Capital Allocation: Hurdles, Buybacks and Eleven Years Ahead of TOPIXNarrow moat

ITOCHU (8001) — moat facet

ITOCHU publishes its cost of capital, holds its businesses to about 70 hurdle rates and has beaten the Japanese market for eleven straight years.

ITOCHU's CFO states the company's cost of capital plainly: approximately 8%1. Against it the company sets about 70 business-specific hurdle rates2, and it aims to sustain return on equity at about 15%3. ROE was 14.6% in the year to March 20264, and it has not been below 10% in the last eleven years56.

Return on equity, years to March10.4%201615.8%201817.0%202021.8%202215.6%202414.6%2026ITOCHU FIR 2026 and Financial Section 2021; cost of capital about 8%
Well above the company's own 8% cost of capital throughout.

The returns to shareholders have grown with the profit. The dividend rose to ¥42 on a split-adjusted basis7, the eleventh consecutive increase, and ITOCHU has set a minimum of ¥44 for the current year8. It has bought back shares for eleven consecutive years9, spending ¥170.0 billion in the latest year10 and planning at least ¥300.0 billion in the current one11. The total payout ratio was a record 52%12.

The market has rewarded it. ITOCHU says it is the only TOPIX constituent to have outperformed the index for eleven consecutive years, with its shares up 7.6 times since March 2015 against 2.3 times for TOPIX13. Its market value was ¥13,802 billion at March 2026, from ¥2,057 billion at March 20151415.

The discipline is being tested by scale. Growth investment is planned at about ¥1.5 trillion for the current year16, and net debt to equity allowed to rise to about 0.617.

The total payout ratio has risen with the returns: 52% in the latest year, a record, and 64% planned for the current one18. The progressive dividend policy was written into the company's management policy in May 202619. Dividends paid were ¥282,692 million in the latest year20.

The measure is ROE against the 8% cost of capital. A spread of about six and a half points21 is the moat in one number.

Moat trajectory: Holding steady

ROE has stayed between about 14.6% and 21.8% for five years; the investment pace is rising.

The number that tests this moat
Reported
Return on equity against the company's cost of capital
14.6% against approximately 8%

A spread the company states itself; ROE below 12% would halve it.

Source: ITOCHU Financial Information Report 2026 ↗
Aspects of the moat
DIG DEEPER 01
An 8% Cost of Capital, Stated
ITOCHU tells investors its cost of capital is about 8% and measures its businesses against about 70 hurdle rates.
DIG DEEPER 02
247 of 265 Companies Profitable
More than nine in ten of ITOCHU's 265 group companies made money last year, a record.
DIG DEEPER 03
The ¥300 Billion Buyback and the Insurers Who Sold
ITOCHU bought back ¥150 billion of its shares at a 10% discount from insurers who wanted to sell anyway.
DIG DEEPER 04
Eleven Years Ahead of TOPIX
ITOCHU has beaten the Japanese market every year for eleven years, and the price now reflects it.
⚠ Threats to the moat
⚠ THREAT 01
ROE Is Drifting Down
ITOCHU's return on equity has fallen by a third in four years as its equity grew faster than its profit.
⚠ THREAT 02
The Investment Pace Doubles
ITOCHU is doubling its investment pace, which tests whether its hurdle discipline scales.
References
  1. ReportedITOCHU's CFO states the company's cost of capital plainly: approximately 8%.
    ITOCHU Corporation, CFO message, Integrated Report 2026 - the cost of capital of approximately 8%, about 70 business-specific hurdle rates, and the aim to sustain ROE at the 15% level. — 2026 · publ. July 2026 · source ↗
  2. ReportedAgainst it the company sets about 70 business-specific hurdle rates, and it aims to sustain return on equity at about 15%.
    ITOCHU Corporation, CFO message, Integrated Report 2026 - the cost of capital of approximately 8%, about 70 business-specific hurdle rates, and the aim to sustain ROE at the 15% level. — 2026 · publ. July 2026 · source ↗
  3. ReportedAgainst it the company sets about 70 business-specific hurdle rates, and it aims to sustain return on equity at about 15%.
    ITOCHU Corporation, CFO message, Integrated Report 2026 - the cost of capital of approximately 8%, about 70 business-specific hurdle rates, and the aim to sustain ROE at the 15% level. — 2026 · publ. July 2026 · source ↗
  4. ReportedROE was 14.6% in the year to March 2026, and it has not been below 10% in the last eleven years.
    ITOCHU Corporation, Financial Information Report 2026 - the six-year financial summary, ROE, employees and market capitalisation. — FY to March 2026 · publ. 12 June 2026 · source ↗
  5. ReportedROE was 14.6% in the year to March 2026, and it has not been below 10% in the last eleven years.
    ITOCHU Corporation, Financial Information Report 2026 - the six-year financial summary, ROE, employees and market capitalisation. — FY to March 2026 · publ. 12 June 2026 · source ↗
  6. ReportedROE was 14.6% in the year to March 2026, and it has not been below 10% in the last eleven years.
    ITOCHU Corporation, Financial Section 2021 - the six-year summary for the years to March 2016-2021, including FamilyMart's consolidation and fixed-asset impairments. — FY to March 2016-2021 · publ. 2021 · source ↗
  7. ReportedThe dividend rose to ¥42 on a split-adjusted basis, the eleventh consecutive increase, and ITOCHU has set a minimum of ¥44 for the current year.
    ITOCHU Corporation, Financial Information Report 2026 - the audited financial statements, segment information, the customer statement, goodwill including FamilyMart, CITIC and the risk factors. — FY to March 2026 · publ. 12 June 2026 · source ↗
  8. ReportedThe dividend rose to ¥42 on a split-adjusted basis, the eleventh consecutive increase, and ITOCHU has set a minimum of ¥44 for the current year.
    ITOCHU Corporation, Consolidated Financial Results for the year ended March 31, 2026 (IFRS) - statements of comprehensive income, financial position and cash flows, the segment information by eight division companies, the share split, dividends, the buyback plan and the forecast for the year to March 2027. — FY to March 2026 · publ. 1 May 2026 · source ↗
  9. ReportedIt has bought back shares for eleven consecutive years, spending ¥170.0 billion in the latest year and planning at least ¥300.0 billion in the current one.
    ITOCHU Corporation, FY2025 Business Results and FY2026 Management Plan - net profit, core profit and extraordinary items by segment, investment and exit, and the management plan for the year to March 2027. — FY to March 2026 · publ. 14 May 2026 · source ↗
  10. ReportedIt has bought back shares for eleven consecutive years, spending ¥170.0 billion in the latest year and planning at least ¥300.0 billion in the current one.
    ITOCHU Corporation, FY2025 Business Results and FY2026 Management Plan - net profit, core profit and extraordinary items by segment, investment and exit, and the management plan for the year to March 2027. — FY to March 2026 · publ. 14 May 2026 · source ↗
  11. ReportedIt has bought back shares for eleven consecutive years, spending ¥170.0 billion in the latest year and planning at least ¥300.0 billion in the current one.
    ITOCHU Corporation, Consolidated Financial Results for the year ended March 31, 2026 (IFRS) - statements of comprehensive income, financial position and cash flows, the segment information by eight division companies, the share split, dividends, the buyback plan and the forecast for the year to March 2027. — FY to March 2026 · publ. 1 May 2026 · source ↗
  12. ReportedThe total payout ratio was a record 52%.
    ITOCHU Corporation, FY2025 Business Results and FY2026 Management Plan - shareholder returns (dividends, buybacks and payout), ROE, leverage and share-price performance against TOPIX. — FY to March 2026 · publ. 14 May 2026 · source ↗
  13. ReportedITOCHU says it is the only TOPIX constituent to have outperformed the index for eleven consecutive years, with its shares up 7.6 times since March 2015 against 2.3 times for TOPIX.
    ITOCHU Corporation, FY2025 Business Results and FY2026 Management Plan - shareholder returns (dividends, buybacks and payout), ROE, leverage and share-price performance against TOPIX. — FY to March 2026 · publ. 14 May 2026 · source ↗
  14. ReportedIts market value was ¥13,802 billion at March 2026, from ¥2,057 billion at March 2015.
    ITOCHU Corporation, Financial Information Report 2026 - the six-year financial summary, ROE, employees and market capitalisation. — FY to March 2026 · publ. 12 June 2026 · source ↗
  15. ReportedIts market value was ¥13,802 billion at March 2026, from ¥2,057 billion at March 2015.
    ITOCHU Corporation, Financial Section 2016 - results for the years to March 2015 and 2016, including the CITIC acquisition and the Australian coal impairment. — FY to March 2015-2016 · publ. 2016 · source ↗
  16. ReportedGrowth investment is planned at about ¥1.5 trillion for the current year, and net debt to equity allowed to rise to about 0.6.
    ITOCHU Corporation, FY2025 Business Results and FY2026 Management Plan - shareholder returns (dividends, buybacks and payout), ROE, leverage and share-price performance against TOPIX. — FY to March 2026 · publ. 14 May 2026 · source ↗
  17. ReportedGrowth investment is planned at about ¥1.5 trillion for the current year, and net debt to equity allowed to rise to about 0.6.
    ITOCHU Corporation, FY2025 Business Results and FY2026 Management Plan - shareholder returns (dividends, buybacks and payout), ROE, leverage and share-price performance against TOPIX. — FY to March 2026 · publ. 14 May 2026 · source ↗
  18. ReportedThe total payout ratio has risen with the returns: 52% in the latest year, a record, and 64% planned for the current one.
    ITOCHU Corporation, FY2025 Business Results and FY2026 Management Plan - shareholder returns (dividends, buybacks and payout), ROE, leverage and share-price performance against TOPIX. — FY to March 2026 · publ. 14 May 2026 · source ↗
  19. ReportedThe progressive dividend policy was written into the company's management policy in May 2026.
    ITOCHU Corporation, FY2025 Business Results and FY2026 Management Plan - shareholder returns (dividends, buybacks and payout), ROE, leverage and share-price performance against TOPIX. — FY to March 2026 · publ. 14 May 2026 · source ↗
  20. ReportedDividends paid were ¥282,692 million in the latest year.
    ITOCHU Corporation, Consolidated Financial Results for the year ended March 31, 2026 (IFRS) - statements of comprehensive income, financial position and cash flows, the segment information by eight division companies, the share split, dividends, the buyback plan and the forecast for the year to March 2027. — FY to March 2026 · publ. 1 May 2026 · source ↗
  21. Moat Explorer calcA spread of about six and a half points is the moat in one number.
    Moat Explorer calculation from ITOCHU's reported figures. Trailing twelve months to June 2026: net profit 900.3 - 283.9 + 293.8 = 910.1; revenue 14,823.1 - 3,558.9 + 3,875.9 = 15,140.1; EPS 128.00 - 40.10 + 42.02 = 129.92. Market value at 24 September 2026: 6,993,053,267 shares x ¥2,220.5 = ¥15.53 trillion. P/E at March year-end: market value over net profit, e.g. 13,802 / 900.3 = 15.3 (2026), 6,090 / 820.3 = 7.4 (2022), 3,046 / 500.5 = 6.1 (2019). Non-resource share of profit: 774.7 / (774.7 + 133.3) = 85%. Segment net profit over segment assets, year to March 2026: Machinery 155.6 / 2,603.5 = 6.0%; Metals & Minerals 143.5 / 1,793.4 = 8.0%; ICT & Financial 93.0 / 1,577.2 = 5.9%; Food 92.1 / 2,403.4 = 3.8%; Energy & Chemicals 69.3 / 1,819.4 = 3.8%; General Products & Realty 60.8 / 1,628.7 = 3.7%; The 8th 45.0 / 2,197.3 = 2.0%; Textile 43.3 / 751.9 = 5.8%. Segment net margin on revenue: Food 92.1 / 5,134.2 = 1.8%; Energy & Chemicals 69.3 / 3,069.6 = 2.3%; Machinery 155.6 / 1,500.6 = 10.4%; Metals & Minerals 143.5 / 1,231.5 = 11.7%. Berkshire's market value over cost: 8,886 / 4,165 = 2.13 times; dividend on cost 181 / 4,165 = 4.3%. Self-tender: 82,735,750 x ¥1,813 = about ¥150.0 billion. Net profit growth since the year to March 2016: 900.3 / 240.4 = 3.7 times. Dividend growth: 42.0 / 10.0 = 4.2 times (split-adjusted). ROE spread over the company's cost of capital: 14.6 - 8 = 6.6 points. Equity growth: 6,590.0 / 5,755.1 = 1.15. Stake in DENTSU SOKEN at the tender price: ¥215.2 billion for 38%. ACG profit target over investment: ¥50 billion is the aerospace target, about ¥310 billion the ACG investment. Berkshire's stake at ¥2,220.5: 704,799,500 x 2,220.5 = about ¥1.565 trillion. ITOCHU over Marubeni net profit: 900.3 / 543.9 = 1.66. 8% hurdle on the CSN Mineração additional investment: 0.08 x 119.2 = 9.5. 8% hurdle on ¥215.2 billion: about ¥17.2 billion. — FY to March 2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in ITOCHU's financial statements, results decks and market data; operands shown in the source line.
Sources
Generated September 24, 2026