P.33 Special Feature: Digital & AI Strategy (DAIS)

33 01. Value Creation Stories for the Future

Special Feature: Digital & AI Strategy (DAIS)

Q1. Investor and analyst perspectives

While investors are paying close attention to DAIS, their primary concern is not simply whether it advances digital transformation. Rather, what matters most is whether DAIS can enhance brand value and corporate attractiveness through higher ROE, stronger cash flow generation, and profit growth, ultimately leading to a higher corporate valuation. That said, what specific areas does Sumitomo Corporation aim to achieve an overwhelming No. 1 position in through DAIS? While SCSKʼs strengths are well understood, which indicators or area should investors focus on most closely as the company transforms its earnings structure and pursues higher profitability?

Answer

Sumitomo Corporation is currently collaborating with SCSK across a wide range of fields. Among these, there are two fields where collaboration has the potential to deliver transformational change. The first is the mobility sector. By combining SCSKʼs expertise in vehicle design with Sumitomo Corporationʼs strengths in the automotive sector, we aim to pursue co-creation across the entire mobility ecosystem. We believe this has the potential to develop into a significant growth business. The other is urban development. With implementation sites already in place, including Hakozaki in Japan and North Hanoi in Vietnam, we envision comprehensive diverse urban development and sustainable cities powered by SCSKʼs technological capabilities. As shown below, we have a robust pipeline of additional collaboration opportunities. We encourage investors to focus first on how Sumitomo Corporation and SCSK are driving transformation together through these initiatives.

Pillar 2

Growth of Sumitomo Corporation Group through DAIS

The society and industries Sumitomo Corporation Group will create

• Optimization of renewable energy supply–demand balancing
• Digital ecosystems for urban development
• AI platform for the investment life cycle
• Infrastructure maintenance using next-generation communications and AI
• Supply chain transformation
• Advancement of

retail operations Establishment and expansion of digital infrastructure and industrial foundations

Growth through Pillar 2 Leverage DAIS to increase sales, reduce costs, and improve ROIC Sales Costs ROIC improvement FY2025

Sales expansion through DAIS

• Strengthening application business initiatives and expanding new revenue streams
• Creating revenue opportunities through customer business transformation and advancement
• Developing data-driven platform-based businesses
• Expanding sales in digital infrastructure-related and device businesses Cost reduction through DAIS
• Improving productivity in the sales frontline
• Advancing and optimizing corporate organization
• Reducing inventory and working capital (Achieving benefits that outweigh the increased costs associated with digital and AI adoption)

Pillar 3

Growth through collaboration between the Sumitomo Corporation Group and SCSK

▍Three categories of collaborative business initiatives to be promoted

1 Combine each companyʼs strengths in capabilities

Combine the strengths of both companies

• Domain

expertise

• Business

frontlines/customer network

• IT infrastructure
• SI
• Security
• Digital solutions Global customer base Cloud Digital and AI BPO Sales/proposals Sales/proposals Markets/customers Markets/customers Examples Steel sector: Explore ways to enhance steel trading and SCM Manufacturing: Support global expansion of manufacturing companies

2 Combine each companyʼs businesses

Joint sales, new solutions, and new business models Markets/customers

Examples Mobility: Explore collaborative business opportunities for the automotive industry centered on OEM engineering

3 Leverage Sumitomo Corporation and its group business frontlines to develop and validate solutions

“First customer” strategy

STEP 1 “First customer” Solutions development Enterprise systems Security Industry-specific solutions Industry-specific solutions

STEP 2 Market rollout

Examples Enterprise systems and security: Consider deployment within the Sumitomo Corporation Group while assessing broader market potential