Message from the President (as of June 28, 2017)
We would like to express our sincerest gratitude to our shareholders for their continued support and cooperation. We are pleased to provide an overview of the Mitsui Engineering & Shipbuilding (MES) Group’s business in fiscal 2016 (the fiscal year ended March 31, 2017) and future initiatives.
In 2016, the global economy was marked by slowing growth in China, emerging countries and resources giants in the first half, followed by a gradual recovery in the second half, which reflected a rebound in the US economy and support from the Chinese economy.
In Japan, economic conditions were also lackluster in the first half given a decline in capital investment and the effects of the stronger yen, but toward the end of the year, positive expectations about the large-scale fiscal policies of the Trump administration caused the yen to weaken and lent impetus to a recovery in capital investment and exports.
Nonetheless, the outlook remains unclear, with increasingly protective trade policies and financial instability in Europe, among other factors.
In the midst of this environment, the Group has been working to enhance earnings through cost improvement activities such as cutting down materials and equipment costs and reducing fixed costs. However, we fell short of our initial goals for fiscal 2016, an outcome attributable to additional costs incurred in relation to the construction of an ocean support vessel and a deterioration in the profitability of construction related to an EPC (Engineering, Procurement and Construction) project.
Consequently, our full-year consolidated earnings were net sales of 731.5 billion yen, operating income of 8.3 billion yen, ordinary income of 14.9 billion yen, and profit attributable to owners of parent of 12.2 billion yen.
Based on these results, we set the year-end dividend for fiscal 2016 at 3 yen per share.
In 2017, we celebrate our centenary. As the gateway to laying the foundation for the next 100 years and the first step toward achieving the MES Group 2025 Vision, our long-term vision, we prepared the Mid-Term Business Plan 2017 (MBP17) spanning fiscal 2017 to fiscal 2019 (ending March 31, 2020). In the MBP17, the MES Group places “Improving added value of products & services,” “Reforming the structure of manufacturing & EPC” and “Expanding & enhancing ancillary services” as the three pillars of its business strategies, and together with “Robust group management and Reinforced business foundation” these form the basic strategy of the Group.
In addition, we will aim to improve the profitability ratio and stabilize earnings by concentrating our management resources on the Environment & Energy, Marine Logistics & Transportation, and Social & Industrial Infrastructure as our areas of business focus. As numerical targets, we have set net sales of 920.0 billion yen and ordinary income of 37.0 billion yen for fiscal 2019.
The Group plans to adopt to a holding company structure through a company split in April 2018.
By separating management functions and business execution through a company split to enhance the mobility of each business and positively seeking to cooperate with external partners, we will strive to achieve the MES Group 2025 Vision and Mid-Term Business Plan 2017.
As the MES Group pursues these initiatives, we fully appreciate the understanding of our shareholders and respectfully ask for their continued support and cooperation.