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SCOA President Atsushi Nishijo's New Year's Welcome
These are excerpts from President Atsushi Nishijo's New Year's Message
delivered at SCOA New York headquarters January 5, 2005
"As we begin this New Year, I am saddened to hear of the damage
and loss from the catastrophic Tsunami that hit so many countries in South
East Asia during the Holidays. I wish to take this moment to express my deepest condolences to all those
who have suffered from this traumatic event.
2004 Business Results
"Taking advantage of the favorable economic climate in the U.S.,
the efforts and initiatives SCOA undertook came to fruition in 2004. And,
the vision I had for the company, is now a reality.
Although the final accounting for the year is still under way, it appears
that, for the Americas, net income will be well over 100 million dollars.
This is a record profit for us.
And most importantly, we did this as I have been continuously saying
we could.
First, by looking beyond the ways we have been traditionally doing business,
and finding new, more profitable businesses to sustain us in the future.
Second, by using the profits from core businesses to invest in businesses
or assets that would bring us greater return in the future. Third, by
challenging new opportunities, rather than rejecting them because we have
never done it before. And fourth, by quickly adapting to the environment
we face.
As you know these results include gains from the sale of our New York
headquarters building. But I would like to add, even excluding extraordinary
items like real estate sales, we were able to reach our financial targets.
In 2004, SCOA and our Real Estate Group purchased a premiere office building
in downtown Phoenix, and just this month we are closing on the acquisition
of another commercial property, in San Francisco. In this way, we have
been steadily expanding our real estate business through reinvestment
of our profits.
We also have been actively pursuing new acquisitions. Acquisitions, in
the past few years such as V&M Star, Hermiston, Oxford Finance and
Hartz Mountain already started to substantially contribute to our profits
in 2004.
We also improved the profitability of our existing businesses. We have
to admit that last year’s surge in the steel market, especially
in the tubular pipe business, was one of the factors that enabled us to
increase our profitability. But as I mentioned in the GM conference in
Tokyo last October, the Tubular Products Division's extraordinary results
were not achieved by luck. It came from having a long term vision, and
a lot of hard work and patience. They worked on their sales network, and
invested in upstream mills. As a result, their efforts paid off this year.
Sumitomo Corporation AG Plan for fiscal 2005/2006
The Sumitomo Corporation AG Plan begins this year. This new plan is focused
on aggressively expanding SC’s earning base.
For Sumitomo Corporation as a whole, the AG plan has set financial targets
for net income of 90 billion yen in fiscal 2005, and 100 billion yen in
fiscal 2006, with a minimum risk return ratio of 7.5% for each year.
The level of profits expected from the Americas will be decided in the
coming months but I would like each organization to set ambitious, yet
attainable targets and work to achieve them.
Our focus must be on expanding either our core businesses or new fields
around our core businesses. This is because expanding from your core,
leverages your strength, reduces risk, and is easier to manage.
That does not mean that we will reject any proposals to expand into new
fields just because we aren’t currently involved in them. Developing
new business fields is an essential element in expanding our earnings
base.
The Year Ahead
We live in a world of constant change, so we must always be aware of
what may be around the corner. We must also be brave enough to make decisions
about necessary changes in business, even if the business is successful
at the moment.
No one should be satisfied with the status quo. Remain challenged, and
we will maintain our good momentum.
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