P.67 Transportation & Construction Systems Group

67 03. Performance & Data

Transportation & Construction

Systems Group Drive ESG management in the construction equipment, shipping, and aerospace businesses, and leverage financial solutions and cutting- edge technologies to create new social value in the global market.

Main relevant material issues Takao Kusaka Group CEO, Transportation & Construction Systems Group

▍Quantitative information

• 2,000　1,500　1,000　500　0
• 15　10　5　0

FY2025 Investment｜Approx. ¥50.0 billion

Main investment areas

• Acquisition of U.S. aircraft leasing company
• Acquisition of leading helicopter leasing company by SMFL

Major asset replacement

• Divestment of shipping business assets

▍Business Development

• Leasing SBU
• Commercial Aviation SBU
• Aerospace Defense & Technology SBU
• Ship & Marine SBU
• Construction & Mining Systems SBU Sumitomo Mitsui Finance and Leasing (SMFL) (Leasing and financing)

SMS Equipment (Construction and mining equipment sales and services) SMBC Aviation Capital (Aircraft leasing) Oshima Shipbuilding (Shipbuilding) Sumisho Air Lease (Aircraft leasing) Sunstate Equipment (Construction equipment rental) Werner Aero (Aftermarket aircraft parts)

▍External Environment: Business Environment

Opportunities

• Projected growth in demand for passenger air travel, aircraft, maritime freight transportation, and construction driven by global population growth
• Growth in government spending on defense and space driven by increasing importance of national security
• Growth in investments to meet rising demand for renewable energy,

including solar and offshore wind power

• Increasing opportunities to accelerate R&D and create new businesses through the use of new technologies
• Growing demand for low-carbon and decarbonization products and services

Risks

• Heightened geopolitical risk
• Existing financial business maturing and facing intensifying competition
• Labor shortages in manufacturing, maintenance, repair, and other frontline activities
• Increased competition and high steel prices in the shipbuilding industry

▍Internal Environment: Key Strengths

• Track record of providing financial solutions and solution capabilities in a wide range of industries
• Expertise in aircraft, engine, and helicopter leasing and maintenance businesses in commercial aviation sector, supported by one of the worldʼs largest leased aircraft fleets
• Business experience in aerospace, security,

and precision technology areas and positive approach to new technologies

• Comprehensive business group and solid customer base covering ship manufacturing,

trading, operation, and chartering

• Management track record and talented human resources in our construction equipment sales/service dealers and rental companies

▍Business Strategy

• Increase prime assets and improve asset efficiency in the general leasing and aircraft leasing businesses and establish the “Assets × Finance × Services” business in new areas, such as GX
• Expand the agency business in aerospace defense fields, add inventory and maintenance functions, and incorporate new technologies
• Strengthen market resilience in the ship business, expand the ship-owning business, and actively invest in offshore wind power and other marine development fields
• Broaden the customer base and provide on-site support solutions through regional and product expansion in the construction & mining equipment business

▍Medium-Term Management Plan 2026

Initiatives in final year of medium-term management plan

• Leverage complementary strengths of SMBC Aviation Capital and newly acquired Sumisho Air Lease to expand earnings base
• Expand existing market share and improve asset efficiency in the construction equipment rental business through operational improvements
• Expand investments in defense, space, and new technology sectors

Initiatives for next medium-term management plan

• Drive organic growth by continuously strengthening governance at business companies and transforming business models and operations through the use of digital technologies and AI
• Leverage strengths in strategic business areas to accelerate inorganic investments and new business development

▍Key Market Trends

Capitalizing on forecasts for air passenger volume, which is expected to recover in the short term and normalize in the medium to long term, we will work to accumulate prime assets across the Group.

Global air passenger forecast (Billions of people)

• UP: Air passenger demand benefits from more favorable macroeconomic conditions
• DOWN: Weaker macroeconomic conditions inflict lasting damage
• Baseline
• 10 9 8 7 6 5 4 3 2 1 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041(Year)

Source: IATA “Global Outlook for Air Transport” https://www.iata.org/en/iata-repository/publications/economic-reports/global-outlook-for-air-transport- june-2024-report/