MOL CEO Ikeda's 2018 New Year Message
- From Uncertainty, Opportunity -

First, a quick look back. 2017 was a year of resurgent growth in global trade, supported by a firm world economy. Japan showed signs of improving business sentiment, as highlighted by the stock market rally in the latter half of the year. Meanwhile, the operating environment surrounding the MOL Group became increasingly unstable due to factors such as the North Korea situation. With this in mind, 2017 was a year that kept us constantly on guard as an ocean shipping enterprise strongly committed to the safe operation of vessels. Looking at the shipping market, conditions were mixed across businesses, with firm conditions in dry bulkers but weaker trends in tankers, for example. A full-scale recovery is still in the making. However, amid suboptimal shipping market conditions, we expect to finish fiscal 2017 with results largely in line with our initial forecasts, as steady operational enhancements and efforts on the sales frontline come to fruition. Two things are clear: (1) the MOL Group is transforming itself into an enterprise capable of generating steady profits following business structural reforms, and (2) this transformation is the result of the hard work and dedication of all MOL Group executives and employees. I'd like to take this opportunity to once again extend my gratitude to all of you.

2017 was also a year in which we took steady strides toward realizing our Vision for the MOL Group Ten Years from Now, as laid out in Rolling Plan 2017. The MOL Group made bold investment decisions with a focus on businesses that offer prospects for long-term growth and steady earnings. Notably, in the LNG carriers and offshore businesses, we entered the self-elevating platform vessel business, providing offshore wind power generation installation services, along with taking part in a floating LNG receiving terminal project in India and expanding the Yamal LNG project. In other segments, we made inroads into wood chip transportation. I am confident that a new 20,000 TEU-class containership and MOL FSRU CHALLENGER, both of which were delivered last year, will serve as part of the core fleet underpinning our future. In addition, we strived to reshape our business portfolio based on the core theme of strategically allocating resources to carefully selected businesses that have a clear competitive edge. Efforts were also focused on upgrading organizations which are expected to grow and increase in scale, including the New Business Creation and Group Business Division and the Port Projects & Logistics Business Division.

Moreover, we have been carefully laying the groundwork for integration of the MOL Group's containership business with two other Japanese shipping companies. Ocean Network Express, a new business venture, will finally commence services in April 2018. It will be a major turning point for MOL and mark a new beginning.

The rapid shift to electric vehicles (EVs) was a major industrial trend that made big headlines last year. Around the world, EV buses and trucks, not to mention EV passenger vehicles, are rapidly becoming part and parcel of daily life. In fact, the future course of the automotive industry could very well be determined by how companies go about addressing the shift to EVs. While this shift has been driven in part by advances in technology, it originated from rising environmental awareness in society. In 2017, we drew up the MOL Group Environmental Vision 2030 to articulate our long-term environmental targets. As conventional fossil fuels continue to be replaced with renewable energy, we believe that initiatives to reduce our environmental impact as a shipping company that transports fossil fuels will in turn help to reduce the environmental impact of customers who use our services. That said, it will be difficult to achieve our long-term targets solely through our current initiatives. We need to drive new innovation. Heightened environmental awareness in society compels us to achieve further transformation, or in other words, to drive innovation. We are pushing ahead with this imperative. Specifically, we seek to develop environmental and emissions-free businesses into future core businesses of the MOL Group, a key pillar of the management plan.

Shifting our focus to daily life, we can see that dominant players, such as Amazon, have brought about a transformation in the way goods are distributed in society and have had a tremendous impact on the conventional retail sector. The so-called sharing society has transformed the notion of personal ownership of property and the values of individuals, and these changes have become apparent in many different aspects of our daily lives. These innovations have provided us with benefits in terms of convenience and cost effectiveness, in conjunction with steadily transforming the workings of society. The shipping industry is not shielded from these trends. No one should be surprised to see disruptive innovation reshape the shipping industry at any time. Know that once we can clearly see the change, it is already too late. The frontrunners who instigated the change have already set their sights farther ahead.
2017 was also a year in which corporate social responsibility came under close public scrutiny due to issues surrounding the falsification of quality data. Through reports in the media, I am sure you can clearly appreciate the magnitude of the impact of those issues. No matter how intense the upheaval we may face, we will never change our policy of ensuring that our conduct is in compliance with laws and regulations at all times.

The tides of change are relentless. In this environment, although we have a huge number of priorities that we must address, I'd like us to rise above our circumstances as One MOL. To this end, we must see this environment as an opportunity and remain focused on the goal of realizing our Vision for the MOL Group Ten Years from Now.

2018 is the second year of our rolling plans. We will be drawing up specific business policies based on in-depth discussions with each division. In last year's Rolling Plan 2017, we articulated three main themes as our Vision for the MOL Group Ten Years from Now. Of those three themes, I'd like the MOL Group to focus on further strengthening the themes of providing stress-free services to customers and making the MOL Group a collection of businesses boasting the highest competitiveness in their respective fields. To provide stress-free services to customers, it is absolutely necessary to first develop a deep understanding of the needs of our customers and the major trends in society. We will get stuck if we only consider the narrow interests of our own businesses. I want you to embrace an expansive perspective. At times, you must use your imagination. At other times, you must shift your viewpoint and explore solutions together with customers. It is no exaggeration to say that the voice of the customer is the wellspring of innovation. Let's actively seek out the views of customers not only in Japan, but also overseas, and listen to them carefully, thereby capturing an expanded range of opportunities to thrive and succeed.

I believe that all factors that lead to stronger profitability are an integral part of our competitiveness. To become No. 1 in as many of these factors as possible, we must check and recognize how we stand relative to our competitors and continuously take action to reinforce areas where we are strong and close the gaps in areas where we are weaker. Nonetheless, we cannot close these gaps by merely doing the same thing as our competitors. We must be creative in how we take action.

We all need to consider these issues in earnest and explore solutions by discussing things with one another. By doing so, I believe we will hone our services even more, and they will become an invaluable asset for the entire MOL Group. Let's grasp the signs of change earlier than our competitors as we make steady strides forward.

I have no doubt that the MOL Group's strength lies in each and every of its executives and employees. I'd like the MOL Group to further strengthen the abilities of each individual, as well as the abilities of the organization, an aggregation of those individuals, and to be a group that can adapt flexibly to change. Work style reforms are one specific means of achieving this goal. As participants in work style reforms, many of you are already familiar with this initiative. We have identified two priorities for work style reforms: transform the mindset of individuals and develop the right environment for the organization. With this in mind, our work style reforms will serve as a platform for generating innovation by successively introducing small creative steps in our daily business processes. Now that two years have passed since work style reforms were instituted, I imagine that many employees are starting to gradually see changes in various aspects of their work, such as ways of meeting management and the atmosphere of workplaces. Mindful of our focus on both individuals and the organization, we will continue to develop workplaces where everyone can feel positive and excited about their work, through initiatives that emphasize dialogue. I believe it is this type of corporate culture that will pave the way for making the MOL Group an enterprise that has the most competitive human resources. Aiming to transform the thinking and behavioral patterns of executives, including myself, we launched the One MOL Management Style Reform Project. In this project, the MOL Group's executives will learn conversational approaches and management styles that create an atmosphere that encourages their counterparts to think freely and put forward proposals for consideration.

Let me stress here that each and every executive and employee is the main player in this initiative. Based on the belief that tomorrow's shipping industry is in our hands, we must be strongly determined to shape the future of the industry. With this in mind, I urge the MOL Group to put its entire weight behind this initiative.

Finally, I must report with great regret that a serious marine incident involving the loss of life occurred on an MOL Group-operated vessel in 2017. I'd like to take this opportunity to extend my heartfelt condolences to all of those affected by this tragedy. To prevent a recurrence, we should return to basics in analyzing the incident and implement all necessary safety measures by incorporating resources such as the latest technologies based on ICT. I want to drive home the message once again that safe operation forms the foundation of the MOL Group and starting point for our Vision for the MOL Group Ten Years from Now.

In closing, I'd like to pledge my commitment to the safe voyages of all MOL Group-operated vessels. I'd like to wish you and your family members a very happy new year, as well as good health, happiness and success in 2018.