2195.T

• Business Model Transformation & Base Preparation (2024-2025 Base Preparation Period)

  • After the COVID-19 shock and the Russian invasion of Ukraine, Amita revised its mid-term roadmap to position 2024-2025 as a Base Preparation Period, prioritizing completion of business model reform and recovery of performance, while laying groundwork for future market expansion. Management completed integrated reform across five core strategies: product, sales, production, partnership, and organizational strategy.
  • Product strategy: Previously fragmented services (circular economy, BPO, consulting) were consolidated into two core offerings: Cyano Project (end-to-end customized support for corporate sustainability transition from consulting to operations) and MEGURU STYLE (integrated solutions for regional social issues).
  • Sales strategy: Shifted from traditional sales-focused outbound selling to pull-type solution-focused selling, building an inbound marketing structure and integrating sales activities.
  • Production strategy: Overhauled production strategy to prioritize the rapid advancement of AI integration.
  • Partnership strategy (called "Endoskeleton Management"): Amita retains core competitiveness built on 45+ years of circular economy and sustainability expertise, concentrating management resources on this core area while partnering with aligned external firms for all non-core activities to build a change-resilient business structure.
  • Organizational strategy: Added process-focused OKR management to traditional KPI-centered management, aligned to Amita's unique business characteristics.
  • Developed Circular 3.0, a new resource productivity-focused business model for circular material manufacturing, featuring three core components: 1) A unified incoming/outgoing reservation system that centralizes information on generator byproduct output and recycler demand to optimize logistics and scheduling; 2) A fully automated, unmanned smart factory that uses AI-powered ingredient simulation to generate circular material recipes and automatically controls manufacturing equipment, eliminating manual labor risks and enabling production in previously hard-to-operate areas; 3) A conversational AI Circular Chatbot that generates new circular material development ideas from internal and public data. The new smart factory in Himeji is scheduled to start operation in July 2026, with full unmanned operation planned long-term.
  • Market and Industry Landscape Perspective
  • The industry is shifting from the "labor productivity" model of the industrial/information age (focused on making and selling goods) to a "value productivity" model, driven by the rise of multi-agent AI. Value productivity is built on three pillars: 1) Resource productivity (circular economy that cycles materials); 2) Information productivity (DX that leverages stored information rather than just diffuse data); 3) Relationship productivity (AI that strengthens stakeholder relationships).
  • Growing underlying tailwinds for Amita: The circular economy market is expanding, mandatory sustainability disclosure for large Japanese listed companies (market capitalization over 3 trillion yen) starting from the fiscal year ending March 2027 (the "2026 Sustainability Problem") is increasing demand for core sustainability services. Essential sustainability management needs are becoming more explicit as the market matures, beyond just disclosure compliance.
  • In the multi-agent AI era, human will becomes the core driver of a new "value society"; Amita's competitive advantage lies in areas hard for AI to replicate: hands-on implementation, BPO and on-ground deployment, and practical sustainability expertise built over 45+ years.
  • Mid-Long Term 2030 Strategy
  • Amita aims to become a circular platform provider building a "social issue solution market", which management identifies as the largest remaining growth market in Japan, the world's leading issue-ridden mature economy. The core is the Circular Platform that integrates resources, information, and relationships, with the Remix Model that uses predictive data to eliminate waste and optimize corporate and regional operations.
  • Two core business pillars for 2030:
  1. Cyano Project: The new SEA executive community service launching in April 2026 supports executive decision-making for sustainability transformation by providing shared dialogue, AI tools, and strategic frameworks to improve decision quality. The reorganized Cyano Project supports corporate sustainability transition across two phases: (1) Conception: improving the resolution of strategic decision-making for executives; (2) Implementation: turning strategic decisions into tangible blue-ocean business results that deliver social impact. A major new focus is helping Japanese firms leverage their traditional strength in reliability and trust to create competitive advantage in a new service-oriented industrial landscape.
  2. MEGURU STYLE: This regional solution business aims to complete a new regional operation model by 2029, centered on the "Regional Circular Symbiosis Bond", a Japanese-style revenue bond structure that allows ordinary citizens to invest in local issue-solving businesses, with returns generated from reduced waste disposal and social security costs that are returned to investors as interest. This structure unlocks Japan's 2,300 trillion yen in household financial assets to invest in local problem solving, creating a new market.
  3. Overseas Business: Amita is expanding overseas centered on ASEAN, where rapid economic growth is leading to the same environmental and resource issues Japan previously faced, creating opportunity to deploy Amita's domestic circular economy expertise. Amita currently has projects ongoing in Malaysia, Indonesia, India, and Palau.
  • Governance and Strategic Architecture Reform
  • Management shifted to an offensive governance structure to accelerate pre-emptive investment: extended director terms from 1 year to 2 years to support consistent execution of mid-long term strategy, with increased proactive information disclosure to maintain transparency. Redefined corporate priorities: shifting from sales-oriented to profit-oriented management, positioning the social issue solution space as the core market opportunity. Amita now invests in talent and relationships as capital (rather than accounting costs), with a new approach to ROIC that treats these investments as invested capital.

• 2025 full-year financial performance was revised downward from the initial forecast. Revenue missed the initial target by 430 million yen, operating profit missed by 217 million yen, ordinary profit missed by 287 million yen, and net income attributable to parent shareholders missed by 215 million yen. Management apologized for the miss, citing slow strategic response to rapid market change.
• Amita reclassified 2026-2027 as the Market Expansion Period, transitioning out of the 2024-2025 Base Preparation Period, with a goal of achieving steady performance growth based on the completed base. Mid-long term targets were revised to be more certain given current internal and external conditions, with a focus on preparing for the next market expansion phase after 2027.
• For 2026, Amita's five core priorities are: (1) Strengthen Cyano Project: target 50 member companies for the new SEA service, and 30 new solution clients sourced through SEA; shift to co-creation sales using AI agents to improve deal speed, quality, win rate, and reproducibility; (2) Advance Overseas Business: solidify and expand the business base in Malaysia and Indonesia; strengthen the 100% recycling business in Malaysia and prepare for the first overseas biomass energy project using palm oil production residue; start construction and secure financing for the Indonesian project on schedule for 2027 launch; (3) Develop MEGURU STYLE: complete base construction in 2026, expand MEGURU STATION to 23 locations across Kameoka City, collect data on resource recovery and community participation to develop the working prototype; (4) Strengthen value creation (productivity) via generative AI: establish an enterprise-wide AI utilization foundation that uses AI not just for efficiency, but as a decision support tool for strategy execution, with dedicated AI/DX staff deployed across all departments; (5) Strengthen business execution: integrate group strategy and execution via cross-appointment of Amita HD directors as CEOs of operating subsidiaries to speed up decision-making and improve execution accuracy.
• The dividend for 2025 is maintained at 5 yen per share in line with the initial forecast, with a resulting payout ratio of 28.2%, and management continues to target a 30% payout ratio going forward.
• After 2028, Amita plans to enter the Market Expansion Period, shifting from growth rate to evolution rate, with a core focus on creating and expanding the social issue solution market itself rather than just growing in existing markets.

1. Cyano Project: This corporate sustainability management support segment missed revenue and profit targets compared to plan and the prior year, due to delayed responses to changing market and business environments. The circular material manufacturing and supply (sustainable BPO) sub-segment faced reduced throughput, fewer high-margin processing projects, and delayed shipments, with profitability declining from manufacturing cost increases from higher depreciation after new capital investment. Silicon recycling volume grew year-over-year but missed plan due to weakness in the semiconductor industry. The supply chain management sub-business at Circular Links Inc. saw steady growth driven by customer demand for sustainable supply chain management and talent sourcing. New services Circular Co-Evolution (CCE) and Sustainable Executive Alliance (SEA) were launched in 2025 to develop new market opportunities.
2. MEGURU STYLE: This segment focused on solving four major regional social issues (population decline, aging population, shrinking employment, rising social security costs). Prototype development began in Kameoka City, Kyoto Prefecture, with the first MEGURU STATION hub opened in January 2025. MEGURU STATION currently operates at 19 locations across 7 regions; in Kobe City, Hyogo Prefecture, it has expanded to 70 locations through partnership with the city's existing EcoNova resource recovery network, gaining broad regional traction. No full financial performance figures or revenue contribution percentages were disclosed for this early-stage development segment.
3. Environmental Certification Audit Services: This segment grew steadily, with demand for certification expanding. The customer count for ASC/MSC CoC certification reached 107% of the prior year's level, marking consistent growth. Silicon recycling (cross-segment) and this segment overall saw confirmed year-over-year revenue growth.
4. Overseas Business: In Malaysia, inbound volume for the cement industry recycling project remained steady, but shipping costs increased significantly, leading to equity method investment income that missed initial forecasts; performance had improved by the end of 2025 after implementing diagnostic and consulting measures to clarify the value of Amita's circular materials. In Indonesia, factory preparation for a 100% recycling project is progressing on schedule for a 2027 launch. In India, Amita is conducting a joint feasibility study with leading local environmental firm Ramkey Group on decarbonization and circular economy projects. In Palau, Amita is developing a prototype low-carbon circular system for island resource circulation. Absolute profit results missed plan due to the Malaysia cost overrun impact.

• External market uncertainty: Ongoing geopolitical risks (including the Russia-Ukraine war, Iran-US-Israel conflict) and global market volatility have created high uncertainty for supply chains and energy prices, and compressed manufacturing client investment plans. Changes in US trade policy (tariff strategy) and China's deflationary exports have negatively impacted Japanese manufacturing client activity, delaying client projects.
• ESG demand slowdown: A recent shift in stance among large global financial institutions (such as BlackRock leaving climate action coalitions following the return of President Trump) has led to delayed customer decision-making and lower near-term demand for ESG disclosure, which negatively impacted 2025 performance. Management had not fully anticipated this shift in market sentiment.
• Internal decision delay: Amita's historical bias toward making decisions in the second half of the fiscal year, paired with over-reliance on observing customer reaction before acting, led to slow and untimely response to rapid 2025 market changes, resulting in the full-year profit and revenue miss.
• Overseas operational risk: Unexpected shipping cost increases in Malaysia led to lower-than-expected investment income from the local equity method affiliate, dragging down 2025 consolidated net income. While improvements were implemented by year-end, the project highlighted operational and cost risks for international expansion.
• Structural industry change: The global shift to a new uncertain, high-complexity operating environment, combined with rapid AI-driven technological change, means incumbents must adapt rapidly or lose competitiveness, creating ongoing execution risk for Amita's transformation.

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