MOL: We Must Prepare For Hard Times During The Good Times

The following “2020 New Year Message” was addressed to all officers and employees by President & 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.

Last year brought a new era in the traditional Japanese calendar – with the Heisei Era making way for the Reiwa Era – and we experienced many other events as well.

Though we were saddened by the damage brought by natural disasters such as typhoons, our spirits were lifted by the strong showing of Japan’s national team in the Rugby World Cup, hosted by Japan in 2019. Looking over the shipping market, we can generally say the year ended on a strong note, although both dry bulk and tanker markets had their ups and downs.

In the LNG carrier business, projects including the ice-breaking LNG carriers for the Yamal project went into a full-scale operation, contributing to a buildup of stable profits. The containership business recovered from a slowdown in profits for the previous fiscal year, showing performance, which will lead to our next stage of growth. Although there are concerns of a slowdown in world economic growth, we expect all our business segments to achieve profitability in line with our initial forecasts. And here I would once again like to thank all of you for your unceasing efforts.

In addition, a big topic for the ocean-going shipping industry last year was preparation to comply with stricter regulations on vessel emissions of sulfur oxides, or SOx.

Led by the SOx 2020 Regulation Compliance Committee, all group members are united in our meticulous preparations to achieve compliance. We have general understandings from customers to bear the increased costs. Nevertheless, switching of fuels on such a massive scale is bound to bring some difficulties at the initial stage, and we need to pay close attention and maintain our focus on compliance as we move toward a stable path.

2019 in Review

Looking back over the past year, we saw various projects that will shape the future of our group.

Firstly, the progress of our LNG-related business was packed with events, such as the delivery of the LNG-fueled tugboat Ishin, the participation in a LNG-fuel bunkering vessel project in Singapore, development of the LNG-to-Powership project which is a FSRU operation project under the co-brand “KARMOL,” and our decision to build Japan’s first LNG-fueled ferry. LNG fuel is one of the realistic solutions we, MOL Group, can offer to tackle environmental issues, by reducing GHG emission. We will continue to promote LNG-related business this year.

Secondly, was the initiative to become a comprehensive chemical logistics company, performed by MOL Chemical Tankers Pte. Ltd. The company (MOLCT) acquired the whole shares of Nordic Tankers A/S to reinforce its business in the Atlantic and established a strategic alliance with Den Hartogh Holding B.V. with the aim of extending the current business to tank container sector. MOLCT has steadily delivered on its strategy for developing its competitiveness as a total logistics provider for liquid chemicals, on top of its current ocean transport services.

And thirdly, I would like to take up the achievements of our business divisions, corporate divisions, and group companies united as One MOL, such as the promotion of the FOCUS projects using advancing digital technology, the Wind Challenger and the e5 project introducing environmental concepts to the vessels, opening of the pilot office where employees are free to choose desk by drop-in basis as one of the specific measures towards workstyle reforms, and securing finance through sustainability bonds. In addition, our car carrier and ferries were honored of the Ship of the Year 2018 awards.

Along with such efforts, the MOL Group was united to develop our success as we work toward an even brighter future. This is an outcome of vitalizing communication among overseas offices and chief country representatives, in addition to group companies. These initiatives have helped us collaborate valuable information and strategies, giving us the agility to take action on various projects. We believe this will contribute to our capability to generate profits.

Ring in 2020

Turning our eyes to global trends, I’m concerned about the effect on seaborne trade arising from the slowdown in worldwide economic growth I cannot say when or how the economy might tumble into recession, but from my experience, they can be categorized in two types, recessions suddenly triggered by a specific factor, and recessions that occur so gradually that it’s hard to determine so. There is one thing that is common among both types of recession. We must, without fail, prepare for hard times during the good times – like now. An example of a measure we can take now is to limit our market exposure. When we say, “limit our exposure,” the first thing that may come to mind is fleet reduction, but the real issue is to prepare for the storm by enhancing the fleet’s market durability, while diversifying profit sources. Please keep this in mind as you engage in your day-to-day tasks.

Currently, we are in the midst of discussions about our management plan for Fiscal Year 2020. This year, I would like to think about the theme of “growth.” What that means for us, right now? – let’s think of it from aspects of both objectives and opportunities.

When talking about the growth of corporations, we generally anticipate that growth refers to the scale, but the quality and health of growth are as important. Stakeholders want us to increase profitability, but also expect us to do our best to have a positive effect to the society. The sustainability issues specified in April 2019 shows how the MOL Group can contribute to social issues. My point is that by fulfilling our role as a member of the society as well as achieving profitability shall lead to healthy growth. The corporate business domain will expand through healthy growth, allowing us to take on new challenges and new opportunities in business.

Changes in society and the environment also represent opportunities for growth. I hope that all of you will use your senses to fully grasp the changes in society and customer needs and meet new challenges you have never known. Our current ocean shipping business divisions such as dry bulkers, tankers, and car carriers, together with the corporate divisions that support their efforts, we must discover new business fields and sprout for further growth by changing perspectives and developing a more flexible mindset. This challenge should lead to workstyle reforms, and I have belief in the MOL Group to become a corporate group that prepared to meet any challenge without hesitation at all times.

The key to realizing these goals is “communication”, which is the lifeblood of any organization. Last year, we surveyed our corporate climate. It showed signs of improvement, but our work in this regard is far from complete, and many issues remain to be addressed. I ask you to try to be more active, frank, and honest communication among employees and management. I will take the lead in encouraging communication, and I hope you all will make a conscious effort to improve in your division.

I believe the MOL Group will move closer to becoming “a Group of Business Units with No.1 Competitiveness in Respective Areas,” when we realize a positive growth spiral around communication, by both the corporate group and individual members maintaining healthy conditions. Let’s join our strengths fully achieve both group-wide and personal growth in next January.

Become One of Society’s Favorite Sustainable Corporations

Safe operation is our foundation. Our members on shore and at sea worked day in and day out to maintain the “Four Zeroes,” which is the benchmark of safe operation, but I regret to say that we could not achieve it in 2019. I want you to reconfirm that safe operation is the never-changing, absolute value for the MOL Group. By the same token, we need to forge ahead with projects through a view of fairness and justice and must act always in accordance with compliance.

The world keeps changing at a challenging pace. We must always stand in front and blaze new trails on our own. Let the entire MOL Group push ahead with sincere determination to ensure not superficial but true growth, to secure profitability, and continually be one of society’s favorite sustainable corporations.

Finally, I want to pledge my commitment to safe voyages by all MOL Group-operated vessels. I wish you and your family a very happy New Year, as well as good health, happiness, and success in 2020.

Reference: mol.co.jp

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