President & CEO's Message for Start of Year 2012

Jan. 04. 2012
Marubeni Corporation

1. Introduction
I am happy to once again join with you all in welcoming in the New Year. Before continuing with my remarks, I would like to express my sincere condolences to those affected by the earthquake and tsunami disaster in March 2011, and express my deepest wishes for a rapid recovery for the affected region.

Looking back at 2011, I have to say that it was not a bright year. From the disasters in Japan in March to the flooding and typhoons that affected regions around the world thereafter, there were natural disasters in countries throughout the world. Turning to the world economy, we observed the further worsening of the sovereign debt problems in Europe, leading to increased uncertainty for the global economic outlook, as well as a significant strengthening of the yen, placing many Japanese companies in a very difficult position.

However, even under such difficult conditions, Marubeni performed well and achieved 103 billion yen in consolidated net income for the first half of this fiscal year. The likelihood of achieving our full-year profit target of 170 billion yen continues to increase. I want to thank all of you for your fine efforts that have led to such progress.

2. Economic Outlook for 2012
It is likely that 2012 will present significant challenges for the global economy. We believe that the wide-spread instability in the financial system and worldwide economic downturn seen after the bankruptcy of Lehman Brothers can be avoided. Nonetheless, we are forecasting that the growth rate for the global economy in 2012 will likely not reach the level expected for 2011, which was around 4%. I would now like to briefly speak about two points in particular regarding the context of our outlook.

The first point is the trend toward austerity in the fiscal policies of various countries. Particularly for developed economies that face restrictions on supportive policy measures in terms of their fiscal position, economic stimulus measures that require additional outlays may be difficult to take.

The second point is the impact of credit contraction. Of course this has an impact on the overall economy, but there is also the possibility that the market prices of commodities and other assets that have been held up by supportive financial policies could move to a lower level.

In the case of a severe downside risk scenario I do believe that there would be additional supportive fiscal and financial policies undertaken, particularly from the developing economies as additional measures there are still available to policy makers. However, there are several influential countries that will see presidential elections or changes in leadership over the coming year, and the possibility exists that there could be big changes. Please continue to pay close attention to such developments.

3. SG-12
Next, I would like to report on the progress of our mid-term management plan SG-12.

(1) Profitability
Last fiscal year we achieved consolidated net profit of 136.5 billion yen, exceeding the original objective (125 billion yen) by more than 10 billion yen and giving us great momentum heading into this year. For the full fiscal year this year we are on pace to achieve 170 billion yen, in line with our target. By doing so, we will greatly exceed the current record for annual consolidated net profit of 147.2 billion yen which was set in fiscal year ending March 2008.

Achieving 170 billion yen this year leads toward “sustainable growth” for the future and achieving “a stronger Marubeni,” the key objectives of SG-12. I ask all to make your fullest efforts toward the sure achievement of the profit goal.

(2) New Investments
Under SG-12 we have established a plan for 750 billion yen in new investments over three years, and as of now we have already approved around 680 billion yen worth of investments. Given the current strength of the yen at historic levels and the ongoing low interest rates, we are considering an increase of about 150 billion yen, resulting in a revised three-year total for new investments of 900 billion yen.

Of course, the necessary condition in order for us to execute such new investments is to continue strengthening financial standing, another key measure of SG-12.

(3) Alliances with Leading Companies
We continue to build and strengthen cooperative relationships with leading companies to improve profitability under SG-12. Through the activities of the various regional Business Strategy Committees we have indeed strengthened Marubeni’s relationships with leading companies around the world, leading to many promising new business opportunities. As we go forward in constructing alliance relationships necessary in our business, it is critical that the relationships lead to increased profits for Marubeni.

4. Things to keep in mind in the New Year
I want you all to keep the following points in mind as you go about your job in 2012.

(1) Strong will to further improve our business performance
To realize the goal of a “stronger Marubeni” that we set under SG-12, I want all of us to become even more aware and focused on the financial results of our businesses; we must be even “hungrier” to achieve our profit goals. We must all seek to maximize the profit every day, while at the same time staying careful to avoid needless costs. Each business unit and subsidiary or affiliate company must set a high standard; each should carry out its business with the goal of becoming the number one player with overwhelming strength in its field. We must keep a tenacious and persistent spirit of winning out over our competition.

(2) Carrying out business with an eye on the future
In order to achieve sustainable growth and survive as a general trading company we must seek to always increase the number of businesses in which we have an overwhelming presence and profits of significant size. Careful planning, sure execution, and then making the necessary adjustments (Plan, Do, Check and Act) are critical, so please carry these out repeatedly to strengthen your business performance.

The pace of change in our industry of general trading companies is very quick; we must act proactively and with speed. In addition, to support our actions we must have a mid-term strategy and a sure sense of judgment based upon solid information from the front lines of our businesses. In order to continue sustainable growth in 2013 and beyond following the completion of SG-12, it is critical that we execute new investments in accordance with our mid-term strategy while also continuing to develop new ways of growing the existing trading businesses.

(3) Compliance
I often speak about compliance matters. Even while doing our best to achieve growth, these rules must be kept. Take this opportunity to once again reaffirm your commitment to conducting business in a fair and just manner.

5. Conclusion
Fiscal Year 2012, the final year under SG-12, has now started for many of the overseas companies and subsidiaries that compose more than half of Marubeni’s business operations. Going forward, I want all Marubeni Group employees to come together in our pursuit of achieving our goal for consolidated net profit in the next fiscal year (FY ending March 2013) of 200 billion yen. As Marubeni Group is now the strongest it has ever been in terms of both profitability and financial standing, this goal is in fact quite realistic.

The past November marked exactly 10 years to the date of the company’s announcement of the unprecedented restructuring plan “A” PLAN. Achieving 200 billion yen in consolidated net profit for the next fiscal year would also have significant meaning as the sum total of all of our efforts over these past 10 years. We have come to the point now where such a goal is indeed within our reach, and we must achieve it now to finish SG-12 on a successful note.

Best wishes for continued health and success to all of our employees and their families in 2012. Thank you.


*This message was addressed to all officers and employees by President & CEO Teruo Asada on January 4, 2012.