillar for the company in the area of energy solutions where future growth is expected. With a focus on renewable energy business and by advancing commercialization efforts in the next-generation fuel hydrogen business area, we aim to make a quantitative contribution to company profits of JPY 10 billion in 5 years and JPY 20 billion in 10 years. Energy Solutions Business Unit will implement strategic investments in area of energy solutions, which is the strategic focus in Mitsui, and work to expand our operations in the sector going forward to make it a source of earnings. Thank you.

Thank you very much, Mr. Mitsui. Next is a presentation on Healthcare and nutrition business strategy. Masato Sugahara, the Managing Officer of the Healthcare & Service Business Unit, will present.

Good afternoon. I'm Masato Sugahara. I was appointed Managing officer of the Healthcare & Service Business Unit in April. Today, I would like to explain 3 key points. First, I will talk about the paradigm shift in Healthcare Asia in light of current megatrends; second, the progress of our IHH business and our future growth strategy; and finally, our business vision in the area of Healthcare and nutrition, leveraging our IHH business. Asia's health care market is expected to continue to grow at a high rate in the coming years due to the rising population, expanding middle income class and increasing prevalence of chronic diseases. As a result, health care spending continues to rise. One of the most important issue is how to improve the quality and effectiveness of health care spending. In addition to the widespread use of smartphones and innovations in digital and big data technologies, COVID-19 has led to increased demand for contactless solutions, and we expect the health care market to quickly accelerate DX to create new solutions. Especially in the emerging economies of Southeast Asia, health care is still treatment-centric and volume-oriented. Medical institutions are driving the choice of treatment with incentives designed to encourage many tests, treatments and medications. In addition, patients are unable to manage their medical records and test results and do not have a clear grasp of their own symptoms, so they are forced to passively follow doctors' instructions. This is causing a so-called information gap between medical institutions and their patients. However, we believe that outcomes will become more important in the future, and digitalization will enable transparency in the pricing of medical services and a shift to patient-centered medicine. In other words, patients and pre-patients will be able to choose the health care that suits them best. As a private sector operator, we will lead and accelerate a paradigm shift in health care from a treatment-centered to a prevention-centered approach and from a hospital-centered world view to individual-centered value-based health care as the importance of everyday care increases. Next, I would like to explain the status of IHH. Mitsui made an additional investment in March last year and became the largest shareholder in IHH. Since our initial investment in 2011, IHH has increased its number of hospitals from 16 to about 18 in 10 countries and increased its total number of beds from 3,500 to 15,000, making it the largest among listed Asian hospital groups. EBITDA also continued to grow steadily, increasing from USD 280 million to USD 800 million in 2019. COVID-19 has had a significant impact on the IHH business, but various measures have led to a steady recovery in recent performance. After the impact of COVID-19 became apparent in the spring of 2020, there was a temporary decline in revenue due to the postponement of nonurgent hospital visits and treatments. And a significant decrease in the number of cross-border medical tourism patients as a result of travel restrictions. However, the number of patients in each country has now recovered to normal, and measures tailored to the unique situation in each country are now beginning to pay off. IHH is also working closely with governments and actively contributing to countermeasures against COVID-19. Specifically, the IHH group has accepted a cumulative total of 30,000 COVID-19 patients. In addition, it has accepted non-COVID-19 patients in cooperation with public hospitals that prioritize COVID-19 treatment and dispatched medical personnel and lent medical equipment to care centers that accept COVID-19 patients. In order to meet the increasing demand for testing, IHH as a group has capacity to perform about 10,000 PCR tests per day, which is the largest number of PCR tests among private hospitals in Asia. The group has conducted more than 1.5 million tests to date as well as responding to border inspections that governments are unable to handle. It has also responded quickly to growing contactless needs among patients, introducing online medical services in 8 countries in May. To improve patient access, 7% to 10% of general practice by clinics is now online, depending on country. And the hospitals themselves are beginning to shift to a more productive revenue structure by focusing on severe patients and highly advanced care. These measures are offsetting the decline in revenue streams from medical tourism, but at the same time, we are seeing results picking up in Turkey, where the borders have been reopened on medical tourism. In Singapore also, where medical needs from neighboring countries are high, the market is gradually recovering as the government has begun to accept patients with urgent needs. In the surrounding emerging economies, COVID-19 has increased the need to attract hospitals that can provide high-quality, highly advanced medical care, and opportunities for IHH to enter new markets are increasing. Next, I'd like to explain the growth strategy for IHH since Mitsui became the largest shareholder through their additional investment. I'll talk about 2 main areas: strengthening the group management base and the future growth strategy. Since our additional investment in IHH, we added 1 director from Mitsui to the Board, raised the number of seconded employees at project sites and have been implementing a number of initiatives. In addition, we have set up a system to enable us to provide hands-on support as a shareholder via a subsidiary in Singapore. First, I want to talk about the strengthening of the management structure and realizing cross-business synergies. After making the additional investment in IHH, Mitsui strengthened IHH's management, including by replacing its CEO and realigned its strategy from long focus to the short term and MAAs (sic) [ MMAs ] to one which seeks to increase corporate value from a medium- to long-term perspective. Specifically, we leveraged our hands-on experience in increasing corporate value of Columbia Asia, reviewed purchasing and outsourcing costs and began reducing costs by reducing procurement items, optimizing procurement growth and other initiatives. In addition, we are working to enhance group-wide functions through integrated management of the laboratory business, which is spread across hospitals in multiple countries; and a cross-group introduction of IHH's own IT health care system. Second, let's discuss the strengthening and expansion of our business portfolio. For India-based Fortis PMI, we implemented measures to strengthen the autonomy of those global hospitals that had recorded a decline in goodwill in this period as well as turnaround measures. In Turkey, IHH saw a significant reduction in foreign currency-denominated debt in part due to the status of the Turkish lira last year as well as increased foreign currency revenue due to an increase in revenue from European businesses in which IHH is invested via Turkey, and an increase in medical tourism to the country. Recently, the proportion of foreign currency revenue from Acibadem increased to 40%. Third, through the cluster strategy, we work to clarify the allocation of growth and functions by hospitals across markets and raise productivity and profitability by strengthening cooperation. In Malaysia, for example, we designated hospitals and specialist acute phase hospitals or general hospitals for the community, based on local needs. By clarifying these roles, hospitals can select and concentrate on specific hospital departments. Next, the 3 pillars of IHH's new growth strategy. The first is the realization of DX and data platform for the creation of value-based health care. The next is expansion of IHH's geographic and business area. We discussed this last year, but IHH will expand and strengthen business in India and China as well as seek opportunities to enter the neighboring emerging economies discussed earlier. In September, IHH acquired Prince Court Medical Center, its 16th hospital in Malaysia, located in one of Kuala Lumpur's best residential districts. The acquisition of the hospital further strengthens IHH's space in the home market. In business areas, in addition to introducing online medical services, as discussed earlier, IHH has begun partnership with insurance and wellness businesses, broadening its involvement in the patient journey from preventative and presymptomatic care to treatment and prognostic care. Finally, I would like to discuss ancillary business spinout. As discussed last year, there is a trend in advanced economies like Japan, the U.S. and Europe where hospital operators in the pursuit of management efficiency, also specialist ancillary services that are traditionally provided by hospitals, services like pharmacies, clinical trials, image diagnosis, sterilization and specialist clinics. As a result, independent markets established by the operators of these services. By spinning out these services that are still provided in the hospitals of the countries in which IHH operates, it aims to deliver further growth in performance through the pursuit of economies of scale. First of all, we will focus on establishing Asia's largest clinical examination laboratory business, begin seeking cost reductions through cross-group procurement of reagents and accelerate integrated management and the creation of synergies with an eye to business spinout. Next, let's talk about Mitsui's business vision, one based on DX at IHH and the creation of a data platform. In recent years, in the U.S., a market with advanced health care IT, the GAFA tech giants, have been working to create a value chain linking health care and the consumer by using large volumes of data to enter the health care market. However, in Asia where there is not yet a major player in this area, this is working to create a wellness service platform through the organic coordination of IHH DX and the data platform with our network and other assets. Based on the trend towards digitalization, as a result of the unique circumstances presented by COVID-19 as well as expansion of the presymptomatic and preventative care markets in advanced economies, we will further grow our business by expanding disease management services. At Mitsui, we aim to demonstrate our company's comprehensive strengths and create value based on collaboration across divisions. Together with energy solutions, Healthcare/nutrition is a strategic focus of our Medium-term Management Plan. We will capture the paradigm shift of hospital-centered to individual-centered that is occurring in this area and pursue business leveraging our comprehensive power from across our business units. Finally, I would like to talk about the quantitative outlook. While we are unable to comment on the quantitative plans of IHH's individual listed companies, as the largest shareholder, we are committed to growing IHH through the strengthening of the group's management base and the steady implementation of a new growth strategy. In addition to IHH, we plan to increase our total equity, proportional EBITDA of each of the companies positioned in the health care and nutrition field from JPY 44 billion in the fiscal year ending March 2021 to JPY 72 billion at the end of the current medium-term period and to JPY 100 billion in the fiscal year ending March 2026, and that is for existing businesses alone. I hope my presentation has given you a better understanding of the potential of the Asian health care market, which is expected to continue to grow as well as the growth strategy of the hospital business and the company's plan to build Asia's largest wellness service platform. These activities are consistent. We have the company's sustainability policy and the themes of materiality, specifically to enhance quality of life and secure sustainable supply of essential products. By developing the healthcare and nutrition field into a core business, we want to help bring sustainability to society and help it grow more prosperously. Thank you for listening.

Thank you very much. Now we'd like to move to DX comprehensive strategy, which will be presented by Yuji Mano, Managing Officer, General Manager of Integrated Digital Strategy Division.

Good afternoon, ladies and gentlemen. I am the General Manager of DX Company Integrated Digital Strategy Division, Yuji Mano. It's been a while to see some of you. I'll be talking about digital strategy of Mitsui, and that is titled DX Comprehensive Strategy. Time is limited, but I'd like to ask for your kind understanding. Now this is what I'm going to talk about today. There are 5 items. The first one is the DX comprehensive strategy as a general principle. What is it? And then the elements that go into that; DX business strategy; and also DD, in other words, data-driven management strategy; and the human resources to support those strategies. Those 3 will be explained. And then last but not least, just for your reference, as an ingenuity to promote DX, what are we doing specifically? That's what I'm going to share with you today. First, Mitsui & Co.'s digital transformation. What is it? What is digital transformation at Mitsui? DX is often talked about around the world by all the companies. So digital transmission at Mitsui. So of course, digitalization is important but OT, or operational technology, is also what we focus on, and this precedes digital transformation. People are adopting digital technologies. And digitalization is just an environment now. But there is a precious real field or the significance of the operational ground is increasing because of the digitalization. So with the digitalization added, you can improve productivity and enhance competitiveness and create new businesses. That's what we see as digital transformation. So what is real is something that we value most, and that is what sets us apart in terms of digital transformation at Mitsui. So before I go into the main business today, I'd like to talk about the history so far. 3.5 years ago, in May 2017, as a sogo social trading house, we have set up a CDO. And as you can see, there are 2 columns on the left and right. The business DX and -- business unit DX and corporate DX. So if you look at each of the columns, we have been following each of the lines since 3.5 years ago. But in October, last year, this has been integrated. And now the integrated digital strategy division was established, which I lead. And offense and defense are separated, or digital technology in IT are separated in many of the companies. But is it really efficient? Digitalization and IT, are they separate? And the offense and defense, are they separate? In any DX, cybersecurity is something essential. And also, cloud usage is what we need to figure out and data management is also there. So do we have to do this in different organization? We thought that this will be inefficient. So at the Mitsui, offense and defense are integrated in one organization. That's what we call digital -- comprehensive digital strategy. And in April this year, in Mitsui, all kinds of systems and what is called digital has been concentrated in this department. So maybe we are taking -- going ahead of the digital agency of the Japanese government that is being established. So this -- what is called digital or IT are all consolidated in this division. And there used to be CDO and CDIO, which are occupied by different individuals, but we have consolidated this to CDIO, which is now taken by Mr. Kometani. And all of this is considered in comprehensive strategy. And there are 2 approaches, the offensive DX or business unit DX. So from the business unit perspective, how are we going to approach DX? And the other is defensive DX or the data-driven management strategy. Of course, they are integrated, but there are 2 strategies. How to use data is the perspective that we have in defensive DX. So by combining these 2, we have DX comprehensive strategy. And here, you can see DX comprehensive strategy and vision, and outline of the vision. And with this slide, I'd like to show what we are aiming for. On the left, as you can see, DX business strategy, there are 4 items. First is real, as I said, earlier, real should be there before we talk about DX. So the significance of real being real is important. If there is no real field or operational ground, there's no DX. And independent business management is the second one. Independent is the focal point in Mitsui business. Those that can do the independent business management can only utilize DX effectively. So with DX can only -- with DX, you can have independent business management, in other words. And industrial solutions, we have been working on for several decades, but this will be accelerated with DX. And the fourth is fully end user focused. As you can see in sogo social trading house, we are on the supply side, more or less. But when it comes to DX, we have to have user perspective, and that is the vision for DX. On the other hand, what about data-driven, on the right from your side? So people -- Mitsui is people and data. Mitsui is people, that's what we talk about often. But what we have come up with Mitsui is people and data. So faster and more accurate decision-making with data. So the way we do business at trading house, as you know, [ KKDK ] is what we -- is what we are called in decision-making, but we use data fully to make the faster and more accurate decision-making possible. But we would use data on top of that decision-making process. And also -- this is just a low-profile approach. But if we can't utilize data, then there'll inefficiency. But if you can take advantage of data, you can enhance efficiency and competitiveness. But that usage has not been made fully. So we have to accelerate that. And the third is data for using, not for viewing. People often talk about how they want to view data, access data. But how to use data is more important. If you don't have the vision for how to use data, then idea of viewing data should be given up. And then the last is data is a company asset. Data is privately and individually held or owned, unfortunately, often inside our company as well. But disparity of data access has been used to leverage, but that era is over. So everybody has to share the data and make full use of data. That's how we should do the business, and that is what we call data-driven management strategy. So there are 4 items. And as you can see at the last, DX and digital. Being digital is a basic standard. All employees of Mitsui and company has to have the data. Otherwise, you will not be able to work in this company. So in the next-generation management talent, this is essential. And also, this has to be part of Mitsui's corporate culture. It's not just do, but it has to be, not just do. So that's what we're looking at the strategy. Now the DX business strategy vision is shown here. On the left, you see DX framework, S1, S2 and T. So this is the framework that we have. DX, there are only 3 actually. What is this one? Productivity increase and efficiency improvement, reducing cost and improve bottom line. And what does this do? Enhance engagement with the customers to increase sales, in other words, raising top line and also create new businesses. That's what we do in T. So those are the 3 items in the framework. And combining this with the medium-term management plan, we would thoroughly conduct S1 and S2. In other words, the enhanced existing businesses is -- that's what is shown in blue. And T is creating new businesses for the next phase. And those are the key components of framework. Now what we have come up with this 6 strategic area, key strategic area. And I'd like to talk about this. And first key strategic area, the existing business DX of asset foundation. If we believe that being real is important, we are strong in having the field on operational grounds. So we have to further enhance that strength. If you can take a look at Page 13, the Appendix, FPSO business is shown here. That's one example. As you can see, our FPSO is the core business, but how we can do the DX. FPSO is a vessel, but it is also a plant. So as far as it is a plant, you have to reduce downtime as much as possible. And for the past 2 years, we have captured various types of data to make the predictive maintenance possible. And we have built a model for that, and downtime has been reduced by 65%. And there are many vessels so we can horizontally develop -- deploy this, and we have been able to save close to JPY 2 billion. And the World Economic Forum that hosts the Davos Conference has recognized MODEC as one of the world's most advanced manufacturers and leader of the fourth industrial revolution, one of the only 4 that was selected this year. And this is the vessel operation optimization. Dr. Andrew Ng of Stanford University, who is an authority in AI, has come up with this waves and vessels and route affecting the vessel operation. And by capturing all this data, what speed you should operate the vessel at which route too has the best fuel economy. And we have been able to reduce fuel consumption by 5% on the average per year. That may sound like very small. But actually, 55% of the fuel is the bunker fuel. And so there's a lot of cost savings that can be done. So we are having -- demonstrating this with several domestic ship operators, and we are now at the stage of implementation. Let me go back to the 6 strategic area. And the second is DX of trading and logistics foundation. Trading is one of the important businesses, and we have to strengthen this. And the third is DX of consumer business foundation. As Mr. Sugahara said, IHH is one of the focus, how to improve the loyalty of patients and how you can provide services to those patients. That's one of the examples. And now we are going into T area. The fourth is large-scale DX of social infrastructure. That's the fourth key strategic area. The smart city projects that we're working on that -- what Mr. Matsui talked about. Energy management platform is what we are building under this. And then fifth is the DX from viewpoint of utilizing new technologies. Usually, you would have to have real assets. But here, you start from technologies. As an example, the Page 19, preferred medicine. We are working with preferred networks and the detection of cancer through blood test has been established through deep learning. There are 14 different tumor types that can be detected, and we will be soon able to launch the product. Now the last, not least, 6th is the most important or most difficult, disruptive one. Industrial disruptive one is something that we are working on as well. So those are the 6 strategic -- key strategic area. Now let me talk about data-driven management strategy. In data-driven management, there are 3 players: data producers, data users, and third is the system operators or supervisors. Those 3 have to work together to take advantage of data. The data producer has to share the data and then data user has to utilize data and system supervisor, have to make sure that data that is spread out can be used and accessed. And there are different levels of employees all the way from directors to the working level employees. So depending on the granularity and demand, you have to provide the data. And that is what constitute data-driven management strategy. It may sound easy, but data-driven management strategy is the foundation for DX. So we have to support this strategy to make the DX successful. So one example is the monthly report of affiliates. The monthly reports have been submitted disparately, unfortunately. But with the cross-affiliate practice, you can take a look at the data instantaneously. So the single source data. So this will be the foundation for all decision-making, and that's how we are going to change the business. Now the personnel to support all this is what I'm going to talk about now. As we do the digital transformation, there are 3 different types of talents necessary: A,B and C. The vertical access is level of business professionals and horizontal access is level of digital specialists. Most of the people in Mitsui is A. They are well versed in business but not well versed in technology. So you have to arm those business professionals with digital technology as much as possible. And that's what we call the super users and base-level raising. And then the C, DX technology professionals or what we call top experts. So they are data scientists or cybersecurity experts or user interface experts. So they are people outside of the company, but there's MKI, wholly owned company, Mitsui Knowledge Information, the other affiliate, and those people will be internalized. And also, we will foster some talent within the company as well. But A is not -- A and C are not enough to do the digital transformation. We need, B, DX business professionals, who are highly knowledgeable in both -- about both business and digital technologies. And we will foster 100 people globally internally. So it's not just in Japan. But in Asia, highly skilled people are already our employees, and they are working on IHH. Now this is the last slide for me. So for your reference, this is d.space. Just for your information. In this building, on the 25th floor, there is what we call d.space. And the DX practice and research experts are stationed, and you can talk to them for consultation. As you can see in this photo, there is a lot of artwork. And once digital technology become commoditized, then you would need this artwork. And so artwork is also there. So this is very special place. So when you have the opportunity to visit our building, please also go visit this floor. So that was the DX strategy. So you strengthen existing technology -- businesses with digital technology and create new businesses and take further advantage of data and foster people to support them by doing all of these. Compared to other companies, we have been establishing overwhelming track record. And we need to keep creating more and take on challenges to create something new. So Mitsui's DX integrated or comprehensive strategy, what is going to happen? I hope you will stay tuned. Thank you for your attention.

So thank you very much, Mano-san. So next, from the Energy Solutions Business Strategy and Healthcare Nutrition Business Strategy, we would like to move into the Q&A session. For DX Q&A, we have allocated a Q&A session within the panel discussion. So we will answer questions on that occasion. So we are now redoing the stage. [Presentation]

Thank you very much for waiting. We have on stage Matsui-san from Energy Solutions and Sugahara-san from Healthcare Service, and we would now like to begin the Q&A session. And as was like the previous question, one question per person, please, we request. And we do have some questions that have been submitted online. So let me start off with that. So this is a question towards Energy Solution. So renewable energy business, in general, from the perspective of sustainability, it will enhance reputation of the company, and through capital cost reduction, it will actually elevate the corporate value. So that is one way of thinking. But at the same time, the competitive landscape is quite heated. So perhaps it will be difficult to create that profit and perhaps it will be difficult to generate value. So how do you plan to expand and how do you plan to be creative to enhance profitability? And how do you plan to acquire a leading position in light of elevating your reputation? We do have another question as well. And this, again, is a question for Energy Solution. Under the new administration, Japan is aiming for carbon neutral. So hydrogen business here in Japan, is that a possibility? And what would be some of the policies that will become a prerequisite for this business to flourish? So Matsui-san, I would like to hand it over to you.

So thank you very much for the questions received online. So the very insightful question. The first question I would like to respond first. So for Mitsui & Co., sustainability and materiality are obviously on the top of our minds when we pursue our management of the company. And at the same time, as we show in the corporate strategy, Transform & Grow is also an objective. And in parallel with all of this, we do have to generate value as well. So this means that we will have to operate both wheels simultaneously. Now in the area of renewable energy, the competitive landscape, it's true it has become quite heated, as you rightly point out. So for Mitsui & Co., it is not just about the brand business or rather than just acquiring companies. Rather than taking that approach, as was explained in the previous presentation, it will be about us contributing and nurturing a business. So this is how we want to approach this market. Now internally as well as within our business unit, we often discuss that. It's not about having the money work for you. It is about having very strong talent within the company, and they have to be focused on creating that value for the company. As was shown in ForeFront Power and the example that I cited, we, as a 100% wholly owned company, we are contributing to the growth of that company, not just for solar energy, but also combining that with the energy storage business as well. So that is how we are generating that value. LanzaTech is another where we create ethanol from waste gas, so they have solid technology. And how can we propel business evolvement? And here, our global network comes to play, and we connected that to a project in China. So in this manner, we want to contribute and create that value. Now the second question about hydrogen business here in Japan. First and foremost, hydrogen is still costly at the moment. So what we feel is important is that demand is properly generated and we scale, and hence, costs to come down as a result of the scaling. So here in Japan, in terms of capacity of power generation, the Japanese government will further deliberate on our energy policies. And again, here in Japan, how do we handle our nuclear plants, power plants? Or how do we elevate the ratio of renewable energy within the entire energy portfolio? That will be the first discussion. And carbon neutral by 2050 is the goal that has been committed to. And so hydrogen will perhaps play a major role in attaining this goal. At least that is my personal outlook. So that does mean that cost reduction will be quite important. And local production as consumption, we do hope that hydrogen can play a major part, and we will also focus on markets that are advanced as well to contribute to this. So we have a hydrogen value chain promotion committee, and we have been designated as one of the founding members. And so through such activities, we do believe that we can further accelerate and contribute to our hydrogen business within Mitsui.

We'd like to move on to the next question. If you have a question, please raise your hand.

Thank you very much for the explanation. I have a question for each one of you. For Energy Solution, as for Mitsui, from a long-term view, are you talking about profits, revenue? And also, what are the impact that you are expecting to come from? Which businesses are you expecting from revenue and also for CO2 reaction? Which area are you expecting the most impact to come from? And the next question is on Healthcare. In Japan, business development was explained. I'm sure there are many challenges. But at Mitsui, what are the initiatives that you would like to work on to make it possible?

So let us have Matsui-san respond to the first question.

Our CO2 deduction impact, we have 3 slogan, so to speak, that we are focusing on. Reduction is one. So this means that for Mitsui & Co., the projects that we handle, we have to contribute to decreasing emission. The next is transition. So our current power generation portfolio. And within this current portfolio, we will lower the ratio of coal power and shift the portfolio. For instance, enhance the gas ratio in our portfolio to within the portfolio, reduce CO2 portfolio, as well as enhanced renewable energy ratio within our portfolio. So we will focus on this transition. Now the third is opportunity. And I believe this leads to the question as well. So we will contribute solidly to the deduction of CO2, but at the same time, focus on business. And so in the immediate future, solar as well as wind, in other words, renewable energies, will be a focus and the storage battery business that stems out from that will be a focus and also in a more long-term EV as well as electricity combined. So there will be business opportunities in this avenue as well. So this will be a focus for us. Now for low carbonization. In terms of fuel, this means that we will focus on biofuel as well as hydrogen. So we need to embrace these areas as well. So these will be our immediate pillars that we will be focusing on.

Mr. Sugahara, would you like to take the next question?

Yes, thank you very much for your question. Of course, Japan is an advanced country and what are the challenges and initiatives we'll be taking was a question. Here in Japan, as you know, we do have Health Care Act. And hospital management, it's very difficult for private companies to be involved in. The hurdle is very high. And in that environment, we have this space here in Japan, therefore, we have to think about what we can do. We have to work on ancillary business of the hospitals, as I explained in my presentation. Preventive medicine is something that we can work on to prevent chronic diseases to go severe. So we call it hospital, peripheral and ancillary businesses. And these are the areas in which we, corporations, can play a role. As for the business portfolio, in April, we have made full subsidiary for [indiscernible]. [indiscernible] is a publishing company, and this has a very long history. So we have made it 100% subsidiary. And we will work on digitalization. We have to ride the wave of digitalization, so that we can chase the publishing industry and change the customer network and combine it with digital so that we'll be able to work better and focus more on preventative medicine. I think we have a role to play. And recently, as media has been taking, we have this electric imager business, nobody that is taken from the cloud. And this company is working with M3 or Alibaba using AI to provide remote imaging services. During the corona pandemic, this is highly evaluated. So using digital, we will be able to play a role in the ancillary hospital business. I'm sure there are many things that we can do. So linking all these opportunities, I think, is important. And in Asia, of course, we have challenges as an advanced country, but we are medically advanced. So I think there are many business bases that we can develop and expand to the Asian countries. So that is what we'd like to focus on going forward.

Thank you very much. So we'd like to take the last question. We have a question online. Next question is on hydrogen. When it comes to hydrogen business, as a trading company, which area of the value chain are you going to gain profit or added value in the upper stream, in the production of hydrogen or in transportation or in the downstream about power generation or about transport fuel? This is the question. Mr. Matsui, please.

So for Mitsui & Co., the value chain for hydrogen and the various aspects of this value chain, I can say that we can leverage our insight that we have accumulated as well as our network. So in various areas of the value chain, we do believe that we can reap opportunity. So from the upstream, if I may start from the upstream, in regards to hydrogen for the future, a cleaner production of hydrogen. In other words, the blue hydrogen, so this is hydrogen created by gas and the CO2 emitted will be captured. So for carbon capture, our oil and gas experience can be applied. Now for green hydrogen, which is the renewable energy power generation electricity, and we utilize this electricity to extract hydrogen from water. And again, our power generation projects and businesses experience can be applied. Now in the area of transport, with the support of [ Neddo ] here in Japan, we are using a technology called MCH and through our various JV activities with our other companies, we are conducting a POC. And so we do believe that we can contribute in this arena as well. Now for the usage of hydrogen, again, as I presented today, California, which is advanced in terms of its regulations, we do have hydrogen stations and we offer hydrogen supply. So this know-how can be expanded globally. And so throughout the value chain, we do believe that the strength of Mitsui can be applied. Thank you very much for the question.

With that, we'd like to close this Q&A session. Please leave the stage. Thank you. Now we would like to take a break. During the break, there are 2 videos that we'd like to show you talking about Mitsui's initiative. These were taken 1 year ago and 2 years ago, respectively. And these are cases in which we have seen progress. So I hope you enjoy the video. So we'd like to restart at 3:44. Thank you. [Presentation]

Now we'd like to start the panel discussion. As moderator, I have the pleasure to introduce Yumi Yamaguchi, Deputy CSO, Deputy CDIO. Now over to you, Yamaguchi.

I'd like to start the panel discussion. The theme of the discussion is practical application of corporate strategy, strength in business management capabilities, integrated DX strategy. The strengthening business management capability is a core strategy with the medium-term management plan to transform and grow, but has increased in importance amid recent developments. In addition, the integrated DX strategy that was reported earlier is essential if we are to respond to changes in the business environment and turn these changes into opportunities. We will pursue transformation through implementation of these 2 strategies, but today's panel is comprised of the 5 people who are responsible for doing just that. Now let me introduce the panel members from the left from your side, Shinichiro Omachi, Representative Director, Senior Executive Management Officer, Chief Strategy Officer. Next to him is Executive Officer, General Manager of Corporate Planning & Strategy Division, Takeshi Akutsu; and General Manager of Corporate Development Division, Corporate Development Business Unit, Daisuke Ishida; with Representative Director, Senior Executive Managing Officer, CDIO, Yoshio Kometani; Managing Officer, General Manager of Integrated Digital Strategy Division, Yuji Mano. So those are the 5 members, and moderator is myself, Yumi Yamaguchi. Now before going into the main topic today, in the corporate services, we have taken up the business management capabilities as first. What was the background of that? And how we are looking at business management capabilities reinforcement? And what sort of approaches were taken? And what was the effect by the COVID-19? Mr. Omachi, please?

Thank you very much. So as a first of the corporate strategies, the business management capabilities reinforcement has been taken up. And the background for that is that for our growth, the enhancement and quality of existing businesses is indispensable. And we have to have entire company effort to support that. And that is the first reason for taking up this strategy as corporate strategy. So far, we have been making a lot of investments in various projects, and we have been building up assets and businesses. But of those, on the capital invested, there has been not enough return recouped in some cases. So there are businesses or projects that are struggling. The businesses are not making progress as expected or businesses that are making progress as expected. So for those that are struggling, how to realize turnaround and how you can change and what should be changed to improve profitability. And for those businesses that have been producing a certain results, in what way we should encourage them to move forward to the next phase to improve the corporate value further. So these are the important thinking. And as I explained later, through various measures, including DX and at each site, the status of the business should be visualized and the issues should be analyzed so that responsive action should be taken quickly. And this would lead to the transformation of the company. As President Yasunaga said earlier, as we anticipate the new normal, as we coexist with COVID-19, in order to realize the profitability that was realized before COVID-19, in March 2023, we have to speed up our measures toward medium-term management plan. But what we are focusing on in order to have future growth is the energy solution and health care and nutrition that were presented earlier. And also, there is a consumer business centering in Japan and the rest of Asia. So similar efforts are being made, but we need to make this lead to the profits. And we need to enhance the business capability -- business management capabilities in order to do that. Thank you.

Now let us dive into the actual contents of business management capabilities reinforcement, what are the measures? And what about the overall picture? Mr. Omachi, once again, can you explain more about this?