Integrated Report 2023
Year ended March 31, 2023
Value Creation Story
NewEditorialGroupPolicy Strategic Goals
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Positioning of "MITSUI E&S Group Integrated Report" | |||||
Financial Information | Non-Financial Information | ||||
INTEGRATED | REPORT | ||||
Gathers and summarizes | key information | ||||
Financial Statement Report | |||||
https://www.mes.co.jp/investor/reports/financial_rep.html | Website Pages [ Sustainability ] | ||||
Website Pages [ IR/Company Information ] | https://www.mes.co.jp/sustainable/ | ||||
https://www.mes.co.jp/investor/ | |||||
Scope | MITSUI E&S., Ltd. and major companies of the MITSUI E&S Group | ||||
However, the applicable scope of reporting is specified | on a case-by-case basis if it differs from the above. | ||||
Period | This report covers the period from April 2022 to March 2023. | ||||
(However, some sections include information for April 2022 and thereafter.) | |||||
Reporting | Once a year in principle | ||||
frequency | |||||
Publication | January 2024 | ||||
date | |||||
Reference | • "Sustainability Reporting Standards issued" Global Reporting Initiative (GRI) | ||||
Guidelines | • "International Integrated Reporting Framework" IFRS Foundation | ||||
• "Guidance for Collaborative Value Creation" METI of Japan | |||||
Inquiries | |||||
Value Creation Story
MITSUI E&S Group's strategy
Foundations of
Value Creation
Contents
Editorial Policy | 1 | |
Contents | 2 | |
New Group Strategic Goals | 3 | |
History | 4 | |
Transition to a new structure | 5 | |
Material Issues | 7 | |
Top Message | 9 | |
Value Creation Process | 13 | |
Competitive Advantages | 15 | |
Interviews with Executives | 17 | |
Progress of the Mid-Term Business Plan 2023 | 19 | |
Business Revival Plan | 20 | |
Interviews with Executives | 21 | |
Pillars of Growth Strategy ① Green strategy | 23 | |
Pillars of Growth Strategy ② Digital strategy | 25 | |
Financial strategy | 27 | |
Human capital | Human resources strategy | 29 |
Initiatives for Human Rights | 32 | |
Health, Safety and Health Management | 33 | |
Manufactured capital | Supply chain management / Quality control | 35 |
Natural capital | Environmental Preservation | 36 |
Addressing climate change risks (TCFD) | 37 | |
Social and relationship capital | Stakeholder Engagement | 39 |
Contributing to Society and Local Communities | 40 | |
Governance | Corporate Governance | 41 |
Officers | 43 | |
Message from an Outside Director | 45 | |
Compliance | 46 | |
Executive Officer's Message | 47 |
MITSUI Co., Ltd. Public Relations Sect, Corporate Planning Dept Contact form | |
https://www.mes.co.jp/contact.html | |
Disclaimers | This report contains plans and forecasts that were current as of the date of publication, as well as descrip- |
tions about our future business activities based on our management plans. Please note that this information is based on the currently available information, and the actual contents of our business activities may differ from the contents of this report due to future circumstances or the environment, or due to unanticipated events that may occur after the publication of this report.
MITSUI E&S agrees with the SDGs (Sustain- able Development Goals), an international goal set by the United Nations to solve global issues.
Business Overview | New Business Development/Marine Propulsion Systems | 48 | |
Logistics Systems/Peripheral Services | 49 | ||
Ocean Development/Others | 50 | ||
Financial / Non-financial Highlights | 51 | ||
Data | 11-Year Financial Performance | 53 | |
Non-Financial Key Data : Environmental | 55 | ||
Non-Financial Key Data : Human capital | 56 | ||
Company Profile / Stock and Bonds | 59 | ||
Offices and Works | 60 |
1 MITSUI E&S Group Integrated Report 2023 | MITSUI E&S Group Integrated Report 2023 2 |
Value Creation Story
New Group Strategic Goals
Mid-Term Business Plan 2023 redefined the MITSUI E&S Group's Strategic Goals (Company Philosophy, Vision, Management Policy, Standards of Conduct), in accordance with the quick shift to a sustainable society, environmental change and the transformation of the Group. All employees share a new the meaning of the MITSUI E&S Group's existence and work together to move forward.
Our mission
We build trust and contribute to society through our engineering and services
The mission conveys the meaning of our existence (purpose), namely expanding our operations beyond the scope of conventional manufacturing, and contributing to the achievement of a sustainable society through our engineering and services.
History
In April 1, 2023, the MITSUI E&S Group ceased to be a pure holding company and made a fresh start as a business holding company named MITSUI E&S.
To ensure our growth and profitability in the future, we will bring our operations and management closer together, unite and transition to a new structure to accelerate the formulation and implementation of strategies.
1917- | Established as the Shipbuilding Division of | ||
the Former Mitsui & Co. | |||
In 1917, Teijiro Kawamura, who was the General Manager of the | |||
Ship Division of former Mitsui & Co. at the time, was acutely aware | |||
of the need to have a shipyard and a repair factory and submitted a | |||
petition to the president. The Mitsui E&S Group commenced from | |||
his passion. | |||
1937- Separated from Former Mitsui & Co. to become | |||
Tama Shipyard Co., Ltd. | Teijiro Kawamura | Salt field before factory construction | |
1942- Changed company name to Mitsui Shipbuilding & | |||
Engineering Co., Ltd. |
Vision in 2030
In the marine domain, we create a carbon-free society
and resolve challenges induced by depopulation
1960- | Evolving into a comprehensive |
heavy engineering company |
Since the 1960s, we have expanded into the land sector, including iron structures such as bridges, and construction and mining equipment. While promoting technical partnaerships , we expanded our business domains to include container cranes, rotary machinery, plant construction, etc.,and we grew into a comprehensive heavy engineering company.
Our first open-cycle marine gas | Japan's first quayside container |
turbine with 2,000 horsepower | crane is completed |
Regarding our strengths in the marine domain that is the core of our operations, we will implement resolute management.
Management Policy
2018 Transitions to a pure holding company
The Group shifted to a holding company structure to accelerate | |
efforts to deepen the level of Group management. At the same | |
time the company name was changed to Mitsui E&S Holdings, | |
marking a a new step forward for the new MITSUI E&S Group. | MITSUI E&S unified logo |
Create new value
together with customers
Business development
(Commitment to customers and
suppliers)
Conduct business through needs-oriented marketing and innovation in relevant technologies
Seek a sound financial structure and steady profit
Finance & Corporate Planning
(Commitment to shareholders and
financial institutions)
Manage and operate our group through the timely evaluation of marginal profit and fixed costs
Accelerate the resolution of sustainability issues
Personnel and general affairs
(Commitment to employees and
society)
Address climate change, population decline and diversity in consideration of employees' health and safety
2019 Formulates and implements a Business Revival Plan
Because of the significant damage to our financial foundation, the Mitsui E&S Group Business Revival Plan was formulated in May 2019 (and partly revised in November 2019) and 120 billion yen in assets and businesses were sold to improve our financial structure.
2022 Mid-Term Business Plan 2023 starts one year earlier
2021-Transfer of Naval Ship | 2022-Virtually withdraws from the |
Business | merchant ship business |
Standards of Conduct
Simple
Endeavor to provide simple, unique and practical products and services
UniquePractical
We always focus on customer-centric products and services that fulfill three kinds of value, develop healthy businesses and bring them into the world to serve society
With our growth strategy as its core, Mid-Term Business Plan 2023 was started one year earlier. A stock transfer agreement is concluded regarding the large marine engines of IHI Power Systems Co., Ltd. and its incidental businesses in September 2022.
And in March 2022, we announced a financing plan totaling approximately 17billion yen as a capital measure, and began laying the groundwork for a turnaround offensive.
2023 We cease to be a pure holding company and are renamed MITSUI E&S.Transitioning to a new structure to accelerate the formulation and implementation of strategies
Transitioning to a new structure to accelerate the formulation and implementation of strategies
We will cease to be a pure holding company and transition to a business holding company. Mitsui E&S Machinery and Mitsui E&S Business Service (the former being the core of our future growth strategy and the latter handling our corporate activities) are merged into MITSUI E&S to structurally integrate their business management. In this way, we seek to promote our growth strategy and streamline our business management.
3 MITSUI E&S Group Integrated Report 2023 | MITSUI E&S Group Integrated Report 2023 4 |
Value Creation Story
Transition to a Business Holding Company The New MITSUI E&S
To complete its Business Revival Plan, adopt a new corporate name and ensure future growth and improved profitabil- ity, the MITSUI E&S Group will transition to a new structure designed to shorten the distance between management and business operations, and speed up strategy planning and execution.
Absorption Merger of Mitsui E&S Machinery and Mitsui E&S Business Service
Since April 2018, the Group has been working to boost Group competitiveness and promote growth under a pure holding com- pany. To complete the Mitsui E&S Group Business Revival Plan that was launched in FY2019, and to ensure the future growth and improved profitability of the Group, two of the Group's companies, namely Mitsui E&S Machinery(MES-M), the Group's core business, and Mitsui E&S Business Service(MES-B), which handles corporate services, were merged into MITSUI E&S by absorption-type merger. By shifting from a pure holding company structure to a businessn operating holding company struc- ture, we aim to shorten the distance between management and business operations, increase the speed of strategy planning and execution, promote growth strategies and streamline management.
Key Points of the Organizational Changes
The new organization has been built while demonstrating an awareness of management policy, namely to "create new value together with customers," "seek a sound financial structure and steady profit," and "accelerate the resolution of sustainability issues."
Key Points of | 1. Consolidation and strengthening of corporate functions |
2. Shortening the distance between core operations and management | |
the Organizational | |
3. Integrated management of new manufacturing and after-sales services (AS) | |
Changes | |
4. Focus on green and digital technology fields | |
Old regime (from April 2018)
Mitsui E&S Holdings | Absorption- | ||||||||||||
type merger | |||||||||||||
of MES-M | |||||||||||||
and MES-B | |||||||||||||
MES-M | MES-B | Other | Affiliates | ||||||||||
subsidiaries | |||||||||||||
- Under the pure holding company structure, the Business Revival Plan was completed to some degree, including the bold implementation of various measures under the plan, and the promotion of a selection and concentration approach.
New Structure (from April 2023)
MITSUI E&S
MES-MMES-B
Other Affiliates subsidiaries
- Management is integrated with MES-M, a core Group business, to speed up strategy planning and execution
- MES-B,which handles corporate services, was incorporat- ed in pursuit of improved efficiency
Create new value
together with
customers
Seek a sound financial structure and steady profit
Accelerate
the resolution of
sustainability issues
Integrate Group and management layers and build a structure to drive the implementation of growth s trategies with a greater sense of speed.
Place the three operating divisions directly under management.
Build a consistent structure for new manufacturing and AS, and conduct marketing based on the potential needs of customers.
Split the Finance & Accounting Department into mission-specific organizations, with an Accounting Department responsible for ascertaining the profitability of business, and a Finance Department responsible for strengthening external financing.
Focus on the two areas of green and digital technology and newly establish the New Business Development Division to implement those business operations.
Drive the implementation of a green strategy aimed at creating a decarbonized society, and a digital strategy aimed at resolving issues of a society with a shrinking population.
To integrate digitalization companywide, bring together distributed systems under the IT Control Section of the Corporate Planning Department.
Outline of the New Company Organization
Three operating divisions, the New Business Development Division, Marine Propulsion Systems Division and Logistics Systems Division were placed directly under management, building a structure that integrates with the management layer and drives growth strategies with a greater sense of speed. In addition, to establish a compact management structure in line with the organizational consolidation and reorganization, we transitioned to a company with an audit and supervisory committee. As a result, we put in place an environment enabling the Board of Directors to engage in more in-depth discussions on matters of business strategy and projects that involve risk.
To Coincide with the Organizational Restructuring, the Business Segments were Changed from FY2023
The former Machinery Business was reorganized into the New Business Development Division, Marine Propulsion Systems Division and Logistics Systems Division. New product manufacturing and the after-sales service business were reorganized into an integrated organization in an effort to improve services. Additionally in the Ocean Development business, we will monitor the equity interests of MODEC.
- Outline of the New Company Organization
- Governance Structure
(After the Shareholders' Meeting in June 2023)
- New Company Business Segments
i r e c t o r s
( M a n a g e m e n t )
Corporate Planning Dept.
Accounting Dept.
Finance Dept.
HR & General
Affairs Dept.
Audit & Legal Dept.
Procurement Dept.
New Business Development Div.
Marine Propulsion Systems Div.
Logistics Systems Div.
Mitsui E&S Systems Research
MESTOKKI & Engineering
AKISHIMA LABORATORY
Burmeister & Wain Scandinavian
Contractor A/S
TGE Marine Gas Engineering GmbH
DASH ENGINEERING
PHILIPPINES, INC.
Mitsui E&S Power Systems
KajiTechnology
Mitsui E&S DU
Mitsui Meehanite Metal PACECO Corp.
Supervision
Shareholders' Meeting
Directors | Nominating | |||||||||||||||||||||
Committee | Audit and | Account- | ||||||||||||||||||||
(Members) | Supervisory | ing | ||||||||||||||||||||
11→ 7 | Compensation | |||||||||||||||||||||
Advisory | Committee | Auditors | ||||||||||||||||||||
Committees | ||||||||||||||||||||||
Execution | ||||||||||||||||||||||
President (CEO) | Audit & Legal Dept. | |||||||||||||||||||||
Management Committee | ||||||||||||||||||||||
Group | ||||||||||||||||||||||
Executive | Executive | Compliance | ||||||||||||||||||||
Committee | ||||||||||||||||||||||
Officers of | Officers of | |||||||||||||||||||||
Corporate | Operating | |||||||||||||||||||||
ESG Committee | ||||||||||||||||||||||
Departments | Departments | |||||||||||||||||||||
Special Crisis | ||||||||||||||||||||||
Control Committee | ||||||||||||||||||||||
Subsidiaries | ||||||||||||||||||||||
Old Segments
Machinery
Others
Ocean
Development
Engineering
Ship
New Segments
New Business Development | • Advanced Machinery |
• Industrial Machinery | |
• After-sales Service Business | |
Marine Propulsion Systems | • Marine Engines |
• After-sales Service Business | |
Logistics Systems | • Port Cranes |
• After-sales Service Business | |
Peripheral Businesses | • Peripheral service subsidiaries for |
the Machinery Business | |
Ocean Development | • Monitoring the equity interests of |
MODEC | |
Others | • Monitoring the equity interests, etc. |
of Mitsui E&S Shipbuilding | |
5 MITSUI E&S Group Integrated Report 2023 | MITSUI E&S Group Integrated Report 2023 6 |
Value Creation Story
Material Issues
The MITSUI E&S Group seeks to enhance its corporate value by contributing to solutions to social issues through its business activities. By setting key sustainability issues (material issues) and medium- to long-term targets, we will accelerate activities aimed at solving social issues.
Material issue 1 Creating a decarbonized society
Social Background
Amid the worldwide trend toward decarbonization, in July 2023 the International Maritime Organization (IMO), an agency of the United Nations, officially designated "net zero greenhouse gas emissions by around 2050" as its reduction target for greenhouse gas (GHG) emissions from international shipping. Similarly in Japan, the Ministry of Land, Infrastructure, Transport and Tourism is promoting the formation of Carbon Neutral Ports (CNP). These CNPs are designed to bring greater sophistication to port functions with decarbonization in mind and improve the environment for the acceptance of hydrogen and other materials, in order to boost competitiveness and contribute to a decarbonized society through ports that serve as nodes between land and sea.
• GHG emissions from international shipping and reduction targets | • Promotion of carbon neutral ports |
100 | |
Joint proposal by Japan | |
and other countries |
Material issue 2 | Resolving issues of a society | |||||
with a shrinking population | ||||||
Social Background
Japan relies on shipping for more than 99% of its trade volume on a weight basis, making container terminals an important part of social infrastructure. However, with the declining birthrate and aging population occurring in Japan, the working-age population (15 to 64 years of age) has continued to decline. According to population estimates released by the Ministry of Internal Affairs and Communications, Japan's total population is projected to drop below 100 million in the 2050s, with the working-age population set to drop to around 50% of the total population in the future. For this reason, to maintain production activities it will be necessary to promote the active participation of women, elderly people,and foreigner in society, further utilize artificial intelligence (AI), robotics and similar technologies, and pursue initiatives to automate tasks. Given these circumstances, in 2019 the Ministry of Land, Infrastructure, Transport and Tourism created the Support Scheme to Promote the Introduction of Remote Controlled Rubber Tired Gantry Cranes (RTGC:Product name "Transtainer") in order to provide support for remote controlled RTGC adoption.
(2008=100) | |||||||
2030 target value | |||||||
50 | 20% reduction | ||||||
Achievement of | |||||||
(Aiming for 30% reduction) | |||||||
carbon neutrality | |||||||
2040 target value | |||||||
by 2050 | |||||||
70% reduction | |||||||
0 | (Aiming for 80% reduction) | ||||||
2020 | 2030 | 2040 | 2050 |
Our Initiatives
As part of its responsibility as a leading company boasting a top domestic market share in marine engines and port cranes, MITSUI E&S has been promoting environmental action for many years. Today, We have been developing LNG dual-fuel engines, which are currently being adopted as marine engines for decarbonization, for more than 30 years and have accumulated a great deal of know-how. Currently, we are developing marine engines fueled by ammonia, which emits no greenhouse gases, and manufacturing cranes powered by hydrogen fuel cells. We will supply all types of dual-fuelled engine in response to customer
- Change in Population Composition
65 years old or older 15- 64 years old
Under 15
Working-age population as a percentage of total population
Source: Produced by MITSUI E&S based on Ministry of Internal Affairs and Communications, National Census; National Institute of Population and Social Security Research, Population Projections for Japan (2017 estimate): "Median birth and median death projections (population as of October 1 each year)"
(10,000 people) | (%) | ||||||||
14,000 | 12,708 | 70 | |||||||
12,328 | 12,670 | 12,532 | 11,913 | ||||||
12,000 | 65 | ||||||||
11,092 | |||||||||
10,192 | |||||||||
10,000 | 9,284 | 60 | |||||||
8,000 | 55 | ||||||||
6,000 | 50 | ||||||||
Working-age population as a percentage | |||||||||
4,000 | of total population | 45 | |||||||
2,000 | 40 | ||||||||
0 | 1990 | 2000 | 2010 | 2020 | 2030 | 2040 | 2050 | 2060 (year) 35 |
needs in order to realize a low-carbon, decarbonized society.
- Marine engines
Our Initiatives
2015 Completed the world's first methanol dual fuel engine
2015 Completed the Japan's first LNG dual fuel engine
2016 Completed the world's first ethane dual fuel engine
2022 Completed LPG dual-fuel engine
2024 Testing of the world's first ammonia dual fuel engine planned
- Port cranes
2010 Completed hybridTranstainer(container transport cranes) equipped with large batteries that reduces fuel consumption by 60%
2021 Completed near-zero-emissionTranstainer that reduces fuel consumption by 20-30% over hybridTranstainers
2023 Development of the world's firstTranstainer that achieves zero emissions by utilizing hydrogen fuel cells as its power source
In anticipation of a society with a dwindling birthrate and aging population, since 2018 MITSUI E&S has been developing port crane remote control and automation solutions. MITSUI E&S has a leading domestic market share not only for hardware in the form of cranes, but also in the area of software to operate container terminals (Container Terminal Management System). We provide customers with optimum systems that combine the latest hardware with software solutions based on years of experience. We are also working to resolve the issues of a society with a shrinking population, such as the recent establishment of crane inspection technologies based on self-flying drones.
2018 CompletedTranstainer and test area for the development of remote and automated operations at the Oita Factory 2021 Developed remote-controlledTranstainer and began in-factory adjustment operation
2022 Established port crane remote inspection technology based on remote-controlledself-flying drones
Transtainer for development purposes at the Oita Factory
FY2022 Results and Initiatives | FY2030 Targets |
FY2022 Results and Initiatives
FY2030 Targets
CO2 reduction through the launch of environmentally friendly products onto the market (left axis)
CO2 reduction resulting from the MITSUI E&S Group' s production activities (right axis)
600 | (10,000 t-CO2/year) | ||||
1.0 | |||||
300 | 0.5 | ||||
0 | FY2021 | FY2022 | FY2025 Forecast | FY2030Target | 0.0 |
CO2 reduction through the launch of environmentally friendly products onto the market
5.5 million t-CO2 /year 66% reduction compared to FY2019
Product life cycle total (20 years)
110 million t-CO2
CO2 reduction resulting from the MITSUI E&S Group's production activities
9,000 tons CO2 per year 17% reduction compared to FY2019
-
Port-related products, percentage of automation products
40
20
0 | FY2022 | FY2030Target |
FY2021 |
Percentage of automation / systemized products among port-related products
40% (as percentage of annual net sales)
Port-related automation / systemized products
Remote-controlledTranstainer
Remote-controlled Portainer CTMS*2 and various other systems
*2 Container Terminal Management System
Regarding indicators and targets, we are currently examining and reviewing them in line with the reality of our business.
Regarding indicators and targets, we are currently examining and reviewing more appropriate indicators and targets, looking at consistency with the business model of our digital strategy.
7 MITSUI E&S Group Integrated Report 2023 | MITSUI E&S Group Integrated Report 2023 8 |
Value Creation Story
Top Message
Making a fresh start as a business holding company, with the machinery business as our core business.
Review of Business Revival Plan
FY2022 was the final year of the "Mitsui E&S Group Business Revival Plan" which started in FY2019. Under the Business Revival Plan, although there were some painful restructurings of the shipbuilding business, reorganization and/or withdrawal of unprofitable busi- nesses, we moved forward with the transformation of our business portfolio, concentrating our resources on growth areas. Largely thanks to the untiring efforts of every single employee, we succeeded in completing the Business Revival Plan at the end of FY2022 as planned.
In the process of implementing the Business Revival Plan, we developed a business portfolio with the machinery as our core business, prompting us to switch from the previous pure holding company structure to a business holding company structure and
make a fresh start under the new trade name MITSUI E&S Co., Ltd. effective April 1, 2023. Under the new structure, we will integrate business with management to increase cohesiveness and we will also speed up the formulation and execution of strategies to accelerate the implementation of growth strategies.
I feel that now we are a business holding company with the machinery business as our core business, our direction is clearer and there is a stronger sense of unity and corporate governance across the group. The change in our mindset from a product-out to a market-in is also steadily progressing, and we have formulated growth strategies for sustainable development and corporate value enhancement and are working together to implement them.
P19
Transition to a Holding Company System P5~6
Seizing the opportunity to shake up the company and overhauling various structures and systems
Resumed dividends after completing Business Revival Plan
Now focusing on implementing growth strategies to solve social issues!
President, Representative Director CEO, CCO *1,
and in charge of General Control and Auditing & Legal Dept.
Takeyuki Takahashi
*1 CCO : Chief Compliance Officer
I see the timing of the transition to a business holding company as an opportunity to shake up the company and am working to transform various structures and systems.
In June 2023, we transitioned to a company with an Audit & Supervisory Committee with the goal of making management more compact and agile. By making the management team more compact, we have increased the speed and flexibility of decision- making and created an environment for more in-depth discussions about business strategies and high-risk projects. Since the structural changes in June, I feel that discussions at Board meetings are livelier than before.
I am also focusing on HR system reforms. We overhauled the HR system for the first time in about 20 years (for the first time since 2004). The need to adopt an HR system that reflects the rapid changes in the world over the last decade and dramatically changing work styles was also a major impetus behind the reform.
In this latest round of reform, we have
replaced our old HR system that was still characterized by seniority-based HR practices with a job-based HR system. Under the new HR system, we will develop mechanisms for clarifying how the output of the work done by an individual employee is connected to groupwide strategy and for fairly evaluating the results achieved, thus clearly showing how the results of work done by individual employees helps them to progress to the next career stage. I believe that the personal growth of individual employees will help us to grow as a company.
Furthermore, from FY2023, we will also introduce a job rotation system. I myself have often learned by changing jobs and putting myself in a different environment and I have experienced how an individual's true ability is put to the test when he or she is put in a different environment. We will aim to develop human resources who are not only experts in their own right but can also gain experience and prove themselves in different environments.
Human capital P29~34
9 MITSUI E&S Group Integrated Report 2023 | MITSUI E&S Group Integrated Report 2023 10 |
Value Creation Story
Completion of Business Revival Plan Achievement of operating profitability
of engines that can run on next-generation fuels such a methanol and ammonia, which we are promoting as part of our green
and commercializing the zero emission Transtainer as part of our green strategy and we are putting effort into automating termi-
In response to losses incurred on the coal- fired thermal power plant in Indonesia, we instituted measures in line with the Mitsui E&S Group Business Revival Plan, including reorganizing and withdrawing from unprofitable businesses and also effectively withdrawing from the shipbuilding business, which was our founding business and, from FY2019 to FY2022, we resolutely sold off businesses and assets in around 20 transactions totaling more than 120 billion yen. In addition, we implemented capital measures to improve
strategy.
Moreover, we now have a double licensing structure for MAN B&W engines and Win GD engines, putting us in a position to propose diverse solutions to the market and broadening our product lineup, which will also help strengthen our marine engine business.
Similarly for port cranes, we are developing
nals as part of our digital strategy. We have identified realization of a carbon-neutral society and addressing the challenges of a society with a shrinking population as our material issues (materiality) and we are adopting a digital strategy in the belief that automation technologies will be essential in the future due to labor shortages as port workers grow older.
our financial position and make growth investments, proceeded to raise capital totaling around 17 billion yen through the
Improving the wellbeing of every single employee to become a company with the potential for sustainable growth
issuance of Class A Preferred Shares through a third-party allotment and the issuance of the 1st series of share acquisition rights with exercise price amendment clause through a third-party allotment.
The civil construction work at the large coal-fired thermal power plant in Indonesia, which was the biggest cause for concern under the Business Revival Plan, has already begun commercial operation and this construction project will have almost no impact going forward.
Given that we successfully completed the Business Revival Plan and achieved operating, ordinary and final income for the first time in
six fiscal years in FY2022, there are no longer any events or conditions that may cast significant doubt on our ability to continue as a going concern. Believing that we were well-positioned to achieve stable dividends, we were able to resume dividends on common stock, although it was a small amount of 3 yen per share. Given that it is a listed company's responsibility to pay divi- dends, it was our dearest wish to resume the payment of dividends. Going forward, we will continue steadily generating revenue to maintain stable dividends.
In FY2022, we resumed dividends for the first time in six fiscal years. We will continue to move forward aiming to become a company with the potential for sustainable growth that can pay stable dividends to its stakeholders.
I believe that improving the personal growth and happiness (wellbeing) of every single employee is essential in order to achieve sustainable growth as a company. When every single employee is both mentally and physically healthy and uses our technological resources to help solve social issues, that is, create a decarbonized society and resolve
the issues of a society with a shrinking population, with strong motivation, a challenging spirit and a sense of mission, then this will provide the momentum behind our sustainable growth.
By increasing wellbeing, earning people's trust and contributing to society through engineering and services based on green and digital approaches, we aim to achieve sustainable growth.
We invite you to stay tuned to find out what the MITSUI E&S Group has to offer in the future.
Focusing on growth strategies with green and digital approaches to create a decarbonized society and resolve the issues of a society with a shrinking population
In view of the dramatic changes in our business environment, we began executing Mid-Term Business Plan 2023 in FY2022, one year ahead of schedule. Our first priority under this plan is to further increase our strength in marine engines and port cranes. To this end, we will develop the product structure and also strengthen our lineup of added value products through green and digital approaches.
As part of this strategy, we concluded a stock transfer agreement regarding succession to the business related to the marine
large bore engines of IHI Power Systems Co., Ltd. and its incidental businesses and established Mitsui E&S DU Co., Ltd. as a new company in April 2021.
Through succession to IHI's engine business, we have combined the production capacity of the Aioi Factory with production at Tamano, giving us more flexibility in the production structure, and we have strengthened our supply chain at a time when domestic demand is rising. We have also successfully expanded our engineering resources in terms of the development and manufacture
Growth Strategy
P23~26
11 MITSUI E&S Group Integrated Report 2023 | MITSUI E&S Group Integrated Report 2023 12 |
Value Creation Story
Value Creation Process
The MITSUI E&S Group contributes to solving social issues by providing products, services and engineering in pursuit of sustainable growth and the creation of corporate value.
External environment /
social issues
- Climate change
- Declining birthrate and aging and reduction of the population
- Evolution of IT
Our mission We build trust and contribute to society
Vision in 2030 | In the marine domain, we |
resolve challenges | |
through our engineering and services
create a carbon-free society and induced by depopulation
Material Issues
Creating a decarbonized society
Resolving issues of a society with a shrinking population
Business models
Expand the core businesses of marine propulsion・logistics systems in the marine domain through green and digital strategies
Numerical Targets (2025)
Consolidated net sales
280billion yen
Consolidated operating income ratio
Core businesses
Marine propulsion systems
Competitive Advantages
Mid-Term Business Plan 2023
6%
Capital-to-asset ratio
Logistics systems
New business development
Strength 01
Products of our core businesses that have an overwhelming share of the market
Strength 02
Technology development capabilities enabling the continual production of world-first
products
Strength 03
Engineering
services based on customer issues
Strength 04
Peripheral busi-
nesses developed based on environmental changes
Advance | |
Green | products |
in core | |
strategy | businesses |
GX | |
Digital | Expand |
strategy | |
DX | the domains |
of our services | |
and solutions |
26%
Net interest-bearing debt to
EBITDA ratio
5.0
CAPEX, R&D, Financial investments
34 billion yen*
*Total amount during the period of the Mid-Term Management Plan 2023 (FY2022~2025)
Results for FY2022
Consolidated | 262.3 billion yen |
net sales | (Sales forecast for fiscal year 2023: 280 billion yen) |
Consolidated | 9.4 billion yen |
operating income | (Operating profit ratio 3.6%, FY2023 forecast 4.3%) |
Capital-to-asset | 24.2% |
ratio | (2nd quarter of FY2023, 26.2%) |
Net interest-bearing | 4.5 |
debt to EBITDA ratio | |
CAPEX, R&D, | 9.2 billion yen |
Foundations of Value Creation | Financial strategy | Financial strategy |
Human resources strategy
Financial investments (2nd quarter of FY2023 ,4.7 billion yen) |
13 MITSUI E&S Group Integrated Report 2023 | MITSUI E&S Group Integrated Report 2023 14 |
Value Creation Story
Competitive Advantages
The products of our core businesses enjoy large market shares and we provide engineering services to facilitate maximum utilization of these products.This fusion of hardware and software to realize comprehensive capabilities is a strength of MITSUI E&S.We also work to expand our business domains by working on businesses peripheral to our core products.
Strength 01 | Products of our core businesses that have | |||||
an overwhelming share of the market | ||||||
Marine engines | Port Cranes | |||||
Strength 03 Engineering services based on customer issues | ||
Port operation and crane preventive | After-sales services | |
maintenance systems |
Since we signed a technical alliance with B&W (currently MAN Energy Solutions) in 1926, we have been engaged in engine manufacturing under the Mitsui-MAN B&W brand. Additionally, in April 2023 Mitsui E&S DU Co., Ltd. was newly established to take over operations of the large engine division of IHI Power Systems Co., Ltd. and the WinGD brand was added. We will strive to grow further in the marine engine business under this double -license structure.
Since we delivered Japan's first container crane to the Port of Kobe in 1968, we have delivered more than 430 gantry cranes(Portainer) and 1,600 yard cranes(Trantainer) to domestic and overseas terminals. As the top manufacturer of industrial cranes, automated cranes and environmentally friendly cranes in Japan, we have an established track record of production and experience.
With Container Terminal Management Systems (CTMS) | We continually support customers over the lifecycle of |
to optimally manage the operation of container terminals | our products, utilizing AI and IoT with the e-GICS |
and next-generation Crane Advanced Remote Monitoring | Advance remote maintenance system for marine engines |
Systems (CARMS) that collect, analyze and visualize all | and LC-A from Mitsui E&S DU. We have set up after-sales |
manner of crane-related data, we provide total solutions | service centers in Japan and overseas to swiftly attend |
that combine software leveraging the group's compre- | to inspection, maintenance and troubleshooting needs. |
hensive capabilities in addition to physical hardware. | In addition, recently we have rolled out services that |
incorporate cutting-edge technologies, such as the use | |
of remote-controlledself-flying drones for port crane | |
inspections, in an effort to improve safety and streamline | |
inspection tasks. |
Domestic market share (FY2022) | Gantry crane | Yard crane | ||
70% | Domestic market share | Domestic market share | ||
(FY2022) | (FY2022) | |||
Combined figures for production by Mitsui E&S DU and sub-licensee | 73% | 81% | ||
Makita Corporation. | ||||
Strength 02 | Technology development capabilities enabling | |||
the continual production of world-first | products | |||
Remote monitoring system | |||
CARMS (Crane Advanced Remote Monitoring System) | |||
Strength 04 | Peripheral businesses developed based on | ||
environmental changes | |||
Development of equipment compatible | Installation of hydrogen supply |
Development and market launch of marine engines
Ammonia dual fuel marine engine is
Developed Transtainer that uses fuel cells
with new fuels for marine engines | equipment in the Tamano Factory |
designed for new fuels ahead of the competition
First | First |
in the world | in Japan |
2015 Methanol | 2015 LNG |
2016 Ethane | |
currently under development
First in the world
2024 Prototype test planned
(FC) as a power source
First in the world
Successfully completed demonstration testing
MITSUI E&S has to date established an extensive track record in the manufacturing and delivery of various industrial equipment such as reciprocating compressors for the petrochemical industry and many other industries. To apply this extensive experience in industrial machinery to the marine sector, we have worked with our group company KAJI TECHNOLOGY to develop and market pumps for LNG fuel supply and high-pressure boil off gas (BOG) compressors.
Aiming to launch a hydrogen-related business at an early stage, hydrogen gas supply equipment (liquefied hydrogen tank, hydrogen gas compressor, etc.) was installed in the Tamano Factory. Reciprocating compressors, which play a core role in the equipment, are supplied from KAJI TECHNOLOGY, a group company that boasts a top domestic market share in compressors for hydrogen stations.
15 MITSUI E&S Group Integrated Report 2023 | MITSUI E&S Group Integrated Report 2023 16 |
Value Creation Story
Interviews with Director
Creating a solid financial structure and organizational culture of thorough preparation for everything
Vice President, Representative Director Assistant to President, CFO*1, CIO*2, and in charge of Corporate Services Div.*3
Taketsune Matsumura
*1 CFO : Chief Financial Officer
*2 CIO : Chief Information Officer
*3 Corporate Services Div. : Corporate Planning Dept., HR & General Affairs Dept., Finance Dept., and Accounting Dept.
Preferred Shares and share acquisition rights. With share acquisition rights, there is normally a risk that issuing share acquisition rights may drive down the share price. Fortunately, we were able to raise more than the target amount in a much shorter period of time than expected without any significant drop in the share price due to the progress and completion of the Business Revival Plan, which coincided with a growth trend in the share price. This delivered a good result not only in terms of recapitalization, but also in terms of a quick recovery of the share price.
In addition to the funds raised through Class A preferred stock, we are conducting R&D and capital investment in the green and digital fields. We expect capital investment to peak in 2023 and 2024, but we are rushing to build a foundation
that will enable us to provide new value to our customers. On the other hand, as of the end of the second quarter of FY2023, our shareholders' equity amounted to approximately 120 billion yen, and our capital adequacy ratio has achieved the target of the Mid-Term Business Plan 2023. Going forward, we will focus on increasing share- holders' equity by building up retained earnings through solid business development. At the same time, we will aim to reduce financial costs, redeem preferred stock, and repay interest-bearing debt as soon as possible. As for manage- ment, we intend to promote management reforms that are conscious of the cost of capital, the return on invested capital, and price book-value ratio while balancing investment and repayment.
Changing our financial structure and organizational culture to achieve the goals of the 2023 Mid-Term Business Plan
Creating an organizational culture in which every employee is resolutely prepared for work to compete
in the international community
Under the Business Revival Plan formulated in FY2019, I have taken a leading role in frantically advancing various measures, including the full settlement of the issues with the civil engineering / construction work on a thermal power plant for the Republic of Indonesia, which incurred significant losses, capital measures to restore a sound financial structure, the sale of unprofitable businesses and assets, and personnel reductions. Despite various obstacles, we were able to declare the completion of the Business Revival Plan in May 2023, and also achieved profitability in FY2022 under Mid-Term Business Plan 2023, which was started one year ahead of schedule. We were even able to make an upward revision to the forecast for the fiscal year in the second quarter of FY2023, giving us a solid sense of achievement with regard to the Mid-Term Business Plan 2023.
In order to achieve the goals of Mid-Term Business Plan 2023, we need to address three major issues. The first issue is how we can make growth businesses as the third pillar of our Group's
operations. When we start something new, there is a tendency to talk only about dreams and positive aspects. However, in order to cultivate growth businesses as a solid pillar of our opera- tions, we have to make strict assessments and hold discussions from various perspectives; such as how much new value our customers will find in the businesses we propose, and whether we can really bring those proposals to life.
The second issue is to improve our financial structure. We must find ways to reduce interest- bearing debt, which has increased due to past loss-making projects, and the associated financial cost burden, while striking a balance between investments for growth and return of profits to shareholders, employees, and other stakeholders. The third issue is to reform our organizational culture. In addition to improving the workplace environment for employees, we will aim to create an organizational culture so that every employee has the fighting and resolutely prepared mindset to make the company grow.
Business Revival
Plan
P20
As the phrase "Mitsui of the People" suggests, for better or worse, our Group has a corporate culture of diligence and hard work. This is, of course, something that should be respected, but I also feel that it is not enough for us to compete in these changing times. We need to have the mindset and preparedness to "fight through," or perhaps I should say the survivability of surviving aggressively in tough times. I, myself, experienced serious negotiations with people outside the company as I pushed for the sale of businesses as part of the Business Revival Plan, and I keenly felt the need for such a mindset. It is with the strong desire to cut out weak links-from the management team down to employees on the front line-that we overhauled our HR system in April 2023. We have placed a conscious emphasis on creating a meritocratic and job-based system as well as personnel rotation as a new mechanism to broaden our perspective, rather than the traditional seniority system. We have also established a new requirements for promotion in terms of accounting knowledge, English language proficiency, and IT knowledge-which are basic
English language skills throughout the company, such as by holding English courses for some employees who are not proficient and teaching them myself. Employees who were reluctant to learn English at first are now actively engaged. In this way, we will continue to develop a tough, wild, and international organizational culture by acquiring a higher level of "global mindset" in our group. In order to achieve this, it is essential to increase the diversity of the Group, from the Board of Directors to each employee.
To achieve this, we will set target figures for the ratios of women and non-Japanese employees, and aim to secure diverse human resources through various schemes, including overseas recruitment, and hiring from both sciences and humanities backgrounds.
Finally, I always value the word kakugo. In English, it means- be-prepared. In other words, it means being resolutely prepared for your work. It means that we've done everything we can, anticipated all the worst-case scenarios, and are fine with them. This is kakugo. From the management team to each and every employee, we will make
Human resources strategy P29~30
Strengthening equity capital through capital measures
We have implemented capital measures to | investments, raising capital totaling around 17 | Financial strategy | |
improve our financial position and made growth | billion yen, through the issuance of Class A | P27~28 | |
subjects in business and essential abilities for the execution of growth strategies.
In particular, with regard to English language proficiency, I am making efforts to improve
changes to ensure that we are resolutely pre- pared, and can take steady steps on the right path.
17 MITSUI E&S Group Integrated Report 2023 | MITSUI E&S Group Integrated Report 2023 18 |
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MES - Mitsui Engineering & Shipbuilding Co. Ltd. published this content on 06 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 March 2024 02:07:04 UTC.