AGC (5201) IR Day 2024 Day 1 summary

Group Strategy and Financial Targets

• Targeting ROE of 8% by 2026 to cover capital cost, with a focus on improving and stabilizing ROE through portfolio transformation and profitability enhancement in each business.

• Strategic investments prioritized in growth businesses, with a JPY 200 billion strategic investment budget and over JPY 1 trillion operating cash flow envisioned.

• 2026 targets include ROE of 8%+, EBITDA of JPY 440 billion+, operating profit of 230.0 billion yen or higher, and debt-to-equity ratio of 0.5 or less, with 2030 targets as the long-term goal.

• Capital allocation shifts from core to strategic businesses, with increased dividends (approx. 3% DOE) and potential share buybacks if attractive investments are lacking.

• Strategic businesses to contribute the majority of group operating profit by 2026.

Status Quo Analysis, Direction, and Key Strategies

• ROE is below capital cost, with a target to reach 8% by 2026 to surpass the cost of capital.

• Focus on accelerating corporate transformation, maximizing value, and deepening sustainability management.

• Promotion of digital transformation (DX) and strengthening management foundations.

• Emphasis on evolving the ambidextrous strategy.

Capital Cost and Capital Return Analysis

• Current ROE averages 4.8% over six years, below the 8% capital cost.

• 2026 ROE target is set at 8% or above to achieve a P/B ratio greater than 1.

• Industry PBR averages 1.1x (simple) and 1.5x (weighted), with improvement targeted.