New Year’s Remarks from the President & COO
January 4, 2021
On 4 January, Yoshihisa Suzuki, President & COO of ITOCHU Corporation delivered his New Year’s message online to employees.
In an effort to prevent and minimize the spread of COVID-19, the annual New Year’s ceremony was canceled.
Happy New Year
This year's winter vacation was a little shorter than usual, but I trust you are refreshed and ready to take on the challenges ahead of us this year.
As we embark on another year, I would like to look back on the past 10 years of ITOCHU. The company has grown greatly during this period. Our consolidated net profit, which stood at 161.1 billion yen in fiscal 2011, grew steadily year after year, reaching 500.0 billion yen in fiscal 2019 and fiscal 2020, back-to-back. In spite of the uncertain economic environment resulting from the COVID-19 pandemic last year, moreover, we are projecting profit of 400.0 billion yen for the current fiscal year, down no more than 20% year on year. We achieved a progress rate of 63% in the first half, evidence of steady headway toward our goal.
The numbers themselves thus show significant change, but what has made possible this transformation over the last 10 years? First, Mr. Okafuji—now Chairman & CEO— made the bold decision to shift our growth strategy to focus mainly on non-resource businesses in 2013, in advance of other sogo shosha, which were still inclined to focus on resources. Then when the so-called “resource supercycle” came to an end in 2015 the other sogo shosha posted huge losses.
Following this, in 2016, we established the ICT & Financial Business Company, moving to DX (digital transformation) business ahead of our peers. In 2018, we made FamilyMart a subsidiary. In 2019, to accelerate our market-oriented business transformation, we established the 8th Company. And last year in 2020, we took FamilyMart private. Looking to the future, we continue to build on these measures. Overall, we shifted from resource to non-resource and consumer-oriented businesses and to a market-oriented approach. In this way, over the past decade, we have been in the vanguard in responding to changes in the market and the business environment, while at the same time focusing on the front lines, and this has allowed ITOCHU to enjoy robust growth.
Another factor that has significantly contributed to our growth during the decade is that the distinctive quality of ITOCHU has become clear. For many years, it was difficult to identify where ITOCHU was heading or to discern our corporate identity. This was due in part because, in our push to catch up with our zaibatsu (former industrial group) heritage peers, we were preoccupied with expanding the scope of our business. In 2014, however, we announced the Corporate Message – “I am One with Infinite Missions” – that harks back to our merchant origins in Ohmi (western Japan). This message has communicated both within the company and externally the Sampo-yoshi philosophy of our founders, whereby business must be “good for the seller, good for the buyer and good for society”. The core values of trustworthiness, keeping promises and delivering commitment-based management that are now recognized as the essence of ITOCHU’s corporate identity have served as an important backbone of our resilient consumer-oriented business portfolio.
This year marks the beginning of a new decade, and our first and most important target for the year is to achieve 400.0 billion yen in consolidated net profit for fiscal 2021 and thereby fulfill our commitment-based management. Last year, the economic environment changed dramatically due to a pandemic that no one had expected, making us aware that things can suddenly turn dark. While the economy is expected to be on a gradual path to recovery, we cannot let our guard down. There is a Chinese saying, "Remain alert to danger, even in times of peace." It continues: "Keeping alert means you are prepared," and "If you are prepared, you will have no regrets." At ITOCHU, we are fortunately coping well with the current situation, aided by the fact that since before the outbreak of COVID-19 we were prepared for contingencies and warned ourselves that economic expansion would not last forever.
I request that you continue doing your best in your respective jobs again this year, reflecting back on past failures, always remembering to be prepared for danger, and practicing ITOCHU’s basic business principles of “Earn,” “Cut” and “Prevent.” If we gain the “triple crown” and are ranked first among sogo shosha in consolidated net profit, stock price, and market capitalization, it will be a big step forward in our efforts to change the course of history of ITOCHU, which has trailed some trading companies ever since our foundation more than 160 years ago. Whether we will be able to establish a solid position will depend these next few years. Even if we succeed in capturing the “triple crown,” we must not forget to guard against overconfidence and always stand ready realign our focus.
The COVID-19 pandemic has accelerated the trend toward digitalization, and we are facing a great turning point beyond which past ways of doing business will no longer apply. At present, ITOCHU has particular strengths in the consumer-related sector. For us to continue growing, we must further strengthen business in the consumer-related sector by taking a market-oriented approach, utilizing data to accurately understand what consumers want and developing businesses from the consumers' perspective.
We can no longer survive with the previous product-by-product “silo” approach. I ask each of you to maintain a strong sense of crisis and an awareness that business transformation is required.
In addition, as Sustainable Development Goals (SDGs) are becoming a major trend, expectations are growing for adherence to ESG (environmental, social and governance) principles, as exemplified by Prime Minister Suga’s recent declaration that Japan will go carbon neutral by 2050. SDGs can be regarded as today’s Sampo-yoshi. As such, responding to SDG expectations should come naturally to ITOCHU for we always have worked to tackle social issues like environmental problems. I would like us to use this opportunity to not only expand business but also to enhance the social value of ITOCHU as a company dedicated to the philosophy of Sampo-yoshi.
Last year was historically significant as the year of the COVID-19 pandemic. Despite the upheaval, however, ITOCHU conducted a large-scale tender offer for shares in FamilyMart. Thus, even in an uncertain environment, it is important to take forward-looking initiatives, while carefully assessing risks. As mentioned, we strengthened our non-resource businesses in advance of other sogo shosha. Thanks to initiatives like those I have mentioned, we will remain a step ahead of others. We will continue to identify structural changes in society and changes in the economic environment as opportunities to take the lead and fearlessly forge ahead. The accumulation of such initiatives should lead ITOCHU to the next level.
This will be a year for us to further evolve our businesses together with our customers, partners and affiliates while improving the business portfolio that we have built so far and also to create a new ITOCHU by further enhancing the distinctive quality of our company. Let's move forward together so that in 10 years we can proudly say, "2021 was the year when ITOCHU started operating as a true industry-leading company."
Lastly, I would like to close this New Year’s Message by again extending my best wishes for good health and great success in 2021 to all ITOCHU Group members and their families around the world.
Thank you very much.