We would like to inform you of the New Year's greetings given by our president, Masayuki Hyodo, which was held today at the Sumitomo Corporation headquarters as follows.

Early on New Year's Day, the Noto Peninsula earthquake occurred in Japan. I would like to express my heartfelt condolences and sympathies to those affected by the disaster and to those who have family and friends in the affected areas. I am deeply saddened by the fact that many people around the world are in difficult situations due to wars and disasters, and that many lives continue to be lost. I will never stop praying for the situation to end and improve as soon as possible.

Looking back at the world situation last year, the extremely unstable situation continues, including the protracted situation in Russia and Ukraine and the situation in the Middle East centered on Israel, leading to changes in global supply chains and a slowdown in world trade. I did. Last year's global average temperature was the highest on record, and at COP28, international rule-making and discussions were underway, including an agreement to 'accelerate the transition away from fossil fuels towards net zero in 2050' in order to mitigate climate change. Progress has been made.

On the other hand, in light of the increasing burden on industry and consumers due to soaring energy prices and high interest rates, some efforts are being made to decarbonize, such as revising policies banning future sales of internal combustion engine vehicles in the EU and the UK. There were also movements to slow down the realization of the scenario. In addition, while generative AI represented by Chat GPT has significantly improved its natural language understanding and dialogue abilities, and is being used in a variety of industries and daily life, there are also ethical and social issues such as the risk of privacy infringement. There has also been a lively discussion about the dangers.

Sumitomo Corporation Global Research describes this year's global situation and economic outlook as 'the world reaching a turning point.' This year, national elections are also scheduled, including the US presidential election and the European Parliament election. We need to be careful about the changes in the international order that are reflected in the struggle for hegemony between major powers and the growing presence of the Global South. In addition, there is also the possibility of slow global economic growth, lower interest rates, and associated shock events, and it can be said that we are at a turning point in various scenarios. In order for us to survive in this environment, it is important to understand the essence of these movements in the world, calmly analyze the risks that can and cannot be taken in each business, and work strategically while making judgments. .

Of course, it is difficult to predict the future and it is not easy to conduct business while imagining various scenarios, but it is important to seriously face customers and society and create the value that society needs one step ahead. is the history of our group, which has overcome various challenges. We have the ability and friends to continue this history. Viewing the current historical turning point as an opportunity for our group to make a leap forward, we will take into account new needs, benefit ourselves and society, and maintain the spirit of 'self-interest, others, public and private,' to always remain an essential part of society. Let's embody it.

There are only three months left in the medium-term management plan 'SHIFT 2023,' which calls for three shifts: 'shift in business portfolio,' 'shift in structure,' and 'shift in management foundation.' As a result of thorough strategy execution and PDCA cycles at each SBU, and the company-wide effort to structural reform, we have been able to shift to a portfolio that combines high profitability and downside resilience, and our company's capabilities are steadily improving. . Set goals for growth, formulate strategies, clarify what needs to be done, and accomplish it. This is the basis of 'SHIFT 2023.' Due to the effects of COVID-19 and the emergence of geopolitical risks, there may have been times when you were worried about your work or even your daily life, but we have continued to make efforts to fulfill our individual commitments on-site in various parts of the world. I would like to express my respect and sincere gratitude to everyone who has achieved results. The approximately 80,000 employees of our group will be responsible for our future growth. Among them, the approximately 8,000 people at the global headquarters who support the development of the 900 group companies, promote change, demonstrate collective strength, and drive the management of the top three companies will create our tomorrow.

Until now, the Group has been divided into seven major locations: Japan, the Americas, East Asia, Asia-Oceania, the Middle East and Africa, Europe, and CIS, with the Tokyo head office and regional (independently-owned) organizations positioned as product division headquarters. Now that we have reached a historical turning point, and as we approach the completion of 'SHIFT 2023,' we must aim for global growth in line with the speed of future changes in preparation for post-SHIFT 2023. We would like to switch to a new system that is suitable for our goals, one that can anticipate future market changes and promote strategies in an agile and speedy manner. Our seven bases will cooperate with each other and demonstrate their functions as an indivisible unit at a high level, and as the cornerstone of our global group, we will practice 'three-strong management' that creates growth for the parent company, operating companies, and the group as a whole. Each of you will hone your competitiveness and strengths in your respective markets, constantly strengthen and promote SBU strategies, and transform our group into a corporate group with the No. 1 business group. I would like to call this new structure and concept, which is suitable for putting this into practice, 'Global Headquarters.'

The global headquarters will lead the way in further strengthening our field capabilities in a rapidly changing world. Our global headquarters, which is located in seven locations around the world, is at the forefront of each market, and all 53 SBUs steadily implement their respective strategies, while at the same time always staying ahead of market changes and continuing to reform SBU strategies. .

The global headquarters always uses local and global perspectives to think short-term, medium-term, and long-term, act quickly, and promote selection and concentration for the entire Group. All SBUs will become the No. 1 business group and continue to enhance the comprehensive strength of our group. To this end, our global headquarters, which operates in seven locations around the world, continues to strengthen its own functions.

We have transformed our network of seven locations around the world into a global headquarters full of such comprehensive strength, and we are practicing 'three-strong management' and each business site is constantly anticipating market and customer needs and implementing an agile approach. I would like to work with them to build a system that allows them to execute strategies autonomously. Let's get started today, with all 8,000 sales and corporate employees who make up our global headquarters working together. Currently, while addressing the unfinished business of 'SHIFT 2023,' we aim to achieve dramatic growth by proactively increasing invested capital based on the business foundation we have established through structural reforms, and are increasing our agility by transforming into a global headquarters. Let's make this a year in which we strengthen our capabilities and begin moving toward becoming the No. 1 business group.

The word 'basics' may conjure up images of basics, but I believe that it is extremely difficult to completely master the 'basics of business' that everyone understands. As I go about my work, I ask myself whether I am adhering to these basics every day. We sincerely face solving customer problems, always have multiple solutions and ideas, and act more quickly and tenaciously than anyone else. It penetrates the face-to-face industry and surpasses its competitors in the freshness and accuracy of its information. Fully understand the risks you are taking and carefully consider appropriate returns and risk hedging measures. The strength of our entire group lies in the basic actions and achievements of each individual working in the field.

Through 'SHIFT 2023,' we have established a strategy formulation and execution process for each SBU that is appropriate for the changing times, namely DX (digital transformation), GX (green transformation), and strengthening sustainability, and we have established a process for formulating and implementing strategies for each SBU strategy. I think its role is becoming clearer. While keeping an eye on the big picture, we must do what we need to do in accordance with the basics of business, and let each success we achieve lead to the growth of our group, embodying Sumitomo's business spirit.

The far-reaching nature of the plan

The second is the far-reaching nature of the plan.

One of Sumitomo's business philosophies, 'far-reaching planning', stems from the fact that Sumitomo's business at the time of its founding was based on copper mine management, which required long-term, continuous efforts. While valuing the importance of The idea is to think deeply and broadly.

As I said earlier, we are at a historic turning point. In the context of decarbonization, the post-industrial assumption that CO2 emissions can be produced without cost and without limit has now collapsed. What will determine our future competitiveness is how we can obtain highly efficient energy that is GHG (greenhouse gas) free and satisfies S+3E (Safety + Energy Security, Efficiency & Environment). Focusing on this point and redefining our own values, we need to look to the future and pursue a sustainable society from a long-term perspective, which is exactly what is required of 'far-reaching planning.' .

Rather than simply thinking about connecting suppliers and customers, we will form coalitions and pursue mechanisms for value creation and growth that take a bird's-eye view of the entire value chain until we become bankable. Although we start with ideas from a local perspective, we will always expand globally and draw up a basic concept to grow our business into the No. 1 business.We will then demonstrate our strength in business engineering and develop our capabilities in each market and industry. Let's raise our presence, provide new value that stays ahead of change, and foster a business that is unique to our company and will last for the next generation.

In addition, in order to think deeply and broadly toward big ideas, it goes without saying that we will utilize a variety of knowledge and opinions from within and outside the company. I hope that they will incorporate this into their own ideas. Additionally, practicing DE&I (Diversity, Equity & Inclusion) is essential to building a strong global headquarters. We will overcome differences in generation, position, nationality, values, etc. and exchange opinions, create new value and business models, and create a gathering of better people to drive them, as our predecessors did. With dreams and ambitions in mind, let's look ahead 100 years and take steps toward the realization of 'Enriching lives and the world.'

In closing, I would like to offer my New Year's greetings by praying that 2024 will be a happy year for the further development of our group and for you and your families.

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