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Commitment to Building a Profitable Company
Since the time when I took up the mantle of president in 2017, I have felt that one of my most important tasks has been to ensure that Sojitz is a company that continuously generates earnings. At the time of my appointment, Sojitz faced a myriad of problems, including a low credit rating. Addressing these problems required us to transform Sojitz into a company that could generate a steady profit. To accomplish this objective, I prescribed a two-pronged approach toward increasing the level of Sojitz’s earnings through trading and business investment. I also called for revisions to our employee evaluation systems, which previously set short-term business results as the main measure for employee evaluation. For example, an employee in charge of a high-margin trading business can produce steady earnings for a certain amount of time just by doing the same things every day. Conversely, the efforts of employees working in business investment cannot be seen in the short term as investment is an area that requires more time to see the fruits of one’s labor. It is not uncommon for an investment to start generating earnings only after the individuals who were first involved in getting the project off the ground have already been assigned to another project. This means that, if we only evaluate short-term results, people in trading will often be evaluated more highly than those in business investment. This situation presented an obstacle to ensuring ongoing growth for the Company over the long term. It is for this reason that I thought to transform our employee evaluation systems to place more emphasis on processes, which I anticipated would help encourage employees to take on new business challenges. We went about the process of implementing these reforms by carefully identifying and addressing issues. These efforts proved to be a success, and our drive to reform employee awareness has helped Sojitz make strides toward becoming a profitable company that generates earnings through both trading and business investment. As we move forward with such efforts to improve our earnings power, we are also making progress in the sustainability initiatives we have been advancing to ensure more solid improvements in corporate value over the medium to long term.
In the year ended March 31, 2017, prior to my appointment as president, profit for the year (attributable to owners of the Company) amounted to ¥40.8 billion. In the year ended March 31, 2023, this figure surpassed ¥100.0 billion for the second consecutive year. This impressive growth can, in part, be attributed to the beneficial operating environment. However, I am immensely proud of the foundation we have built to boost our earnings power, which has resulted in our being able to consistently generate profit in excess of ¥100.0 billion.
Sojitz’s Next Step
In the year ending March 31, 2025, after seven years as president of Sojitz, I have chosen to pass the reins to the next leader.
In my new capacity as chairman, I intend to devote even more effort to strengthening our relationships with Sojitz’s partners around the world and to forging bonds with new partners. Sojitz’s new president, Kosuke Uemura, is decisive and unwavering in his values. His career to date includes a strong background in the field of energy. However, I have most praise for the way in which he has helped boost Sojitz’s earnings as the general manager of the Project Development Office of the Chemicals Division, and later as the vice COO and eventually the COO of this division. The Chemicals Division had previously lacked an investment-oriented mindset and consequently was not sufficiently motivated to tackle new challenges. Fortunately, Mr. Uemura was able to rise to the occasion as a leader, rallying his colleagues and enlisting new allies as he propelled the division forward to become a more profitable organization. Some may think that Mr. Uemura is a bit young for his new role as president, but, in my opinion, age is not that important. The Nomination Committee has also judged him to be the right person to lead Sojitz toward its next stage of growth. This decision was not made lightly but, rather, was arrived at through extensive discussion on factors such as personality and track record. I will retain representative rights, and I will oversee our highly capable division COOs and other members of the new management team as they support one another in advancing the Company. When the frameworks are in place to ensure ongoing improvements in Sojitz’s corporate value, I plan to step down from my role as CEO.
To reiterate, Sojitz has made strides toward becoming a company with high earning capabilities over these past several years. However, many of our businesses are still in their early stages of development, and their contributions to earnings are thus small. An important task that I am entrusting to Mr. Uemura as the new president will be to grow these small businesses into ones that generate substantial revenue. Our efforts going forward will not be limited to areas where Sojitz has traditionally exhibited strength, like machinery and energy. Rather, I look forward to seeing Sojitz foster new strengths in its current areas of focus, such as retail and food products.
In June 2024, Sojitz transitioned to the Company with Audit and Supervisory Committee structure as described in the Companies Act of Japan. The aim of this move was to expedite decision-making. Under this new structure, the Board of Directors will delegate authority to executive directors and executive officers. Meanwhile, the Board’s functions for monitoring the executive team’s efforts to improve corporate value will be enhanced. These changes are also anticipated to allow the Board to focus more on matters pertaining to growth investments and strategies and to thereby delve deeper into these matters. The resulting structure should make it easier to reach a consensus and thus allow for decisions to be made faster. This structure will no doubt be an effective asset for Sojitz and one that we will be further refining as we move forward.
Message to Shareholders and Other Investors
Sojitz has already accomplished all of the quantitative targets of Medium-Term Management Plan 2023—Start of the Next Decade. However, we also recognize that these targets are not goals but rather milestones on our journey forward. Our commitment to our vision of becoming a general trading company that constantly cultivates new businesses and human capital remains firm. To guide us toward this vision, Medium-Term Management Plan 2026—Set for Next Stage—has set forth as one of its core tenets the aim to define Sojitz’s unique identity, based on which we should continue to improve corporate value over the medium to long term. I hope you will look forward to the endeavors of Sojitz as it celebrates the 20th anniversary of its founding and approaches its next stage of growth.
July 2024
Masayoshi Fujimoto
Representative Director, Chairman & CEO
*Organization affiliations and titles are current as of the July 2024 issue.
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