Growth Strategy Toward 2040(Value Creation Strategy)
Structure of the Growth Strategy
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Overall Vision for Growth Toward 2040
Looking toward 2040, the IHI Group has set out its desired state as “supporting the safety, security, and prosperity of people around the world at its core,” with the aim of achieving both the sustainable development of society and transformative growth for the IHI Group. Building on the technological capabilities it has cultivated over many years, the Group will continue to develop its businesses by creating high barriers to entry and maintaining its competitive advantage. The Group’s strengths are best demonstrated in fields that support the industrial infrastructure and national security of countries around the world. Based on this approach, the IHI Group has designated Aerospace, Energy, and Infrastructure as the three business domains in which it will pursue both solutions to social challenges and growth toward 2040. With technology and human capital as the sources of its growth, the IHI Group will create value chains and provide value throughout the lifecycle to achieve sustainable growth.
Adapted and simplified from the diagram
on p.4 of “Medium-to-Longer-Term Direction”
in the FY2025 Financial Results Briefing
(fiscal year ended March 2026) -
Desired State in 2040
Supporting the safety, security, and prosperity of people worldwide at its core
For Industry & National Security
The IHI Group aims to help restore Japan’s industrial capabilities and national strength to world-leading levels, while supporting economic, national, and energy security in countries around the world, so that people everywhere can live safe, secure, and prosperous lives.
Redefining Our Desired State
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Recognition of the External Environment and Social Issues
The business environment surrounding the IHI Group is changing significantly. The Group recognizes the following as the major opportunities and risks that may affect the Group’s businesses.
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Opportunities Related to Climate Change Adaptation and Mitigation
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There is a growing need to advance carbon neutrality while adapting to changes in the social environment, including an increase in natural disasters.
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Opportunities Arising from Increasing Geopolitical Complexity
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Confrontation and tensions between countries and regions are increasing, creating greater instability in areas such as energy, defense, and trade.
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Risks Associated with Technological Innovation
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The pace of technological innovation is accelerating. Maintaining and strengthening competitiveness requires us to continuously enhance the IHI Group’s technological capabilities while flexibly incorporating external expertise.
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Supply Chain Disruption Risks
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The risk of disruptions to the procurement of raw materials and components due to geopolitical developments, natural disasters, and other factors is increasing.
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Risks Associated with a Declining Birthrate and Aging Population
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Population aging and decline are making it increasingly difficult to secure workers and transfer skills to the next generation.
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Risks Associated with Advances in AI
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Advances in AI are accelerating. To maintain and strengthen the IHI Group’s competitiveness, the Group needs to promote the proactive use of AI while strengthening information security.
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Internal Environment
Completion of Structural Reforms and Transition to a Phase of Sustained High Growth
The IHI Group has pursued the transformation of its business foundations and the reform of its business portfolio in response to major changes in the business environment. Under Group Management Policies 2023 in particular, the Group focused on restructuring its core businesses, strengthening its earnings base, and improving capital efficiency. As a result, the IHI Group has reached a significant milestone in the restructuring of its business portfolio, and it is now moving into a new phase aimed at achieving further growth by building on the results of these reforms.
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Growth Process
The IHI Group examines the key elements that will drive the IHI Group’s growth toward 2040.
Technology and Human Capital That Support Growth
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Technology Strategy and Human Capital Strategy
The growth of the IHI Group is underpinned by the technologies it has cultivated over many years and the human capital that translates those technologies into business value.
The IHI Group has developed a diverse range of businesses by drawing on two distinctive technological strengths: “Developing technologies that do not exist in the world,” and “developing the processes that do not exist in the world.” These technologies provide an essential foundation not only for enhancing the competitiveness of its existing businesses, but also for creating new businesses and markets. By continuously driving innovation, the Group will develop technologies that further strengthen the Group’s competitiveness.
At the same time, the challenges facing society and the Group’s clients are becoming increasingly sophisticated and complex, and cannot be resolved by any one company alone. The IHI Group will therefore work with clients and partners, drawing on the diverse expertise of people across the Group.
The technologies and human capital cultivated through these efforts, together with the relationships the Group builds with clients and partners, are important management resources that underpin the IHI Group’s competitiveness.Mechanism for Growth
- Business Model -
The IHI Group will achieve growth by leveraging technology to solve difficult challenges facing society and its clients, while strengthening the Group’s competitiveness through the track record and trust the IHI Group builds. The Group primarily operates in business fields related to industrial infrastructure and national security. In these fields, clients consider more than just price, placing importance on safety, quality, and the ability to ensure stable operations over the long term. By continuously advancing its technologies, the IHI Group has addressed challenges that are difficult for other companies to solve, steadily building a strong track record and trust. This accumulated track record and trust enable the Group to expand into new growth areas and further strengthen its competitiveness.
Going forward, while further strengthening these capabilities, the Group will expand the technologies and expertise it has developed into global markets. It will also broaden its growth opportunities by cross-leveraging technologies and products developed across different fields, including defense and commercial businesses.
The IHI Group's business strategy is to create a virtuous cycle of stable cash generation through “providing value throughout the lifecycle” and creating new growth opportunities through “creating value chains.”
Rather than ending its involvement when a product is delivered, the IHI Group remains engaged over the long term in its operation, maintenance, and renewal, building lasting relationships with its clients.
This enables clients to operate products and services reliably over extended periods while maintaining safety and quality and ensuring compliance with regulatory and certification requirements. For society, this also contributes to maintaining and strengthening the infrastructure that supports industry and people's lives.
Furthermore, the Group enhances its competitiveness by leveraging operational data generated through this process and insights gained from its interactions with clients to improve the IHI Group’s offerings and advance technological development. The IHI Group refers to this approach within the Group as “providing value throughout the lifecycle.”
The Group also leverages the cash, talent, and technologies generated throughout the lifecycle to create new markets and stimulate demand. Some of the challenges facing society and its clients cannot be solved by a single product or service alone. In such cases, the Group works together with its clients and partners to combine technologies, products, services, and operational frameworks, thereby creating new markets and business frameworks.
By becoming involved from the early stages of market development, the IHI Group seeks to establish business structures that capitalize on its strengths, while contributing to the resolution of social challenges and achieving business growth. The Group refers to these activities as “creating value chains.”
In the new markets created through these efforts, the Group will continue to generate cash by providing value throughout the lifecycle.
The IHI Group will generate stable cash by providing value throughout the lifecycle and reinvest that cash in the creation of new value chains. This cycle drives the IHI Group’s sustainable growth.
Adapted and simplified from the diagram
on p.9 of “Medium-to-Longer-Term Direction”
in the FY2025 Financial Results Briefing
(fiscal year ended March 2026)Contribution to Society
- Outputs and Outcomes -Delivering Value to Society
Three Business Domains
The IHI Group provides products and services that support industrial infrastructure and national security around the world in the Aerospace, Energy, and Infrastructure domains. In these domains, the Group is required to ensure product safety and information security, support stable operations over the long term, and work to reduce environmental impact.
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Aerospace
In the Aerospace domain, the IHI Group primarily supports foundational functions in the aerospace sector related to the movement of people, goods, and information, as well as national security.
With propulsion technology at its core, the Group contributes to safe and secure lives by providing next-generation propulsion systems, strengthening Japan’s national security infrastructure, and building space infrastructure. -
Energy
In the Energy domain, the IHI Group supports the foundations of society by providing pragmatic solutions to the challenge of achieving both energy security and carbon neutrality.
With technologies related to nuclear power and next-generation clean fuels at its core, the Group contributes to the safe and secure use of energy in Japan and around the world. -
Infrastructure
In the Infrastructure domain, the IHI Group builds and maintains urban, transportation, and other social systems that address challenges such as population concentration, aging infrastructure, and climate change.
With technologies related to bridges and industrial machinery at the IHI Group’s core, the Group supports people’s daily lives and industrial activities.
Foundations for Growth
A culture where challenges and support reinforce each other / Strengthening governance for risk management
A Culture Where Challenges and Support Reinforce Each Other
For the IHI Group to achieve sustainable growth, an organizational culture that supports growth is also essential.
The IHI Group faces increasingly complex social issues and client needs, and a growing number of challenges cannot be addressed solely by relying on past successes. The Group therefore needs to remain an organization that continues to take on new challenges.
The IHI Group is fostering a culture that encourages each individual to take on challenges and supports those efforts across the entire organization.
Through this cycle of challenging and supporting one another, the Group will drive the creation of new technologies and businesses.
Risk Management and Governance
The IHI Group operates in areas that are critical to industrial infrastructure and national security. As a result, each decision the Group makes and every action it takes can have a significant impact on the trust its clients and society.
To achieve sustainable growth, the Group must not only encourage people to take on challenges, but also manage risks appropriately and respond with integrity.
By identifying risks at an early stage, including those related to AI and information security, ensuring rigorous compliance, making appropriate decisions, and ensuring transparency through governance, the IHI Group will maintain the trust of its stakeholders and drive sustainable growth. -
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Material Issues
Message from the Executive Officer Responsible for ESG
Akihiro Seo
Managing Executive Officer
In Charge of Group ESGThe IHI Group’s Medium-to-Longer-Term Direction is to enhance the sustainability of both society and the IHI Group and, through its businesses, address social issues at the industry and national levels.
To achieve this, the Group has identified key management issues (material issues*1) based on long-term opportunities and risks. Under its management philosophy of “Contribute to the development of society through technology,” the IHI Group has continued to develop and grow its businesses while contributing to society. I recognize that the concept of double materiality*2 is consistent with the IHI Group's management, which seeks to achieve business growth while meeting society’s expectations.
In this materiality assessment process, the Group took into account its perspective while also referring to the concept of double materiality. With the support of external experts, the Group identified six material issues that it should address.
Going forward, the IHI Group will continue engaging in dialogue with its stakeholders and incorporate the views it receives as it develops specific strategies and KPIs for each material issue.-
*1
Issues that a company recognizes as particularly important to creating value over the medium to long term and that should be addressed as priorities.
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*2
An approach to identifying material issues from two perspectives: the impact of corporate activities on society and the environment, and the impact of society and the environment on the company.
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*1
Understanding the IHI Group’s Growth Strategy Q&A
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To realize its desired state for 2040, the IHI Group needs to create products and services that go beyond what it has done in the past and deliver them to society. In addition, given the nature of the IHI Group’s businesses, some initiatives may also take more than 10 years to progress from development to commercialization and, ultimately, to making a broad contribution to society.
The Group therefore needs to do more than simply respond to immediate changes in the business environment as it has done in the past. It needs to accelerate technology and business development from a medium- to long-term perspective.
In doing so, it is essential that the Group’s employees remain aligned with this direction and take on challenges freely and boldly while maintaining discipline.
For this reason, the IHI Group has established its “Medium-to-Longer-Term Direction” to serve as a guiding framework for decision-making over the long term. By sharing this overarching direction, the Group aims to ensure consistent management decisions and employee actions throughout the organization. -
These three domains are critical to supporting people’s lives, industrial activity, and national security in countries around the world. By leveraging the technologies and talent it has developed, together with its business operating systems and experience in management decision-making, the Group will build a sustainable competitive advantage. The business domains do not represent a reorganization of the Group’s existing business areas or organizational structure into three categories. For example, the “Aerospace” domain is not simply a renaming of the existing “Aero Engine, Space & Defense” business area. Rather, it is a domain in which the IHI Group will combine technologies and talent across traditional boundaries to create new businesses.
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The IHI Group has supported its clients’ businesses through the operation, maintenance, and renewal of the products and equipment it has delivered. Going forward, the Group will not simply respond to requests concerning products and equipment. It will also seek to understand the underlying business challenges and objectives and propose the solutions best suited to each client.
For example, when a client consults the IHI Group about replacing a piece of equipment, the IHI Group will consider not only the replacement itself but also the role of the equipment and its impact on the overall production process. Based on this understanding, it will propose measures such as optimizing the entire production process, introducing automation, and improving energy efficiency, in addition to installing new equipment. -
In the fields of industrial infrastructure and national security where the IHI Group operates, it is required to meet stringent standards for safety and quality, comply with regulations in each country, and ensure stable operations over the long term. Without the technology and track record needed to meet these requirements, the Group cannot operate in these fields.
Moreover, the Group’s businesses cannot be sustained by technology and products alone.
For example, in its aero engine business, the IHI Group needs to manage complex, long term projects while negotiating with companies in various countries. In building an ammonia value chain, it needs to take into account the different circumstances of each country and company, collaborate with a wide range of stakeholders, and create new markets and business frameworks.
To make these businesses possible, the Group needs both the technology to solve complex challenges and the talent who can bring stakeholders together around that technology and drive long-term business development. This is why the IHI Group regards technology and human capital as the driving forces behind its growth.
The IHI Group operates across the Aerospace, Energy, and Infrastructure domains to support the safety, security, and prosperity of people around the world.
The Group addresses social challenges related to industrial infrastructure and national security in countries around the world, aiming to contribute to society while achieving business growth.
It achieves sustainable growth by creating value chains and providing value throughout the lifecycle.
Building on its technological strengths, the IHI Group pursues global expansion and business growth while creating new value.