Message from our President and CEO

On July 1, 2024, we marked the 70th anniversary of the founding of MC. We have faced challenging business environments during our long history as a trading company (sogo shosha). There were even times when people argued that sogo shosha were in decline or redundant. However, MC has survived these difficult times and continued to achieve growth. In every era, MC has been defined by its broad touchpoints across multiple industries on a global scale and this dates back to our founding as a trading company. In every era, we have continued to capture new growth opportunities by flexibly reshaping our business models—from trading to business investment, and from business investment to business management— to adapt to the changing business environment. The industry expertise we have accumulated through this evolution remains a vital source of our core competencies and is the cornerstone of the way we do business.

In recent years, there has been a clear shift in perceptions of the role of companies, which are increasingly expected to work toward the realization of a sustainable society by resolving societal issues. However, we recognize that finding resolutions to today’s societal issues is far from simple. For example, decarbonization has emerged as a shared global challenge. A key solution to this problem is the transition to the local production and consumption of renewable energy, in part because of energy supply constraints due to heightened geopolitical risks. However, this approach raises the question of how electric supply can be reliably secured using renewable energy, which is weather-dependent and inherently intermittent. The rapidly advancing field of AI technology is also expected to contribute to the resolution of societal issues, such as through the improvement of productivity. However, the massive computing power required for AI depends on semiconductors and electric power, which have been characterized as the bread and butter of industry in the 21st century. At the same time, we must try to provide the electric power required to support our social and living infrastructure while considering the affordability of this resource. To solve these issues, we will need to ensure that energy is used efficiently and without waste through energy management. We need to pursue a variety of initiatives, including the commercialization of next-generation energy sources, such as hydrogen, ammonia, and sustainable aviation fuel (SAF), to optimize electric power systems and reduce or eliminate carbon emissions. There is no silver bullet for today’s increasingly diverse and complex societal issues.

This is why we have identified the augmentation of our core competencies as a priority under our Midterm Corporate Strategy. By leveraging these capabilities in ways that help resolve societal issues, we aim to achieve corporate growth by contributing to the development of a sustainable society.

Since taking office as President and CEO, I have worked to create more opportunities for management, including myself and our independent directors, to engage in dialogue with institutional investors in Japan and overseas, analysts, and shareholders (including individual shareholders), and investors. The feedback and advice we have received through this dialogue is immediately shared with our management team and reflected in management initiatives, starting with changes that can be introduced immediately. One example of this approach relates to shareholder and investor returns. We carefully determine expectations through our discussions and make decisions based on our cash position, the state of our investment pipeline, and our financial soundness. In May 2024, we decided to increase MC’s dividend from 70 yen to 100 yen per share, maintaining our progressive dividend policy. This decision reflects the growth in our earning power and the increased predictability of our cash flows. Although this dividend is relatively high given our current performance outlook. I believe that we have gained a certain degree of recognition in the capital markets thanks to our stance of providing robust shareholder returns through our commitment to both growthrelated investments and the maintenance of our financial soundness as a company.

We are determined to achieve further growth through continued two-way communication with shareholders and investors.②

Since its founding, MC has evolved in step with a changing business environment by shifting from a trading company to a Company which invests in and actively manages businesses across a broad range of industries. For example, the relationships of trust that we built with our customers through our import and sale of oil served as the foundation for the development of our LNG business. When Japan began to introduce LNG in the 1960s, we established ourselves as a trader in this area by becoming an import agent for Alaskan LNG. In the years that followed, we expanded the scope of our trading activities through investment in areas such as natural gas liquefaction and upstream gas field development. Today, the evolution of our business models toward active business management is evident from our involvement in LNG plant operations and direct selling of LNG, and from the growth of our LNG activities into a core business.

Thanks to MC’s core competencies across a wide range of industries and a global network, we are able to make flexible decisions about investment strategies, structures, and time horizons based on industry-specific characteristics, and business phases. I see this as a key strength for MC. Our growth is also attributable to the industry expertise we have gained through our deep involvement in all industries and our engagement in business and operational management. That expertise, together with our diverse business segments, form a foundation for the continuous creation of new businesses that can contribute to the resolution of societal issues.③ When our initiatives lead to an increase in our earning power, we gain recognition from the stock market. This, together with our commitment to have an open dialogue with our shareholders and investors, is reflected in the growth of our market capitalization, which has climbed from approximately ¥6 trillion in April 2023 to ¥12 trillion as of October 2024. We see this growth as indicative of a significant rise in the expectations shareholders and investors have of MC.

We are determined to maintain our lead in an environment of increasing global competition, and we cannot afford to be complacent with our current state. Rather, we will work to increase our corporate value by targeting sustained growth and improved ROE through robust investments and initiatives, while also providing detailed disclosures regarding these efforts to our stakeholders.

To achieve that, we executed a reorganization in April 2024, resulting in the establishment of an organizational structure optimized for the new growth story that has emerged under our current Midterm Corporate Strategy, as well as related growth drivers. In addition, in June 2024 we modified our corporate governance structure and transitioned to an Audit & Supervisory Committee structure, to rapidly capture growth opportunities and accelerate decision-making processes.⑥ While individual business segments will continue to pursue growth in their respective sectors, we will also implement initiatives to create new business models that combine the strengths of multiple business segments in ways that go beyond simple synergies.

To help find solutions to today’s increasingly complex societal issues, we need to create MCSV and apply MC’s unique strengths across multiple existing business areas. We see this as a driver to enhance corporate value over the medium to long term.

Our people are our greatest strength. As mentioned earlier, MC has been able to adapt to change by transforming the capabilities of individual employees into an organizational strength. However, uncertainty in the business environment continues to increase, and values and perspectives toward work are diversifying as new generations enter the workforce, leading to more independent relationships between companies and their employees. Given these conditions, we have developed a medium- to long-term people vision designed to ensure that we can continue to recruit and retain high-quality talent as an attractive employer and train people with the ability to anticipate changes in the business environment over the next 10 years.⑦ As our employees acquire business experience, they evolve into professionals in various fields and gain the capacity to create or enhance the value of our businesses. In addition, we aim to cultivate individuals who can pursue the creation of MCSV across multiple business areas, by rotating employees through multiple roles to allow them to gain an overall understanding of their own business segment, as well as MC as a whole. We are never satisfied with the status quo and will continue to innovate through DE&I initiatives and other measures in order to develop environments and systems that maximize the strengths of our employees, leading to the recruitment and development of individuals who can vigorously promote our continual evolution. I believe that my most important mission as President and CEO of MC is to train large numbers of people with these qualities as the next generation of leaders.

While FY2024 marks the final year of our current mid-term corporate strategy, we aim to treat it as year zero of the next mid-term strategic period. We are committed to creating a new, enhanced version of Mitsubishi Corporation that is befitting a new stage of our evolution.