AMITA HOLDINGS CO.,LTD. Q4 FY2024 earnings call

Company Strategic Direction

• Management frames the company's work as addressing latent social demand for sustainable transition: moving beyond traditional compliance-focused ESG (defensive ESG) to outcome-focused sustainability management that transforms core business models. The long-term vision is to help shift Japan from an economic superpower to a circular economy superpower, creating a new "relational domestic demand" market that addresses social issues like loneliness and declining social connection.

Organizational & Operational Updates 2024

• Redesigned the 2030 roadmap in 2024, redefining 2024 and 2025 as the infrastructure building period after unexpected global events (Russia-Ukraine war, Israel-Hamas conflict) delayed original infrastructure completion plans.
• Shifted from a hierarchical organizational structure to a flexible ecosystem-based structure, reduced reliance on individual senior managers, strengthened on-site expertise and management accounting-based forward planning.
• Achieved compliance with Tokyo Exchange listing maintenance standards for tradable share ratio after targeted improvement efforts.
• Launched two new joint entities: Circular Links Inc. with SMFL Group, and the two Indonesian JVs for circular materials business.

Mid-Term 2030 Strategic Priorities

1. Cyano Project Enhancement: Strengthen consulting capabilities through external partnerships, expand proof-of-concept support for new circular business development, and scale sustainable non-core business process outsourcing (BPO) for corporate clients.
2. Circular 3.0→4.0 Implementation: Achieve full automation of circular resource production by 2027, expand capacity to process 18 types of small-batch diversified waste (up from 7-10 types currently), and achieve a fully data-driven optimized circular supply chain by 2030.
3. MEGURU STYLE Development: Scale community-based resource collection station (MEGURU STATION) deployment to build regional circular economy models that address expected future collection labor shortages, starting with full-city deployment in Kameoka City.
4. Circular Platform Construction: Establish the "Remix Model" consumer information database to combine people movement and goods movement data for demand forecasting, enabling optimization of circular supply chains and addressing social issues like transportation access gaps.

Overseas Expansion Strategy

• Amita has an experiential advantage in ASEAN, where rapid economic growth is replicating the industrial development path Japan experienced 40 years ago, creating fast-rising demand for circular economy solutions. The strategy focuses on building local partnerships with leading regional conglomerates to adapt to local market conditions and culture. Expansion priorities are Malaysia, Indonesia, and India.

1. Cyano Project (corporate sustainability management transition support):

   • Transition strategy consulting: Inquiries and orders both exceeded prior year levels; 26 new client companies ordered in 2024 (average 2 per month), with Q1 2025 inquiries growing. The segment grew driven by rising demand for substantive circular business model transformation rather than passive ESG disclosure.
   • Circular resource manufacturing & provision: Sales, operating profit and operating margin all grew year-over-year, supported by expanding corporate demand for sustainable materials amid rising resource supply chain risks. The segment executed new circular resource development projects with semiconductor industry partners, and announced a new next-generation automated factory in February 2025.
   • Environmental management process outsourcing / supply chain management system development: New projects grew through partnership with SMFL Group, driven by corporate demand for process efficiency amid labor shortages.

2. MEGURU STYLE (regional integrated solution for 4 key regional challenges: population decline, aging population, shrinking employment, rising social security costs):

   • 9 social/concept proof projects were completed in 2024, plus 2 strategic partnerships. A formal partnership agreement was signed with Kameoka City, Kyoto to launch city-wide MEGURU STATION deployment. MEGURU STATION is now deployed across 17 locations in 6 regions globally (including 1 new location in Malaysia in 2024).

3. Environmental Certification Audit Service:

   • Demand for forestry and fishery certification grew substantially amid rising focus on natural capital, but the segment faces a bottleneck of shortage of qualified specialized auditors.

4. Overseas Business:

   • Malaysia: Circular resource production volume grew 17% year-over-year, with dividend reaching an all-time high. The 100% owned overseas holding company AMITA CIRCULAR DESIGN SDN. BHD. was launched in April 2024 to oversee ASEAN expansion.
   • Indonesia: Two joint venture companies were established with major local conglomerate partners in 2024, in preparation for future circular resource production facility operation.

• The 2025 fiscal year is the final year of the infrastructure building period; management aims to complete all base infrastructure preparation and transition to the market expansion phase starting in 2026.
• Dividend guidance: 4 yen per share for 2024 (as previously guided), 5 yen per share for 2025, with a long-term target of reaching a 30% payout ratio once the market expansion phase begins in 2026-2027.
• 6-year mid-term sales guidance: 5.3 billion yen for 2025, 6.0 billion yen for 2027, 8.7 billion yen for 2030, with improving profit margins over the period.
• Key 2025 milestones: Full-speed city-wide MEGURU STATION deployment in Kameoka City; secure all necessary permits for the 2027 Indonesian circular resource production facility launch; complete development of the Amita-style inbound marketing flywheel model for Cyano Project sales.
• Long-term: Amita targets becoming a "Do Tank" (action-focused implementer) rather than a traditional think tank, building a new industry focused on circular economy solutions for Japan and exporting this model globally.

• Geopolitical instability (Russia-Ukraine war, Israel-Hamas conflict, shifting global trade regimes) has already caused delays to original infrastructure development plans and increases broader market uncertainty.
• Growing global trade fragmentation increases resource supply chain risks and macroeconomic instability, though the company views a strong domestic circular economy as a mitigant to this risk.
• Japan's structural demographic decline (aging population, shrinking working-age population) creates operational bottlenecks including labor shortages for waste collection and a shortage of qualified specialized auditors for the environmental certification segment.
• Overseas expansion carries inherent risks from unfamiliar local business customs, regulatory requirements, and market conditions, which management mitigates through deep local partnerships.
• The company's focus on developing new early-stage markets means growth relies on converting latent unmet social demand into tangible commercial markets, which carries execution risk.

The provided transcript does not include a transcribed question and answer section, so no key exchanges can be summarized.