The New Year greeting delivered by Fumiya Kokubu, President & CEO at the Marubeni Tokyo Head Office on January 4 is posted below.

 

1. Introduction

Happy New Year, everyone. This year, as Japan prepares to transition from the Heisei period into a new and as-yet unnamed era, we here at Marubeni are celebrating the 70th anniversary of the founding of the company.

Last January, I declared that the New Year would be all about propelling Marubeni to overcome existing boundaries of our business, and I initiated a number of programs designed to do just that. Before long, we announced the Global Crossvalue Platform, our vision for the Marubeni of the future, and launched initiatives for breaking down every kind of barrier.

One example is our Business Model Canvas, a visual resource that makes all of our business models available to all employees. We also held our first annual Business Plan Contest, through which employees proposed 160 business models and new ideas for how the company could multiply existing value. This bounty of fresh thinking came not only from employees at Marubeni’s Tokyo headquarters, but also from our industrial operations, overseas affiliates, and branch offices.

Our diverse pool of talent is propelling us to overcome the existing boundaries of our business by transcending the perceived borders separating organizations, nations, and age groups. At Marubeni, this marks a phase change. Diversity is among our greatest untapped resources. Hailing from a variety of backgrounds, each of our forty thousand employees has a unique perspective and the potential to generate creative new ideas. Going forward, a conscious attention to the dreams, aspirations and activities of every single Marubeni employee will fuel our progress as a company.

Our initiatives for steering the company into uncharted territory may have only just begun, but in 2018, we took the first steps thanks to all of you. The changes in the atmosphere and mindset of the company are palpable. We’re gaining momentum and entering a revolution that promises great things for the future. This year, I want us to increase that momentum by shifting gears, to push us even further beyond the norms. This is my conviction for 2019.

Our mantra for the coming year is “Go Beyond”. Just like last year, I want us to continue pushing into new terrain. As we forge ahead, there are two things I want everyone to keep in mind for 2019.

The first is creating new business models that have the potential to generate explosive growth ten years down the line; businesses that might be an expense for the next few years but promise to pay off in the future. Ideas that have our signature brand of originality. I want 2019 to be the year in which we establish a number of such business models.

The second is reinforcing the domains of those existing businesses currently supporting medium-term sustainable growth. Each business group should pursue its strategies and vision for the future by strengthening the domains of its existing enterprises. The strategies and plans are already in place, all that remains is setting them in motion.

These two points correlate with the “exploitation of existing business” and “exploration of new business” outlined in our discussions of the Global Crossvalue Platform. If exploiting existing business means driving sustainable growth today, and exploring new business means setting the stage for explosive growth tomorrow, then our ethos for 2019 is a hybrid of the two: pushing Marubeni to overcome the existing boundaries defining its business.

2. The Management Climate

Now I’d like to speak a little bit about the management climate surrounding the company.

We are in the midst of an age of uncertainty, characterized by discontinuity and great change. Since last year, stock markets, commodity markets, and exchange markets have been extremely volatile. It may be a new year, but the signs of market fluctuation persist. We cannot afford to be too optimistic.

International disruptions to the social order; shifts in the structure of industry and rapid progress in the technology that supports it; and evolving corporate consciousness toward ESG criteria. In all these ways and more, the management climate surrounding our firm is going through a transformation. Specifically, there are five things I want everyone to remain conscious of this year:

•  The United States: How will the policies of the Trump administration, exemplified by current frictions between the United States and China, influence the economy of the United States, the leader of a world economy that was booming only yesterday?
•  China: Will we see an economic downturn as China suffers the brunt of the damage of its trade war with the United States?
•  Competition between the United States and China is spreading beyond trade into a fierce war over cutting-edge technology and data, aggravating a deep-seated problem.
•  Europe: There is a growing sense of dread surrounding government and economics, particularly in Germany, France, and Italy, and especially with regards to the outcome of BREXIT.
•  Middle East: Then there is the situation in the Middle East, centering on Saudi Arabia and Iran.

Of course, we have the overarching question of the financial situation. At the risk of spouting conventional wisdom, I believe that the global trend from easy money policies toward financial regulation has the potential to vastly impact the financial arrangements of our firm. The idea that low-interest capital will always be available is becoming obsolete, making it imperative for business models to produce added value even in the harshest financial scenarios.

Will we embrace uncertainty and grow? Will we face the threats inherent to these changes? The Marubeni Group is at a crossroads.

Without falling victim to tumultuous, short-term change, we must remain focused on medium and long-term results. This means entertaining a variety of scenarios and following through on our strategies as we keep doing what we do best – planting one foot firmly in front of the other.

To confront these enormous changes, it is imperative that we utilize the Marubeni Group as a single platform and tap every last strength the company has at its disposal, while maintaining the dexterity and flexibility of a start-up.

3. Overcoming Existing Boundaries

The Global Crossvalue Platform, established last year as our organizing principle, urges the entire Marubeni Group to break down barriers between enterprises, companies, and even nations, and to create new value through an exploitation of existing business and an exploration of new businesses.

Slowly but surely, our efforts are paying off, as we continue to make this vision a reality.

After the final year of our medium-term management plan, “Global Challenge 2018”, we will emerge with an increasingly firm base for future growth. Our immediate priority of bolstering our financial foundation has yielded tangible results, and our efforts to strengthen our balance sheet have met success ahead of schedule. Last year, our profits reached 211.3 billion yen, the highest consolidated return in company history, and this year we expect to witness another historic high. Further, in the second quarter of 2018, our shareholders’ equity exceeded 2 trillion yen for the first time ever.

Moreover, by aligning their visions and strategies, the management and sales offices are successfully exploiting existing businesses. The visions and strategies we carefully formulated for each main business group in 2017 have become part of the fabric of the company.

Meanwhile, we continue to explore new businesses. In 2018, the business groups were developed of a number of projects that were responsible for multiplying functionalities across enterprises. By breaking down the barriers of product and organization, these initiatives have created brand-new business.

We are strengthening our financial foundation, strengthening the strategies of our enterprises, and exploring new opportunities by breaking down barriers―several of which are now behind us. This year let’s ramp up the momentum even more!

In 2019, I want everyone to “Go Beyond”. This means moving beyond your past self, setting individual goals for what to overcome this year, and taking the first steps toward making those goals a reality. If each of us works towards new goals and moves beyond new barriers, I am certain that our collective effort will become a driving force. What’s more, I know that this will translate into medium-term sustainable growth and long-term explosive growth.

4. Conclusion

Finally, I want you all to take good care of yourselves and hope you will have a healthy and productive year. May you and your families enjoy comfort and prosperity. Happy New Year. Thanks for listening.