An 8% Cost of Capital, StatedNarrow moat

ITOCHU (8001) — moat facet

ITOCHU tells investors its cost of capital is about 8% and measures its businesses against about 70 hurdle rates.

Few Japanese companies state their cost of capital. ITOCHU's CFO writes that the current cost of capital is approximately 8%, and describes about 70 business-specific hurdle rates in place1. The CFO also describes the aim of sustaining ROE at the 15% level, which the CFO calls a global standard2.

ITOCHU return spread (%)about 8%Cost of capital14.6%ROE, yr to Mar 2026about 15%ROE aimITOCHU CFO message, July 2026; FIR 2026
A published hurdle, and a return well above it.

The hurdle rates apply the discipline business by business: a food distributor and an iron ore mine carry different risks and should clear different returns. ITOCHU's group companies earned ¥782.6 billion in the latest year3.

The published cost of capital lets outsiders check the company. On its own number, ITOCHU's ROE of 14.6%4 is a spread of about six and a half points5.

The published figure is unusual among Japanese companies and makes ITOCHU's claims checkable. Its ROE has been above 10% in every year from the year to March 201667, which on its own numbers means it has created value every year for a decade.

The measure is the spread. If ROE falls toward 10%, the spread narrows to where the company's growth creates little value.

Moat trajectory: Holding steady

The framework is established; ROE is drifting lower.

The number that tests this moat
Reported
Business-specific hurdle rates
about 70, against a cost of capital of about 8%

The discipline behind the returns; a falling ROE spread is the warning.

Source: ITOCHU CFO message, July 2026 ↗
⚠ Threats to the moat
⚠ THREAT 01
A Company Estimate of Its Own Cost
A company's own estimate of its cost of capital is only as good as its assumptions about interest rates.
References
  1. ReportedITOCHU's CFO writes that the current cost of capital is approximately 8%, and describes about 70 business-specific hurdle rates in place.
    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. ReportedThe CFO also describes the aim of sustaining ROE at the 15% level, which the CFO calls a global standard.
    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. ReportedITOCHU's group companies earned ¥782.6 billion in the latest year.
    ITOCHU Corporation, FY2025 Business Results and FY2026 Management Plan - results of major group companies by segment, with ownership, including FamilyMart, CTC, DESCENTE, NIPPON ACCESS, IMEA and Orchid (CITIC). — FY to March 2026 · publ. 14 May 2026 · source ↗
  4. ReportedOn its own number, ITOCHU's ROE of 14.6% is a spread of about six and a half points.
    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. Moat Explorer calcOn its own number, ITOCHU's ROE of 14.6% is a spread of about six and a half points.
    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.
  6. ReportedIts ROE has been above 10% in every year from the year to March 2016, which on its own numbers means it has created value every year for a decade.
    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. ReportedIts ROE has been above 10% in every year from the year to March 2016, which on its own numbers means it has created value every year for a decade.
    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 ↗
Sources
Generated September 24, 2026