Message from the CEO on MOL Foundation Day Taking the Next Step toward Realizing Our Vision for the MOL Group

At the same time, we also revamped our internal framework in April. In terms of our organization, the Head Office organization, which had been a mix of divisions and offices, was unified into departments only, and new teams were set up in each department ahead of the introduction of a new personnel system in July. I'd like the newly appointed team leaders to experience just how satisfying it can be to manage an organization on your own and produce results as a team.

At the business unit level, the Technology Innovation Unit was newly established alongside the existing Safety Operations Headquarters, Energy Transport Business Unit, Dry Bulk Business Unit, and Product Transport Business Unit. Under the leadership of the Chief Technical Officer, the Technical Division, Smart Shipping Division, and MOL Information Systems, Ltd. will work closely to develop new technologies and promote the use of ICT, both of which will be wellsprings of MOL's future competitiveness. To do so, I believe the new unit will surely need to take full advantage of external knowledge and resources. Rather than trying to do everything in-house, I'd like the new unit to pursue open innovation.

Next, let's take a look at individual divisions. First, I'd like to say a few words about the establishment of the Corporate Marketing Division. The Corporate Marketing Division was set up by establishing the One MOL Business Strategy Execution Office, which had formerly been part of the Corporate Planning Division, as an independent business division. The primary mission of the Corporate Marketing Division is to apply different models and perspectives to identify customer needs that shift constantly and cannot be grasped through conventional approaches alone. The division will then apply what it has learned to the business front lines to pave the way for delivering stress-free services, a crucial theme of the rolling plan. In addition, the division will strive to realize existing priorities more effectively, such as pursuing marketing strategies based on business intelligence, advancing marketing methods and systems across different divisions, and expanding business interests in key strategic countries. Similarly, MOL has set up the Ferry Business Division by carving it out from the New Business Creation and Group Business Division and establishing it as an independent business division. Additionally, we renamed the foregoing New Business Creation and Group Business Division as the New & Clean Energy Business Division, with the aim of having this division focus on accelerating the new clean energy business. Each of these restructuring measures was intended to strengthen our strategic business divisions. Furthermore, we established the Corporate Communication Division, which will comprehensively oversee public, investor and employee relations, by integrating the Public Relations and IR Offices. By setting up this new division, we will seek to enhance the quality of messaging, information, and communication directed both internally and outside MOL to strengthen the corporate brand value and enterprise value of MOL. As announced at the end of February, we implemented other restructuring measures with clearly defined purposes, including the merger of the Secretaries Office and General Affairs Division to establish the Secretaries & General Affairs Division, the separation of the Tanker Division into Tanker Division (A) and Tanker Division (B), and the establishment of the Corporate Audit Division by reorganizing the Internal Audit Office.

What I'd like to accomplish together with all of you is to create an organization where everyone can work even more energetically than before in every division amid the changes in the business environment and in the mission that society expects the MOL Group to fulfill. To achieve this, we must actively embrace new ideas and approaches without becoming preoccupied with conventional ways of assigning duties and getting work done. Under our new framework, I encourage everyone to adopt a new mindset and strive to maximize your leading strengths as we seek to realize our vision for the MOL Group. I have particularly high hopes for our young employees and their capabilities.

In the past year, we made steady strides toward realizing the "Vision for the MOL Group Ten Years from Now," as set forth in "Rolling Plan 2017," by making progress on the following three main themes: 1. Provide stress-free services to customers; 2. Develop the environment and emission-free businesses into one of our future core operations; and 3. Make the MOL Group a collection of businesses boasting the highest competitiveness in their respective fields. There is room for improvement on each specific theme, so we will continue to address them in "Rolling Plan 2018." Here, I'd like to emphasize that I've found that the mindset of executives and employees has steadily evolved over the past year. Specifically, I mean that we have embraced positive thinking and a chain of actions such as sharing the same goals, getting everyone involved in discussions without adhering to fixed notions, boldly tackling difficult issues, promptly making decisions, and realizing priorities as One MOL by bringing together the strengths of each division to create a positive cycle. There have been several notable cases in point. In terms of sales activities leading to the development of the environment and emission-free businesses, we made a company-wide effort to win a long-term charter contract for a liquefied natural gas (LNG) bunker vessel from Total Marine Fuels Global Solutions. In terms of technological innovation, the entire Group worked to achieve the signing of a deal for the construction of an LNG-fueled tugboat. Every division, business and team member from every level of the organization will need to purposefully get involved in creating those kinds of major positive cycles. I believe that doing so will be crucial to the success of the rolling plan.

Next, I'd like to briefly discuss the direction of "Rolling Plan 2018," which will be announced publicly at the end of April. Under "Rolling Plan 2017," we listed the following five Group-wide priorities for strengthening the MOL Group to achieve our three long-term goals: marine technical skills, ICT strategy, technology development, environment and emission-free businesses, and workstyle reforms. Under "Rolling Plan 2018," we have reprioritized the themes that the MOL Group should address, narrowed down the actions we will take, and adopted more specific goals.

In addition, "Rolling Plan 2018" will emphasize price competitiveness as a crucial benchmark. We must seriously accept that, above all, customers are seeking price competitiveness based on the premise of safe and reliable transportation. With this in mind, we will work squarely to enhance the cost competitiveness of our fleet and enhance business efficiency through business process reforms. We will explore ways of raising the capacity utilization of ships, not just reducing their cost. We will extensively discuss this priority without being bound by past practices or keeping any areas off limits to reforms in an effort to enhance the competitiveness of our fleet for the current and coming era. This approach applies equally to business process reforms, that is, our own workstyle reforms. I'm grateful that everyone has actively participated in the decluttering campaign we are currently advancing in our in-house operations. Management involving numerous reports will certainly not be exempted from the decluttering campaign, so I welcome drastic reform proposals in this area as well. Efforts will also be made to actively utilize ICT. One recent example is robotic process automation (RPA), which has also attracted a lot of public interest. We have already begun examining whether we will be able to streamline routine tasks and boost labor efficiency by introducing RPA within the company.

Meanwhile, evaluations of the MOL Group by customers show that recognition of MOL's initiatives in ICT, technology, and the environment is still low. We have issued press releases every time we undertake a major initiative, including the "ISHIN NEXT—MOL SMART SHIP PROJECT." However, we recognize that issuing press releases alone is not enough to fully convey our message to customers and other stakeholders. At each frontline site, I'd like you to understand MOL's various activities, even if certain activities may lie outside your department's field and help to get the message out to customers and other stakeholders. The "seeds" of business activities that we have may happen to match a customer's needs, or casual small talk may set events into motion, leading to a major business deal. Opportunities for innovation that would otherwise lie dormant may be awoken by your conversations. I'll take on the role of the lead spokesman for the MOL Group, so I ask all of the Group's executives and employees to work closely with me and serve as spokespeople for MOL.