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President’s Message
Results for the fiscal year ended March 31, 2012 and the New Medium-term Management Plan
I would like to thank all of our shareholders for their enduring support.
We have announced our financial results for the fiscal year ended March 31, 2012, the final year of the Shine 2011 Medium-Term Management Plan.
Reviewing the business environment during the year, while the Japanese economy gradually recovered from the effects of the Great East Japan Earthquake, it was impacted by a global economic slowdown, yen appreciation, and flooding in Thailand. China, India and other newly emerging economies maintained relatively robust growth supported by expanding internal demand. Overall, however, the global economy was hindered by sluggish growth in advanced economies and a decline in capital flows from advanced economies to emerging economies due to the prolonged debt problems in Europe. As a result of these factors, there was a higher level of uncertainty in the business environment surrounding the Sojitz Group.
The Sojitz Group' s business performed generally well under these conditions. Financial results were impacted, however, by a reversal of tax deferred assets following Japan' s corporate tax reforms introduced on December 2 in tandem with the promulgation of a reconstruction financing law. As a result, while ordinary income for the year ended March 31, 2012 increased by ¥16.9 billion from the previous year to ¥62.2 billion, we posted a consolidated net loss of ¥3.6 billion for the year, a year-on-year decline of ¥19.6 billion. Although this marked a substantial improvement from the forecast ordinary income of ¥46 billion and net loss of ¥12 billion announced on December 9, 2011, it is regrettable that this result failed to meet the expectations of our shareholders. At the same time, I would like to note that the overall profit base of our business continues to improve as new investments begin to provide contributions to earnings.
Reviewing the success of Shine 2011, in the wake of the financial crisis following the bankruptcy of Lehman Brothers in 2008, we aimed to use the plan to solidify our footing while improving earning' s quality through the accumulation of high-quality businesses and assets in order to establish a strong earnings foundation conducive to sustained growth. In terms of specific business areas, we implemented thorough risk management practices in the fertilizer and automobile businesses to enable a relatively swift recovery in earnings, and we achieved our goal of making all of our business segments profitable. New investments expanded our coal and rare metal concessions and in the non-resources segment, progress in the IPP business laid the foundation for stable long-term profitability. We also succeeded in expanding the business foundation through new upstream investments in the rare earth and industrial salt businesses. These new areas will provide a foundation for our future growth. With these tangible successes, we made significant strides in enhancing the earnings foundation, which is one of the great achievements of Shine 2011.
We have formulated the Medium-Term Management Plan 2014: ‘Change for Challenge' as a way to build on the initiatives of Shine 2011 and promote even greater reforms throughout the Group.
“Change for Challenge” means our continuous effort to reform ourselves, as we strive to live up to new challenges in pursuit of greater achievements, in face of the accelerated pace of globalization . The plan calls for continued replacement of assets in order to enhance asset quality, thereby strengthening the earnings foundation and developing new pillars of profit to support our future growth.
We will continue to invest for growth. Strategic investments will be made in areas where we can expand stable profits, transform profit structures, and in areas to support future growth. We plan total investments of ¥180 billion over the three-year period.
Below are the key financial targets and management indices for the Medium-Term Management Plan 2014.
・Consolidated net income: ¥20 billion (FY2012); ¥33 billion (FY2013); ¥45 billion (FY2014)
・Consolidated ordinary income: ¥50 billion (FY2012); ¥65 billion (FY2013); ¥75 billion (FY2014)
・Total assets: Maintain a level of ¥2 trillion
・Shareholders' equity: ¥380 billion by March 2015
・Net DER:2.0 times or lower
・ROA:2.0% or higher
・Payout ratio: Approximately 20%
I will spare no effort to achieve the goals of Medium-Term Management Plan 2014 and enhance our corporate value, thereby meeting the expectations of our shareholders.
With the continuous commitment and determination of all group employees, Sojitz will strive for greater prosperity in local communities and in countries around the world through the promotion of sound business activities.
Thank you again for your understand and support of the Sojitz Group.
May 8, 2012
President & CEO
Yoji Sato
>>Inaugural address in April 2012
