2014 New Year Message from the President and CEO

Jan. 20. 2014
Marubeni Corporation

The following is a message from President and CEO Fumiya Kokubu delivered at 09:00 am on January 6, 2014, at the Tokyo Head Office.


A Happy New Year to you all. As we celebrate the start of 2014, I would like to make a few remarks to all members of the Marubeni Group around the world.

1. Economic outlook for 2014
It is likely that the overall global economy will be favorable, despite some destabilizing political and diplomatic factors. The forecast tells us that the trend in 2013 will generally continue in 2014, with economic recovery in the developed countries including the United States, as well as recovery in emerging countries, although the latter may not be as strong as before. For Japan, it will be a year when the country will be tested to see whether or not it is capable of implementing its growth strategy in a steadfast manner to ensure its economic recovery.

Under this condition, I want you to be aware that the economic tide may change this year. For the past 10 years and more, there has been an overabundance of money due to excess liquidity under a situation of ultra-low interest rates, and this has supported high growth in emerging countries and promoted the high price of natural resources. Sogo shosha, including ourselves, grew by incorporating these changes into our business. However, it is also likely that the “zero” interest rate policy will eventually end, as the United States decided to wind down its quantitative easing policy at the end of last year. We must carefully monitor the situation because these changes may impact our business in many ways. Do not let these changes affect you; I want you to take these changes as an opportunity and allow them to lead you to new business.


2. Global Challenge 2015
Next, I would like to report on the current status of Global Challenge 2015, our mid-term management plan that is currently underway.

FY2013 started out smoothly, achieving consolidated net profit of 111.8 billion yen for the first half of the year, setting a record-high profit. However, the future prospects for the surrounding business environment (i.e., resource prices and sluggish commodity markets) still remain unclear. While aiming to achieve the goals of Global Challenge 2015, I want you all to pull yourselves together and go about your job for the remaining three months to achieve our target of 210 billion yen set for FY2013—the first year under Global Challenge 2015.

(1) Optimizing management resources
In order to achieve sustainable growth regarding limited resources, we must optimize management resources; in other words, we must further improve our portfolio. We need to continue to replace less efficient assets with more efficient and profitable ones, while raising the standards for existing businesses and projects in a thorough manner.

Regarding this point, since April last year, we have had a series of discussions that started with the Portfolio Management Strategy Committee. Having examined and analyzed our business areas from different perspectives, we are beginning to see what shape an optimum portfolio should take in the future, as well as the course of action for each area. We plan to promote the more efficient allocation of management resources and drastic asset replacement.

(2) New investments
In Global Challenge 2015, we plan to invest a total of 1.1 trillion yen in three years. In the first half of this fiscal year, we invested around 250 billion yen in the growth areas and other areas that could contribute to strengthening our competitiveness. We will continue to implement excellent projects that would match the growth strategy of each division in accordance with the corporate portfolio strategy.

At the same time, we will never be able to achieve sustainable growth without further improving our financial structure and building a solid financial base, as these are literally the “foundations” of the company. I would like you all to know that achieving a consolidated net D/E ratio of around 1.5 times as stipulated in Global Challenge 2015 is one of the top-priority goals that we must achieve.

While building a solid foundation and defense, we will resolutely continue to take the offensive. We plan to more actively implement excellent projects, which should contribute to achieving the sustainable growth of our company.


3. Things to keep in mind in the New Year
(1) Enhancing genba-ryoku (field operational effectiveness)
Our starting point is out in the field, where most new projects are launched based on the information collected there and on the everyday business conducted therein. Most of the causes of problems and the keys to solutions are to be found here as well. You must go out into the field, and meet and talk with our customers to improve your field sensitivity. You should never be excessively theoretical.

I believe that honing and improving the genba-ryoku of our employees will be the driving force behind the growth of our company. I want to build a team where each employee working in the field uses their capacity for critical thought, where matters are discussed as a team, and where decisions are made independently as a team.

Also, increased awareness in the field is essential with regard to compliance, which is a fundamental premise for all businesses. We have continued to improve our compliance system throughout this year; yet, each of you needs to have high awareness for compliance and to recognize the importance of always thinking about and assessing things on your own.

(2) Commitment (making sure to keep promises)
The “A” plan, which was announced back in FY2001, was a last-ditch effort in the face of the risk of our company’s survival. What we learned from this plan was how important it is for a company to accomplish what has been decided and to keep our commitments with both internal and external partners. It is indeed our strength that high awareness for keeping commitments and promises has been strengthened since the “A” plan, and this has become part of our corporate DNA.

When you go about your job, please always remember the importance of keeping commitments and promises, as well as the lessons learnt from the “A” plan, without becoming complacent over the current performance of the company.

(3) Challenging spirit
The third point is to move ahead while maintaining a challenging spirit. I want you to know that both companies and individuals will stop growing when they become complacent with the current situation; they will be on the decline. The world is a global arena in which we need to compete with global companies in order to survive. This is why I named the mid-term management plan “Global Challenge,” as I wanted to reflect my strong commitment to face global competition and to keep striving ahead with persistence. I would also like you to boldly face difficulties and keep striving to achieve higher goals without setting any limitation for yourselves. Let us aim to reach higher with a challenging spirit, in a united effort involving all employees and executives.


4. Conclusion
This year’s outlook for the global economy seems to be generally favorable. In Japan, the Abe administration will enter its second year, raising much expectation for the realization of its growth strategies.

Under this circumstance, Marubeni’s opportunities are expanding globally. I would like our company to play a role in achieving the growth of Japan, as well as the growth of the world, while fulfilling the missions and roles expected of a sogo shosha to contribute to the development of regions around the world and their economies. Let us continue to strive as a team to achieve the goals of Global Challenge 2015 and sustainable growth with lofty aspiration and a challenging spirit.

I would like to wish you all and your families another healthy and successful year. Thank you.