TOKYO: MOL President & CEO Takeshi Hashimoto delivered the following "2023 New Year Message" to all MOL Group officers and employees on January 4.
Happy New Year to everyone at the MOL Group. As we start off the year, I would like to share some of my thoughts with you.
Looking Back at 2022
Last year was a year in which I gradually felt the normalization of economic activity and social life from the COVID-19 pandemic. Travel restrictions have been eased almost all over the world, which means we are free to make overseas business trips. Personally, I have taken opportunities to travel overseas since last year, and I was eager to see some of the changes taking place in the world, by exchanging opinions with government officials and business leaders in various countries. I encourage everyone to take advantage of opportunities to communicate directly with customers, business partners, colleagues in MOL group, and others in your business circle and offer constructive opinions about the future of our group.
Last year was also a time when the world economy and society were widely and severely affected by the war of Russia and Ukraine since February. Disruptions in supply chains, soaring energy and grain prices, global inflation, and so on—turmoil continues in a variety of fields. Some companies decided to withdraw from Russia-related business, but our group will continue to offer stable transport services, placing the highest priority on securing the safety of crewmembers, cargo, and vessels, as a company that develops a social infrastructure business centered on ocean shipping, transporting commodities essential to people's lives. Considering about strategic importance of energy supply under current circumstances, we will continue our energy transport business, mainly LNG, from Russia, as long as we can, and this is also in line with the direction of the Japanese government's policy. Of course, at the same time I pray that the situation will be brought to an end as soon as possible and that the people of Ukraine will return to safety
and peace.
We expect to achieve record high profits for the current fiscal year, benefiting from strong demand for ocean going shipping and the accompanying surge in market rates, as we did in the previous fiscal year. On the other hand, freight rates have already begun to decline in some segments, especially container segment, as logistics disruption is coming to an end with the normalization of society.
The shipping market is always volatile, and we expect a reversal in market conditions. The global economy is in an overall downtrend, and we have also had to prepare for future market downturns. Regarding our favorable performance for this fiscal year, I believe it was the result of you and your team's efforts to reform its operations and business structure since the COVID-19 pandemic, and to hone its competitiveness. I would like to once again express my appreciation for all of MOL group staff's efforts.
Outlook for 2023
Looking ahead to the business environment in 2023, since China announced a review of its zero-COVID policy at the end of last year,
I believe the nearly three-year-long turmoil caused by COVID-19 will be over, and the world economy and society will gradually normalize. In the last two years, we have achieved fantastic financial results against the backdrop of a soaring shipping market. But due to the global inflation that has been rising since last year, high interest rates, and the resulting economic downturn, we expect our profits for the next fiscal year to be lower than in FY2021 and Fy2022.
This year, we may see the impact of inflationary measures in the U.S. and Europe, and a significant but temporary downturn in the economy, however, we expect a return to a moderate expansionary trend in the not-too-distant future, as the Chinese economy normalizes and the pace of U.S. interest rate hikes slows. We intend for this year to be one in which we effectively use the capital we have accumulated over the past two years to prepare for deteriorating financial result and to invest for our future growth.
Organizational restructuring measures
Next, I will touch upon the new organization and structure announced in December 2022. This year's reorganization will be a major one. I want to share two key points with you.
The first is to create a structure that can powerfully push our regional strategies, one of the group's main strategies. To expand our overseas regional business, the group will be broadly re-grouped into "corporate organizations", "business organizations", and "regional organizations",
each of which will mutually collaborate and cooperate with appropriate checks and balances put in place. As a business execution system to support this organizational structure, the "corporate organizations" will introduce a Chief Officer system to address group-wide management issues related to corporate functions, including strengthening group governance.
In addition, an executive officer responsible for regions, dedicated to "regional organizations" will be assigned in each region to promote business development and operation in "regional organizations". Another essential issue in driving regional strategies is to speed up the decision-making process for specific business projects, particularly for new investments. To this end, it is essential to delegate authority to "regional organizations" and detailed discussions are currently underway.
Finally, I want to pledge my commitment to safe voyages for all MOL Group-operated vessels. I wish you and your families a very happy New Year, as well as good health, happiness, success, and prosperity.
