From V-shaped recovery to a new leap forward
In April 1999, Senior Director Tohru Tsuji assumed the office of president and President Toriumi was appointed Chairman. Newly appointed President Tsuji announced “Vision 2000 Restructuring Plan” to rapidly promote drastic reforms in organizational as well as personnel systems, improvement of financial position, and streamlining of unprofitable operations. When the restructuring plan was completed in April 2001, Marubeni Corporation announced “@ction21,” a new two-year midterm business plan, aiming at “Shifting to Aggressive Operation” toward “Expansion and Evolution.”
On October 1, 2001, Marubeni-Itochu Steel Inc. was incorporated, which was the first entity established by general trading firms integrating their common business operations. The company has since steadily recorded good financial results by making the most of the merits of its parent companies, Marubeni and Itochu.
In November 2001, as the economic situation suddenly changed after the sharp decline in stock prices in Japan, the bursting of the IT bubble, and the 9-11 terrorist attacks in the US, President Tsuji decided to move up the amortization planned in “@ction21” and to collectively clear the extraordinary loss amounting to ¥208 billion in order to eliminate the potential risk of negative profit. He also announced “@ction21 “A” PLAN (“A” stands for Acceleration)” focusing on a V-shaped recovery of business performance in FY2002, in which consolidated net profit was targeted at ¥30 billion. By implementing “A” PLAN, consolidated financial results recorded a massive deficit of ¥116.4 billion, the company’s performance was evaluated negatively by the media and stakeholders, and the stock price temporarily plummeted below the 60-yen level in December 2001. Furthermore, in March 2002, a scandal ensued when it was revealed that one of our subsidiaries, Marubeni Chikusan Corporation, falsely labeled their chicken products, further damaging Marubeni Corporation’s public image.
In this fateful crisis for the company, corporate executives and employees shared the same sense of crisis, and made every effort together to recover the company’s business performance. As the result, in FY2002, the company was able to record a consolidated net profit of ¥30.3 billion, achieving the vowed V-shaped recovery. The company also reinforced its internal control system among the entire Marubeni group companies including the reconstruction of compliance systems.
In April 2003, President Tsuji who achieved “A” PLAN became chairman, and Executive Vice President Nobuo Katsumata was appointed president. Under newly appointed President Katsumata’s leadership, a three-year business plan named “V” PLAN (“V” stands for Vitalize) was implemented which aimed at further developing profitability and the in-house vitality revived by “A” PLAN, as well as reinforcing the foundation of profitability and improving the company’s financial position.
The “V” PLAN was enacted smoothly by accelerating “Selection and Concentration” based upon portfolio management. The revenue base was steadily reinforced, and the company increased its marvelous consolidated net profit each year, which amounted to a record-high of ¥34.6 billion in 2003, subsequently surpassed in 2004 by a new record-high of ¥41.2 billion. And in FY2005, the last year for the plan, the consolidated net profit amounted to¥73.8 billion, far exceeding the initial target of ¥50 billion. The financial position was also steadily improved. When the “V” PLAN was completed at the end of March 2006, net DE ratio declined to 2.83 times, which is one quarter of the initial figure of 10.3 times; and shareholders’ equity increased to ¥663.8 billion, which exceeds the net risk asset of ¥572.6 billion, enabling the company to achieve “building of financial position which reflects the risk,” one of the most important challenges of “V” PLAN.
Having finalized the “V” PLAN and achieved the build-up of the foundation to “restore an energetic Marubeni which can stand up to the top trading firms,” targeted by the plan, Marubeni announced, in April 2006, a new midterm business plan named the “G” PLAN. This is a two-year project aimed at consolidating the group’s sustainable development through two-way strategies: Setting up a firm “defensive” structure by upgrading the business system that had led the “V” PLAN to a big success, while introducing an “offensive” strategy including the expansion of business scope, sophistication and diversification of the trading firms’ functions, and aggressive investment in strategic sectors. The new plan targets a yield of ¥220 billion as the total consolidated net profit for the two years, among which 100 billion yen or more should be earned in a stable manner, and ensuring ROA (return on asset) to exceed 2% or higher by severely screening prime assets. It also plans new investments of ¥500 to ¥600 billion within the two years while keeping its financial position stable.
FY2006 was the first year of "G"PLAN. And in the first year, the Marubeni group have already recorded ¥119.3 billion as the total consolidated net profit, ensuring the “G” PLAN a good start. The Marubeni group will continue to challenge itself to ensure the success of the “G” PLAN, which targets the two “Gs,” sustainable Growth and future Glory.
