| April 2, 2007 |
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| President Akimitsu Ashida's Speech on the Anniversary of MOL's Founding |
On the occasion of Mitsui O.S.K.Lines (MOL) 123rd anniversary, we are pleased to bring you a message from our President, Akimitsu Ashida.
April 1, 2007, marked the 123rd anniversary of the founding of our company.
MOL ADVANCE Starts
Today marks MOL's 123rd anniversary and brings to a close of MOL STEP, our three-year management
plan that began in 2003. At that time, we set some very ambitious goals,
and the anticipated result of more than ¥170 billion level in consolidated
ordinary income (FY2006) represents three consecutive years of very favorable
performance. Declines in the containership segment, due to changing market
conditions, were offset by increased profits in other fields and have resulted
in an overall high-level of profitability, which is very encouraging.
While we cannot ignore that FY2006 brought considerable such tragedy as a result of four serious incidents involving our vessels and we should avoid any similar occurrences in the future by working together.
To that end, today we begin MOL ADVANCE, our new three-year management
plan. The first objective of our new plan is the implementation of measures
designed to reinforce safe operations. The restoration of trust from our
customers and the global community is critical and our plan is to invest
a total of ¥35 billion in safety operations over the three year period
of MOL ADVANCE, while continuing to increase the quality of our transportation
service.
Demand for global ocean transport will continue to grow in step with the
worldwide economy so we can expect to see our business increase rapidly
as well. Our new three-year plan will chart a course to our destination
of becoming an "excellent and resilient MOL Group."
Global Company
Something that will not change with MOL ADVANCE is the importance of the
"3Gs" - Growth, Group, and Global.
Regarding growth, the MOL STEP term saw our fleet increase from 645 vessels
(FY2003) to 800 vessels (FY2006), while consolidated revenue increased
from ¥997.2 billion to over ¥1,500 billion. Consolidated ordinary income
rose from ¥90.5 billion to over ¥170 billion for three consecutive years,
and consolidated net income grew from ¥55.3 billion to about ¥110 billion.
These numbers represent major increases in every category. Additionally,
our equity capital, which is the index of corporate soundness, grew from
¥221.5 billion to ¥530 billion. We have made steady progress on our course
for growth and our goal for MOL ADVANCE is even more ambitious - more than
¥2 trillion in consolidated revenue and ¥220 billion in consolidated ordinary
income.
Considering group activities, it is clear that MOL group companies have
grown steadily during the MOL STEP period. Looking at consolidated ordinary
income, profits by group companies increased from ¥19.6 billion
in FY2003 to ¥34 billion, ¥51 billion, and ¥57
billion in succession. Contributions of group companies have grown each
year in terms of business performance. We will increase group-wide strength
and competitiveness, and aim at further development by focusing our management
resources on growth.
From a global viewpoint, we will continue to face challenges on the path
to becoming a truly global company, and our focus on this issue must be
vigilant. We cannot expect great increases in the Japan-based ocean cargo
trade, because the nation's economy is already mature. We must look to
overseas markets, to businesses that are expanding as a result of the accelerating
globalization. Only then we can hope to achieve the financial goals set
forth in our new three-year plan. While exploring overseas opportunities,
we must also maintain good service for our Japanese customers. In the containership
segment, we have already established a global network that fully utilizes
human and other management resources, but we must work harder to duplicate
these achievements in other fields. By enhancing our sales and marketing
capabilities in growing regional markets and proactively expanding cross-trade
in markets outside Japan, we will successfully forge new global business.
In addition, MOL ADVANCE will see the establishment of organizations and
structures in overseas subsidiaries and our continued growth in the world
market while moving forward with the integration of Head Office functions.
A flexible response to changes
The development of an international economy changes every second of every
day, and the economic climate that we experience one day may be completely
different the next. Like sakaro*, we must always be prepared for drastic
changes; hoping for the best while preparing for the worst, always striving
toward our goals in a time of favorable market conditions during MOL ADVANCE.
But we must also remember that "there is a seed of failure in success,"
and therefore approach each new situation with optimism, but also with
a seed of caution. That means because of such changes in business, we must
always be aware of the potential that we may not be able to use the same
approaches to business that now seem to fill our sails with a strong tailwind.
* Sakaro: Military commander Kajiwara no Kagetoki advised building double-ended ships that could sail both forward and backward, when Minamoto no Yoshitsune was planning to invade Yashima in the Gempei War between the Minamoto and the Taira clans during the Heian Era (784-1184).
Achieving safe operation and recovery in the containership segment
The success of MOL ADVANCE depends on our ability to increase transport
quality while ensuring safe operation and improving our business performance
in the containership segment.
Over the course of three years, we will be investing ¥35 billion toward
the improvement and reinforcement of safety measures, ensuring the utmost
level of transport quality. This will include the development of the Safety
Operation Supporting Center and the recruitment/training of seafarers.
We will also focus on the development of safety standards for our current
and future operated vessels. To put it concretely, three ship management
company groups for dry cargoships, tankers, and LNG carriers will formulate
basic ship management policies for each type of vessel, and each ship management
company among the groups will take the initiative to implement those policies
through its daily operations. The Marine Management Division (new name:
Marine Safety Division) will support these ship management companies' operations.
We also established the Safety Operations Headquarters as a parent organization
to integrate the emergency response and safety management standards which
are common among ship management companies. We expect vessels and ship
management companies to work together to achieve a new world standard in
transport quality under this new site-oriented organizational structure.
We will also develop a more direct management approach for the Liner Division.
Recovery of this division is essential for achieving the MOL ADVANCE financial
goals. We need to work quickly in today's rapidly changing market and transform
the Liner Division under the VLC system to the Liner HQ. This will create
a nerve center to link all regional divisions while maintaining the three-polar
structure of Asia, North America, and Europe.
In "The Book of Changes", I Ching said, "When you are in
real trouble, you shall change quickly and will find a way out." This
is how we must think in today's business climate. There is no permanent
organizational structure. We must remain flexible, and be prepared to change
and adapt as necessary.
Toward A New Leap Forward
Comparing today to our situation three or four years ago, it was a great
leap to achieve ¥170 billion for three consecutive years during the MOL
STEP period. Once again, I'd like to express my thanks to all Group management
and employees for their hard work. Inevitably, and in spite of an expanding
fleet scale, there are those who would probably say that our business performance
has remained on the same level for three consecutive years; that we have
hit the ceiling. Others may think that we can exceed ¥170 billion in profits
in the future by continuing to do exactly as we've been doing. To these
people I say that in the new three-year plan, we will cast aside all sense
of limitation. By the end of FY2009, the final year of the MOL ADVANCE,
our goal is consolidated revenue topping ¥2 trillion and a consolidated
ordinary income of more than ¥220 billion.
Japanese novelist Taichi Sakaiya has been writing a serial called "Genghis
Khan, the man who created the world" in the Nihon Keizai Shimbun (Japan's
leading financial newspaper), and he suggests in the serial story that
individuals, companies, and nations can experience "great leaps"
during their lifetimes. These periods last five or six years for individuals,
10 years for enterprises, and up to two decades for nations. If such periods
come three times in succession, an individual will become a national success,
a company will become a blue-chip mega corporation, and a nation or group
will become an empire of historic proportions. If the enterprise can repeat
a 10-year leap period three times, the theory of an enterprise's 30-year
lifespan is not true. Applying this thinking to our Group, we have just
completed three consecutive years of achieving a consolidated ordinary
income of ¥170 billion, and we have now passed the three-year mark in the
first decade leap. Moving forward, let us set higher goals, dream bigger
dreams, and work toward continued growth together achieving great strides
during the three years of the MOL ADVANCE plan and completing the decade
leap during next three years.
Finally, I pray for the safety of all of our Group vessels, and hope that
fiscal year 2007 will be a healthy, happy, and prosperous one for everyone
in the MOL Group around the world. |
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