News Release

Wednesday, 04 January 2017

MOL CEO Ikeda's 2017 New Year Message


 - Shaping a New Future -

The following "2017 New Year Message" was addressed to all officers and employees by CEO Junichiro Ikeda.

Happy New Year, everyone. I would like to wish the entire MOL Group family the very best as we begin the new year.

2016 in Review

First, a quick look back. 2016 was a year of major political and economic upheaval around the world, and the shipping industry certainly saw its fair share of change. In terms of political developments, I think the U.K.'s decision to withdraw from the EU and the outcome of the U.S. presidential election took everyone by surprise. On the economic front, there are heightened concerns about the persistence of "slow trade"- a phenomenon where global trade grows more slowly than the world economy. However, environmental factors, such as falling resource prices caused by slower growth in China and sluggish resource-rich economies, are only partly to blame. I believe that structural changes in the world economy have played a much larger role. Companies are seeking to go local instead of global. Manufacturers are localizing production for consumption in local markets. There has also been a rapid shift in consumer preferences from purchasing physical goods to consuming services and seeking experiences.

In the ocean shipping industry, stagnant demand and a persistent oversupply of vessels have kept the marine transport market at historic lows. Developments such as the bankruptcy of a major overseas shipping company have accelerated industry realignment and consolidation. The MOL Group has taken steps to address major management issues. In January, we implemented a new round of Business Structural Reforms. In October, we were among three Japanese lines that decided to integrate their container shipping businesses. Both moves reflect our strong determination to act first by anticipating changes in the business environment and to boldly reshape our business.

2016 marked the culmination of several initiatives taken in our growth business fields. In the LNG carrier building project in China, four vessels for ExxonMobil were delivered on schedule, and the first of six vessels for the China Petrochemical Corporation (SINOPEC) project was delivered in November. And we were the first Japanese shipping company to enter the liquefied ethane transport business. We have a strong advantage in the specialized methanol tanker business. Here, three cutting-edge tankers, the first in the world capable of running on methanol, were also delivered on schedule. In addition, in the offshore business, we joined a subsea support vessel project, building on our success in FPSO, FSRU, and shuttle tanker operations. Our success in pioneering these new business fields reflects our positive and ambitious approaches to the business environment and technology. I think everyone in the MOL Group can be proud of this accomplishment.

Restoring Profitability

As 2017 begins, our highest priority is to restore profitability at the ordinary income level in FY2016. We need to convince our shareholders and other stakeholders that the Business Structural Reforms we pushed through last year are making a difference. Since the second half of last year, the long-stagnant containership and dry bulker markets have been showing signs of bottoming out. In the foreign exchange market, the yen remains weaker than anticipated, although bunker prices are trending upward. We must achieve profitability. Every executive and employee, regardless of whether they are in business or corporate divisions, must work constantly to increase income and reduce costs as we head into FY2017.

The MOL Group will have a much different profile after our containership business is transferred to the new joint venture in April 2018. I will address a broad range of issues by pursuing "One MOL," and draw up a new vision for the MOL Group. Let me stress again that the containership business will remain our core business. Of course, we will continue to offer reliable services to customers until the new containership company starts operation. We will also need to make preparations to ensure a smooth handoff to the new company so that it can offer customer-friendly services from day one. The integration of the three companies will give us a foundation to compete with the world’s leading mega-carriers. That is why I expect the new company to pursue integration synergies and become a leaner, stronger business enterprise.

Meanwhile, the priorities for non-containership businesses after the transfer of containership operations will be to restructure global networks and deepen relationships with customers. Please continue to focus on business expansion. Use the restructuring of our containership business as an opportunity to think through how the MOL Group will advance to its next stage of growth. Let’s aim at reforms based on bold and flexible ideas.

How Do You See Our Future?

My vision of MOL 10 years from now is a group with a strong presence as the world's top logistics partner. It will be a group that customers all over the world think of first-one that customers can count on with full confidence. I want MOL to be a leading full-line marine transport group, and a strong business that we can take pride in.
As I said at the beginning, I believe that changes in the business environment, notably the "slow trade" phenomenon, are not short-lived trends; they reflect a long-term structural change in global trade. Faced with structural changes in the world economy, we cannot break through this impasse by relying on the methods and strategies of the past and outmoded rules of thumb. Last year, we launched two business units and enhanced our operations under the One MOL banner. We also identified the core elements that will spearhead IT strategies and technological innovation, and our environmental strategies. Let's think together through how the MOL Group, through your efforts, will grow and advance into the future. We are aiming at reforms with bold, flexible thinking that breaks from the past. I want to work with all of you as we define and implement big and bold strategies, and not simply rehash and continue previous policies. I want you to remove the bias that tomorrow will be the same as today. Keep yourself open to portraying the future in an innovative way. You might even enjoy seeking optimal solutions in this era of constant flux.

Please remember that the environment, ICT, and technological development hold the key to our future. Corporations can rise above the competition only if they thoroughly analyze their customers' industries, venture into customers' value chains and identify unmet needs, explore how they can add value, and steadily propose solutions that deliver value. A steady string of new environmental technologies has been emerging as customers become increasingly aware of the environment. We see the progress of technologies in the ICT field every day. Our role is to use these emerging technologies (seeds) to fulfill our customers' unmet needs, and thereby become the first to reinvent services ahead of everyone else.

Putting good ideas to work is crucial to the creative process. I will fully support people who actually try new ideas. Don't spend too much time sitting around thinking about things. Just assess the risks and give it a try with every ounce of your enthusiasm. If things don't work out, just try something else.

I often hear objections from people about to try something new. They say, "But we don't have enough staff. We won't be able to get our work done." Certainly, none of your daily work is unnecessary. However, I don't want you to shy away from new initiatives and innovation simply because you are too busy with your daily duties. You need to make time for new initiatives. This can be done by increasing productivity through workstyle reforms. People tend to focus on whatever task is at hand. Instead, I would like division and office GMs to set priorities, and have everyone work on those shared priorities. Personally, I will strengthen our ability to execute new initiatives within the company and create ways to raise your motivation.

Ensuring Safe, Reliable Services

Finally, last year marked the 10th anniversary of four serious marine incidents that occurred in 2006. I joined a beach cleanup activity at Kashima Nada in October, prayed for those who died in the line of duty, and renewed my vow to never allow such an accident to occur again. There's still a lot of work ahead to realize our goal of "becoming the world leader in safe operation." Once again I want to emphasize that safe operation is absolutely vital to the MOL Group as a business enterprise, and we must never neglect it.

In closing, I would like to pledge my commitment to the safe voyages of all MOL Group-operated vessels. I want to wish you and your family members a very happy New Year, as well as good health, happiness and success in 2017.

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