New Year Message for 2023

A Happy New Year. I would like to extend my New Year’s greeting from Tokyo to everyone in the Sumitomo Corporation Group across the world.

External environment

Looking back at last year’s global situation, we saw further progress in coexisting with COVID-19 and normalization of social and economic activities, of course with some differences from one region to another. The flow of people has recovered. In addition to domestic business trips, I, myself went abroad for the first time in about two years, and I was delighted to meet and speak to many of you. At the same time, geopolitical risks, such as the situation in Russia and Ukraine, materialized, and the world was greatly shaken. These developments put downward pressure on the global economy through higher prices for energy, materials, and food, as well as monetary tightening against inflation. A number of global-scale natural disasters occurred such as Europe recording summer temperatures exceeding 40 degrees Celsius, and forest fires and floods in many parts of the world. While tremendous effort to solve the climate change issue is underway, including carbon pricing and border adjustment mechanisms, response to the current energy crisis led to an increase in CO2 emissions, mainly in developed countries, revealing the difficult balancing act between decarbonization and economic activity.

Sumitomo Corporation Global Research describes the outlook for this year’s global situation and economy as “Growing division and stagnation with no savior.”

I see this as “We are the ones to forge our own paths.”
With inflation continuing from last year, there may be significant pressure on employment, finances, and debts. Financial market may see an increase in volatility. As a result, the risk of a slowdown in the global economy is expected to increase. We should stay alert for this year’s economic environment. However, looking at our history, our predecessors had overcome difficult situations in the past. We, who are responsible for the present, have placed defensive and offensive formations through the structural reforms of SHIFT 2023 our medium-term management plan. Together with using our mechanism and capability for managing risks, let this be the year in which we truly demonstrate our ability to respond to the ever-changing situation in a timely manner, and above all else, to see changes as opportunities and provide value that society needs at each point in time. Let’s stick to the basics of business, keep up our defense, and firmly forge our own paths toward our goal beyond harsh environment and big changes.

Significance of 2023 for Sumitomo Corporation

Let me be more specific. We posted record- high consolidated net income for the second quarter of this fiscal year. Our forecast for the full year is also expected to be record-high for the second consecutive year. We recorded great losses in fiscal year 2020 to my great vexation. Since then, we have united as one to undertake structural reforms, and our efforts are starting to come to fruition. I feel proud of your achievements. I see everyone worked hard even with uncertainty of daily life due to the impact of COVID-19. This is truly the result of the execution on the frontline; that is where our strength lies. This year, we will work on creating a workplace environment and culture that allow you to fully apply your capabilities toward growth.

I would like to make this year a time when we take a step toward exponential growth and accomplish SHIFT 2023. I want to see this time of major social transformation as an opportunity.

The trend of transformation in industry structure and the economic society is gaining speed, as digitalization and going green accelerates. In the midst of the big wave that transcends industry borders, our opportunity has increased as it requires our collective strengths and functions. Top priority of our growth strategy is to advance business portfolio shift by enhancing digital transformation and sustainability management. In fact, projects unique to Sumitomo Corporation, have emerged all over the world, including the telecommunications business in Ethiopia and the initiative related to energy transition in Indonesia. I really look forward to these projects, which have the potential for expansion in the future and contribute to the development of the respective countries and regions by creating new value. In order to do so, we have to formulate mechanisms to solve issues which society and our customers are facing, and incorporate these mechanisms into our business, while keeping in mind our long-term business strategy. We also have to actively invest management resources in areas where we have strengths and competitiveness. I firmly believe that we can achieve sustainable growth over the long term by embodying the Grand Design in Sumitomo's business philosophy, which is to look far ahead to make a careful plan, and continuously make efforts to realize these plans.

Message to members of the SC Group

Dreams and ambitions

As we enter the new year, I would like to share with you two points.

The first is “dreams and ambitions.” When I became CEO, I said “Those without dreams have no success.”

In our business, mutual cooperation with various stakeholders is very important. Customers, partners, government, international organizations, local residents, investors, the public... and ourselves. What is the first step in getting their cooperation?

Last year I had the opportunity to speak with a lot of people inside and outside the company in more than twenty cities around the world. I visited many sites, and had face to face or web meetings. They were manufacturing facilities, construction sites, companies about to expand, companies undergoing reform, industrial park celebrating its opening day, an office celebrating its 60th anniversary, business development initiatives, training sessions, various fora, and more. I heard thoughts, passions, dreams, and ambitions for their businesses from all the people I met. I remember as if it were only yesterday that I felt very encouraged. At the same time, I had a strong feeling that I could rely on them, and that we could work together, then my expectations for the future rose. Their dreams and ambitions had the power to make me feel that way. In all of the businesses that currently support our group, there are many people who, together with our stakeholders, have passed on the baton of such dreams and ambitions over the years.

During the course of business, time will come when we face difficulties. Even relationships with long time partners may change as generation and the world changes. What is necessary in order to develop empathy and receive cooperation during difficult times is our dream and ambition and our determination to carry it through until it is realized.

In the end, dreams, ambitions, and determination will surely help and lead you toward success.

I myself have two dreams and ambitions.

・First, I would like to further enrich people’s lives and our own, by putting our strengths together. I want to make the society even more attractive through our business.

・Second, to achieve them, I will stick to the business basics and apply them dynamically as a business professional.

I hope all of you will keep your dreams, ambitions and concrete goals close to heart and undertake initiatives toward growth with your colleagues. Let us keep striving together toward achieving our dreams and ambitions.

Leveraging our strengths

The second is to leverage our strengths. Our Group has its strengths. We have foundation of trust that was built by our predecessors. At the same time, we have foundations developed at each business, business and corporate functions that support them, and above all else, people who work here.

In each business, you will always find this strength of trust and people. First step of business basic is to leverage the strengths we have developed. If we do not have such strengths, we must acquire them first to obtain positions that are hard to replace. In other words, we seek to build strategic indispensability. It is important to expand functions and areas strategically that make our business indispensable to society and our customers. This will lead us to sustainable growth. Please consider if we are essential to our customers or how you can make us so. Then, formulate specific measures and implement them. Our strategic indispensability and competitiveness will be enhanced if we could build our businesses based on our strengths and then further expand functions on those business foundations.

By leveraging the two points I mentioned, which are “dreams, ambitions, and determinations” and “leverage our strength”, let’s work together as one to achieve “Enriching lives and the world.”

Lastly, I hope that 2023 will be a wonderful year for the greater development of the Sumitomo Corporation Group and a happy one for you and your families.

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