P.9 Message from the President and CEO

9 Introduction

Message from President and CEO

Q4.

You have also said that you plan to pursue an “asset-turnover” model. How will you go about this?

The Group has refined a business model that creates value through the development and operation of assets in such areas as real estate and energy infrastructure, including power plants. Going forward, we will take this a step further by selling assets after enhancing their value and using the cash generated to drive the next stage of growth. We are already doing this extensively in our real estate business, where we develop and operate assets to enhance their value, sell them, and then reinvest the generated cash in the next project. In our energy infrastructure business as well, we will take an integrated approach encompassing development and operation to recovery of invested capital through asset sales. We are also strengthening our leasing businesses, which generate earnings by mobilizing assets. Rather than simply owning and leasing assets like aircraft and vehicles, we will also provide services, such as asset management and maintenance, while flexibly acquiring and selling assets in response to market conditions. While market liquidity is important for this type of business model, it only works because of the strengths our company has cultivated over many years. In our development businesses, for example, the properties and power plants we build create enough value to attract buyers in the market. I believe this reflects the well-established reputation that “If Sumitomo Corporation built it, you know itʼs good.” We enhance the value of assets, find the best way to realize their full potential, and use the proceeds to drive further growth. By accelerating this cycle, we will generate greater cash flows and build stronger earning foundations for each of our businesses. From the perspective of our overall business portfolio, we will also steadily continue the asset replacement initiatives we have been pursuing. Over the three-year period from FY2026 through FY2028, we plan to replace approximately ¥1.2 trillion in assets. This is not simply intended to offset the cash outflows associated with major investments. Rather, by recovering capital from businesses with low profitability or growth potential, we will accelerate portfolio renewal and reallocate management resources to areas with greater growth potential.

Q5.

How will the Digital & AI Strategy (DAIS) strengthen the Groupʼs earning power?

As its name suggests, DAIS is the acronym for the Groupʼs Digital & AI Strategy. It is a growth strategy for leveraging digital technologies and AI across all of our businesses to build new value creation models and lead the social and industrial transformation. DAIS is built on three strategic pillars. Pillar 1 is the growth of SCSK itself. As its parent company, we will support SCSKʼs self- directed sustainable growth. SCSKʼs strength lies in its ability to provide end-to-end IT services, from system development to network and other IT infrastructure. By leveraging these strengths to further enhance its growth potential, while accelerating the shift to an AI-driven business and evolving toward an offering-based business model, SCSK aims to double profit from the FY2025 level in FY2030 while achieving an operating profit margin of 15% or higher. Pillar 2 is the growth of the Sumitomo Corporation Group. By deploying digital technologies and AI across our business operations, we will improve ROIC through both sales growth and cost reductions. Pillar 3 focuses on growth through collaboration between Sumitomo Corporation and SCSK. My message to SCSK is simple: “Rather than having the Sumitomo Corporation Group make use of SCSK, I want SCSK to make full use of the Sumitomo Corporation Group.” SCSK offers digital solutions, while the Sumitomo Corporation Group has business frontlines in which to apply them. If we can identify fundamental challenges in the frontlines, solve them using SCSKʼs expertise, and then scale those solutions across industries and SBUs*, we can create even greater value. Over 70 specific initiatives are already underway, including AI-powered automated ordering and price optimization at Summit supermarkets, AI applications in logistics, and efforts to enhance and streamline corporate functions. We are now in an era where failing to use AI is itself the greatest risk. Through DAIS, we will evolve into an integrated trading company that fully harnesses digital technologies and AI to generate earnings. However, what I focus on with DAIS is not simply deploying technologies. It calls for us to redefine the value customers truly seek, convert tacit knowledge into explicit and organizational knowledge, and create new value by addressing fundamental challenges. Our people are uniquely positioned to identify these challenges because of their hands-on experience in running businesses. We will arm them with SCSKʼs expertise for deployment across our businesses. This is where our unique competitive advantage lies. By pursuing the growth of SCSK, the growth of the Sumitomo Corporation Group, and growth through collaboration between the two as an integrated strategy, we aim to achieve our target of raising Group-wide ROIC by 1.0 percentage point through DAIS by FY2030, thereby further strengthening the Groupʼs earning power.

* SBUs: Strategic business units