Idemitsu Kosan : Integrated Report 2025 Message from Top Management

CONTENTS

Value Creation Story

Message from Top Management

Business Structure Reforms

Human Capital / Human Capital Strategy

Evolution of the Business Platform / Innovation Management

Sustainability

Corporate Governance

Data Section

Idemitsu Integrated Report 2025 6

• Message from the Chairman ■ Message from the President

  Message from the Chairman

  Pioneering a Sustainable Energy

  Future for Japan

  Representative Director and Chairman

  Shunichi Kito

  
  
  

  Against this backdrop, we announced a new management structure in February 2025. Since FY2025 marks the final year of the current Medium-term Management Plan and the start of full-scale discussions around the next plan, I have determined that this is the ideal timing to transition to the new management structure and pass the baton of the presidency. I will hand over responsibility for internal matters to the new president. As for myself, I will devote my full efforts to external activities aimed at realizing our Vision for 2050, Shaping Change, and further enhancing corporate value.

  Idemitsu Kosan's Mission and Management Structure

  At Idemitsu Group, we are fulfilling our mission of providing a stable supply of energy and materials while striving to achieve a carbon-neutral society by 2050 as we move forward boldly on energy transition. The business environment is undergoing significant, unforeseen changes, including a global pushback against decarbonization trends and rising geopolitical tensions. Even in this uncertain era, we are taking on the global challenge of the energy transition as a unified Group to remain a leading player in energy supply.

  Since my appointment as Representative Director and Chief Executive Officer in 2018, I have led a wide range of initiatives. Above all, I have placed the most significant importance on the People-Centered Management that has been a consistent pillar since our founding. Following the business integration

  with Showa Shell Sekiyu in 2019, I have focused on the integration of human capital from both companies, believing that transcending organizational origin is essential to unlocking the true strength of the organization and supporting sustainable growth. I firmly believe that our greatest synergy lies in each and every Group employee working with vitality and bringing their strengths to life in their respective workplaces.

  Under the current Medium-term Management Plan (FY2023-2025), we have committed ourselves to ensuring the stable supply of energy and to realizing a carbon-neutral society. As we pursue business structure reforms, we have made management decisions by carefully assessing long-term trends in demand for energy and materials and taking a prudent view of the timeframes involved. Going forward, we recognize that we are entering a critical phase, one that calls for prioritizing investment areas and optimizing resource allocation to achieve social implementation.

  Toward the Future of the Energy Industry

  Achieving a carbon-neutral and circular society requires a balance between energy security and a realistic energy transition. The stable and secure supply of energy is an essential foundation that supports the daily lives of people and economic activity. Through my roles as President of the Petroleum Association of Japan, a member of the GX Implementation Council, and other Keidanren-related activities, I will work closely with government agencies to offer policy recommendations aimed at ensuring the sustainable development of the energy industry. Amid increasing uncertainty due to geopolitical and natural disaster risks, fossil fuels and liquid fuels, which have high energy density and are superior in portability and storability, continue to play an important role. Recognizing this reality, I will promote the low-carbonization of liquid fuels while advocating for the importance of maintaining a stable energy supply and pursuing the optimal energy mix for Japan. We will remain steadfast in our mission to support Japan's energy foundation, including the petroleum industry.

  To all our stakeholders who continue to support our activities, I extend my sincere gratitude. Thank you in advance for your continued support and cooperation.

  CONTENTS

  Value Creation Story

  Message from Top Management

  Business Structure Reforms

  Human Capital / Human Capital Strategy

  Evolution of the Business Platform / Innovation Management

  Sustainability

  Corporate Governance

  Data Section

  Idemitsu Integrated Report 2025 7

• Message from the Chairman ■ Message from the President

  Message from the President

  Toward a New Stage of Growth: Embracing Change through

  People-Centered Management

  Representative Director and President

  Noriaki Sakai

  
  
  Upon My Appointment as President

  My name is Noriaki Sakai, and I assumed the position of Representative Director and President in April 2025.

  Since joining the company, I have worked in various departments, including sales, manufacturing, human resources, accounting and finance, and safety and environmental affairs. Through these wide-ranging experiences, I have come to strongly recognize that every role has its own mission, and that it is people who carry out these missions. People are the source of corporate value and the foundation of sustainable

  growth for a company.

  Our founder, Sazo Idemitsu, declared: "Our business is to develop people; the petroleum industry is merely the means." Developing people who contribute to society and are respected by others is the very purpose of our company. The attitude of each and every employee is to be Truly Inspired, as stated in our corporate philosophy. It has been the driving force that has enabled us to overcome numerous challenges and hardships. Our most important management resource is people, and we will continue to practice People-Centered Management going forward.

  The energy industry is undergoing a major transformation. As climate change emerges as a global challenge, financial and geopolitical risks continue to evolve, and people become more aware of energy security, society is becoming increasingly complex, and our business environment is changing rapidly. Even amid the energy transition toward decarbonization, our mission as a Group remains unchanged: to ensure a stable supply of the energy and materials that are needed right now. Having taken on the role of president at this crucial junc-ture-when we must accelerate our efforts and drive transformation forward-I feel a deep sense of responsibility and purpose.

  Looking ahead, what I intend to prioritize in management is balance. While the word "balance" may sometimes suggest a passive stance, I see it as a strong and deliberate effort to steer both offense and defense simultaneously. Ensuring a stable

  CONTENTS

  Value Creation Story

  Message from Top Management

  Business Structure Reforms

  Human Capital / Human Capital Strategy

  Evolution of the Business Platform / Innovation Management

  Sustainability

  Corporate Governance

  Data Section

  Idemitsu Integrated Report 2025 8

• Message from the Chairman ■ Message from the President

  Message from the President

  supply of energy and materials is the fundamental mission of any company in our industry, and that mission remains constant. In particular, existing energy sources will continue to play an essential role in supporting Japanese industry and people's daily lives for the foreseeable future. We must firmly maintain that foundation while simultaneously exploring new business possibilities. This is what it means to achieve both stability and change, and I believe that having a strong sense of balance will be more important than ever. It is about knowing when to accelerate and when to brake, and by doing both deliberately, making sure we continue to move forward.

  While it is difficult to predict what the future may bring, no matter what comes, I believe that by maintaining this focus on balance and empowering every employee-nurtured through our business-to perform at their best, we can move boldly into the future with both flexibility and strength.

  Vision for 2050/2030 and Basic Policy for 2030

  Smart Yorozuya

  While fulfilling our mission to provide a stable supply of the energy and materials needed today, we will also work to implement new forms of energy, materials, and solutions into society that contribute to a carbon-neutral and circular society. Because we have long provided society with a stable supply of large volumes of energy and materials, we believe we are uniquely positioned to lead the way as a main player in energy,

  materials, and carbon-neutral solutions well into the future. To contribute to a carbon-neutral and circular society by 2050, we view the environmental changes ahead as opportunities for business transformation and will promote the social implementation of new solutions. Our specific areas of business implementation are: Energy One Step Ahead, Diverse Resource Conservation / Circulation Solutions, and Smart Yorozuya. Energy One Step Ahead encompasses a range of initiatives designed to establish a stable supply of diverse, environmentally friendly, and carbon-neutral energy sources, including synthetic fuels, ammonia, and sustainable aviation fuel (SAF). Diverse resource conservation/circulation solutions leverages our accumulated technological capabilities to offer carbon-neutral solutions, such as high-performance materials and used plastic recycling, not only for industry but also for general consumers. Smart Yorozuya represents our vision to transform service stations across Japan into local "lifestyle support hubs" that support everyday life and help address regional challenges. Our brand, apollostation, will evolve to meet the unique needs of each community, embracing the concept of yorozu (unlimited diversity), and will serve as a base for supporting energy and mobility in local areas.

  Through the social implementation of these three business domains, we aim to fulfill our responsibilities both to support people's daily lives and to protect the global environment for future generations. This is embodied in our 2050 Vision: Shaping Change. Leading up to that, we have set forth our

  2030 Vision: Your Reliable Partner for a Brighter Future, identifying this period as a critical phase in which we will firmly uphold safe and stable operations at our refineries and complexes, fulfill our duty to ensure a stable supply of energy and materials, and bring to life our efforts toward realizing a carbon-neutral and circular society.

  
  
  

  In line with our medium- to long-term vision, we remain unwavering in our strategic direction. As part of our investment in business structure reforms, we are advancing both the enhancement of capital efficiency and profitability in our existing businesses, and our preparations for a carbon-neutral and circular society. Alongside these investments in business structure reforms, we also place human resources strategy at the core of our management. Through investment in human capital, we are working to maximize employee growth and engagement and to foster the nurturing of personnel that will serve as the source of our competitive strength. To accelerate our management strategy, centered on both business structure reform and human resources strategy, we are also pursuing digital transformation (DX) and enhancing our governance framework to evolve our business platform, thereby laying the foundation for continued transformation.

  Previous Medium-term Management Plan

  Vision for 2030: Your Reliable Partner for a Brighter Future

  Social implementation for 2050

  Vision for 2050: Shaping Change

  Medium-term Management Plan period (FY2023-FY2025)

Three business domains for 2050

NH3

Diverse resource conservation / circulation solutions

Energy one step ahead

CONTENTS

Value Creation Story

Message from Top Management

Business Structure Reforms

Human Capital / Human Capital Strategy

Evolution of the Business Platform / Innovation Management

Sustainability

Corporate Governance

Data Section

Idemitsu Integrated Report 2025 9

• Message from the Chairman ■ Message from the President

Message from the President

Reflecting on the Second Year of the Medium-term Management Plan

1. Investments in Business Structure Reforms

   To ensure a stable supply of energy and materials, it is crucial to further enhance the capital efficiency and profitability of our existing businesses. In the second year of our Medium-term Management Plan, we focused on strengthening our earnings base by advancing three key initiatives: enhancing the competitiveness of our refining and manufacturing sites, maintaining and reinforcing our service station network while improving customer experience value, and expanding our functional materials and advanced materials businesses. In addition, to achieve a carbon-neutral society by 2050, we screened the 16 projects identified at the time of the current Medium-term Management Plan's release in November 2022 and, in FY2023, designated four key areas: blue ammonia, e-methanol, sustainable aviation fuel (SAF), and lithium solid electrolytes. We have made steady progress in each of these four businesses.

2. Investments in Human Capital

   We place great importance on practicing People-Centered Management, where people are developed through the course of business. Under the current Medium-term Management

   Plan, we are advancing initiatives built around three pillars: embodying our corporate philosophy and vision, deepening DE&I (diversity, equity & inclusion), and enabling each individual to fully demonstrate their abilities and uniqueness. Through our business, we aim to develop individuals who can overcome challenges regardless of the environment, and for each employee to become Your Reliable Partner for a Brighter Future.

3. Evolution of Our Business Platform

   Our business platform, which forms the foundation of both our Investments in business structure reforms and investments in human capital, is being upgraded to respond to changes in the energy and industrial landscape. We are rebuilding our IT infrastructure and leveraging various digital tools to improve the quality of work and transform our business model. At the core of this transformation is the power of people, and we view the nurturing of digital transformation (DX) personnel as essential. More than 4,000 employees have completed DX literacy training, and we are working to enhance productivity and create new value through the use of AI.

4. Toward the Next Medium-term Management Plan We plan to announce our next Medium-term Management Plan in spring 2026. In the near term, we expect the management environment to remain uncertain, with factors such as the global pushback against excessive decarbonization

projections, and building the necessary supply systems for commercialization will require careful, demand-driven decisions. Under the new management structure, we will strive to embody our visions of Your Reliable Partner for a Brighter Future and Shaping Change by maintaining a high-level balance between the immediate need to ensure a stable supply of energy and materials and the development of next-genera-tion fuels, moving both initiatives forward with strength and determination.

Message to Our Stakeholders

Precisely because we live in a time of uncertainty and disorder, it is essential that we show how we will realize and demonstrate to society our 2030 Vision: Your Reliable Partner for a Brighter Future and our 2050 Vision: Shaping Change. As we adapt to the transition toward a carbon-neutral society, we will continue to leverage our diverse business portfolio to ensure even greater stability and efficiency in the supply of conventional energy and materials. This is not a challenge that can be easily overcome, but I firmly believe it is something only Idemitsu can accomplish. I also intend to carry forward the team-based management approach championed by former President Kito and use the collective strengths of the entire Idemitsu Group to navigate these difficult times.

To move forward into an unpredictable future, co-creation

2030

1 Investments in

business structure reforms

Practice of

ROIC-based management

Our value proposition

Social implementation capabilities

2 Investments in

human capital

Maximizing employee growth and engagement

3 Evolution of our business platform

Vision: Your Reliable Partner for a Brighter Future

momentum and the United States' tariff policies. Nevertheless, achieving carbon neutrality by 2050 remains a shared mission for the world and one that has not changed. At the same time, we believe there should be flexibility in how we envision 2030 and 2040-key milestones on the path to 2050-as well as in the pace at which we move toward them. For example, with electricity demand expected to rise due to the advancement of AI technologies, fossil fuels are likely to continue playing a significant role in society. The timing of increased demand for next-generation fuels may be delayed compared to earlier

with all our stakeholders will be essential. We will continue to deepen our communication with stakeholders through initiatives such as ESG Top Seminars featuring outside directors and live seminars hosted by the president. The insights gained through these dialogues are being applied to management improvements and are also being integrated into our communication with employees. We will remain steadfast in practicing People-Centered Management and move forward as one Group. I sincerely ask for your continued understanding and support.