Mitsui O.S.K. Lines (MOL) President Koichi Muto outlines business initiatives on his company's 129th anniversary.
Extracts from his recent overview follow:
In fiscal 2013, we will launch business initiatives based on a One-Year Management Plan designed to return the MOL Group to a growth trajectory.
Since the beginning of 2013, the business environment has started to show positive signs in some quarters, including a rebound in the U.S. economy and a weakening of the yen. In the marine transport industry, while vessel deliveries are projected to plummet from 2014 onward, we do not foresee any end to a vessel supply glut in fiscal 2013 because a large number of vessels continues to be scheduled for delivery during the fiscal year. Combined with persistently high bunker prices, the business environment will warrant continued vigilance in fiscal 2013.
In January 2013, MOL executed bold business reforms. We put a system in place to reshape our business structure by transferring our dry bulkers to Singapore, a key hub of customers and information. The move to Singapore has restored cost competitiveness to the dry bulker fleet, which had been operating at a loss, laying a strong foundation for restoring profitability. Based upon this new foundation, we formulated the One-Year Management Plan for fiscal 2013 with a view to accumulating additional cash flow.
Business model transformation lies at the heart of the One-Year Management Plan. During the years of sharply rising market conditions in the shipping sector from 2003 to the Lehman Shock of September 2008, the MOL Group generated large earnings through a business model that anticipated a bullish shipping market. However, given the continuing vessel supply glut at present, we need to return to basics and reaffirm the MOL Group Corporate Principles by rebuilding our sales structure to carefully support customer needs. We will accelerate business expansion from our hub in Singapore through business reforms designed to capture growth primarily in emerging markets. At the same time, we will enhance the quality of service for our Japanese customers, who have stood behind the MOL Group over the years, with the aim of upgrading our services further.
Moreover, we will execute bold reforms of unprofitable operations and non-core assets, leaving no stone unturned. Measures will extend to withdrawing from businesses and disposing of assets.