New Year Message for 2024

Happy New Year everyone.
It is with great pleasure to extend my New Year’s greetings from Tokyo to each and every one of you across our global Sumitomo Corporation Group.

On the very first day of the New Year, Japan experienced the Noto Peninsula earthquake. To those affected by this disaster, and to those who have family and friends in the affected areas, I extend my deepest condolences and sympathies.

I have been deeply saddened that many people around the world are living in difficult situations due to wars and disasters, and that many lives continue to be lost. I pray that the situation will resolve and improve as soon as possible.

External Environment

Last year continued to be extremely unstable, with the prolongation of the Russia-Ukraine conflict and the situation in the Middle East, bringing about changes in global supply chains and the slowing down of international trade. Last year’s global average temperature was the highest ever recorded, and international consensus for mitigating climate change was advanced — such as an agreement to accelerate the transition away from fossil fuels towards net zero emissions by 2050 at the COP 28. Meanwhile, taking into consideration the increasing burden on industries and consumers due to high energy prices and high interest rates, we also saw a trend of deceleration in achieving certain decarbonization scenarios, where the European Union and United Kingdom revisited their policies of banning the sale of vehicles with internal combustion engines. Generative AI—as represented by ChatGPT—achieved significant improvements in natural language processing and conversational capabilities, gaining utilization in various industries and daily life. There were also controversial discussions on the ethical and social risks of AI, such as invasion of privacy.

Our Sumitomo Corporation Global Research describes the outlook for this year’s global political situation and economy as “The world at a Turning Point.”
This year, elections are scheduled to be held in various countries, including the presidential election of the United States and elections for the European Parliament. We should pay attention to changes in the international order as shown by the contest for hegemony between major powers and the growing presence of the Global South. In addition, we could see slow economic growth globally as well as impacts from the lowering of interest rates. In order for us to succeed under such circumstances, it is important to understand the true nature of these trends and work strategically while calmly analyzing and making decisions about the risks that “can” and “cannot” be taken for our business. Of course, when the future is unclear, it is not easy to conduct business.  However, the Sumitomo Corporation Group has overcome various hurdles by facing customers and society with sincerity to create new value needed by our society in the future. This is our history. We have the capabilities and the people to continue this history. Let us see this turning point as a good opportunity for our Group and embody the spirit of “Benefit for self and others, private and public interests are one and the same.”

Significance of 2024 for Sumitomo Corporation

There are only three months left in the current Medium-Term Management Plan “SHIFT 2023,” which aims at three shifts: Business Portfolio SHIFT, Framework SHIFT, and Management Base SHIFT. We are making progress in our shift toward a portfolio that is high in both profitability and resilience as a result of executing the strategies of each SBU, thoroughly going through the PDCA cycle, and working as one to undertake structural reforms. Setting goals toward growth, formulating strategies, making clear the tasks to be undertaken, and accomplishing them. This is the fundamental concept of SHIFT 2023. I think there were times when some of you were concerned about your daily lives possibly due to COVID-19 or arising geopolitical risks. I wish to express my respect and sincere gratitude to everyone at our frontlines around the world who worked tirelessly toward the respective commitments, propelled forward to achieve them, and delivered results.

The 80,000 Sumitomo Corporation Group employees are the driving force for achieving growth in the future. However, I would dare to note  that our success is created by the 8,000 employees working as global headquarters, who support the development of 900 group companies, promote transformation, apply our collective strengths, and drive our Three-Pillars Growth Strategy.

Until now, our Group, with headquarters in Tokyo, was managed by a matrix of seven Business Units/Initiative based on products and seven regional organizations (Japan, the Americas, East Asia, Asia and Oceania, Middle East and Africa, Europe, and the CIS). Facing this historic turning point today, and upon completion of SHIFT 2023 and toward the post SHIFT 2023, we envision shifting to a new system appropriate for seeking global growth, a new structure that can proactively anticipate future market changes and agilely advance strategies with a sense of speed.

Collaboration amongst the seven regions is the key to our Three-Pillars Growth Strategy that generates growth respectively at Sumitomo Corporation, group companies, and the Group as a whole. With each and every employee’s dedication in improving competitiveness and strengths in respective markets and committing to achieve our SBU strategic goals, the Sumitomo Corporation Group will become a corporate group with numerous No.1 businesses in various fields. I would like to call this new structure and concept our “global Headquarters”

Global Headquarters will further enhance our frontline capabilities in a rapidly changing world. Undertaking business in the seven regions, global Headquarters is our frontline in each market, and it ensures that all of our 53 SBUs steadily execute their strategies and continue to improve them, staying one step ahead of the changing business environment.

Global headquarters utilizes both local and global perspectives to determine the short-, medium-, and long-term opportunities, act with speed, and propel the selection and concentration of the business portfolio of the whole Group. In order for each SBU to realize the No.1 business in its field and continue to amplify our Group’s collective strengths, our global Headquarters should and will consistently strengthen its own functions.

I am excited to work with everyone to transform our network across seven regions into this global Headquarters driving Three-Pillars Growth Strategy where the frontlines of our businesses can autonomously execute agile strategies while staying ahead of the market and customers’ needs. Let us embark on this task today, with the 8,000 group members of the business and corporate departments constituting the global Headquarters function, uniting as one.

As we embark on this new chapter, let us tackle the remaining tasks of SHIFT 2023 so as to be prepared for creating the global Headquarters and face the future by actively expanding our invested-capital on the business foundation established through structural reforms. We will enhance our dynamism by transforming into this new global Headquarters structure and taking a bold step toward realizing No.1 businesses in each field.

Message to members of Sumitomo Group

As we stand on the doorstep of a new year, I would like to share with you two points.

Basics of Business
The first is the basics of business.
The term “basics” may give the impression of something elementary, but it is extremely difficult to master the basics of business. I myself go about my work each day while pondering if I am adhering properly to these basics. Working on resolving customers’ issues with sincerity and always having alternative solutions and ideas, and at the same time, acting with greater speed and tenacity than anyone else. With the breadth of vision and information, we must excel our performance amongst our competitors. We must also be cognizant of the risks we are taking and meticulously consider the appropriate profit returns and ways to mitigate the risks. The accumulation of such basic actions and achievements at our frontlines is the true overall capability of our Group. Through SHIFT 2023, we have established a process for managing strategies at each SBU to cope with the changing times with a focus on DX (Digital Transformation), GX (Green Transformation), and sustainability enhancement, and the roles of each individual in the respective SBU strategy has become clearer. While maintaining a view of the big picture, let us work steadily on the basic business tasks, link our series of achievements to the growth of the Sumitomo Corporation Group, and embody Sumitomo’s business philosophy.

Grand Design
The second message is on “Grand Design.”
A credo from Sumitomo’s business philosophy, “Grand Design” derives from copper mine management, Sumitomo’s core business in its early days, which required long-term vision and continuous effort. It is an approach that uses a long-term perspective to think deeply about future goals, how to change the industry, and the value to bring to society.

We are at a historic turning point. In the context of decarbonization, such an assumption since the Industrial Revolution that we can unrestrictedly emit carbon dioxide without bearing costs has collapsed. Competitiveness in the future shall be defined by how we obtain highly efficient energy that is both free from greenhouse gases and meets the “S+3E” criteria (Safety + Energy security + Economic efficiency + Environmental sustainability). Focusing on this point, we need to redefine our own values and pursue a sustainable society from a long-term perspective. In short, making “Grand Design”  continues to be important for us. 
We cannot limit ourselves to simply linking suppliers with buyers. For our value creation, we have to consider the entire value chain, form coalitions and commit till the end until it becomes a feasible business. While ideas come from a local perspective, we must develop them into leading businesses in the global market. We will apply our strength of “business engineering” to provide new value that anticipates changes and grow them into Sumitomo Corporation businesses that we leave for future generations.

In addition, to think deeply and comprehensively toward Grand Designs, it is necessary to capture a wide range of knowledge and opinions from both within and outside the company. I ask everyone to sincerely face different opinion and eagerly incorporate them into your own designs. Furthermore, the practice of diversity, equity, and inclusion (DE&I) is essential for building a strong global Headquarters. Bounce your opinions off each other, transcending the differences in generation, position, nationality, and values. Our aim is to create new value and business models, as well as to foster a united group of people and drive these initiatives forward. Just like the pioneers before us, let us stride forth toward achieving “Enriching lives and the world” with our dreams and ambitions in our hearts and with a vision of the future 100 years from now.

Here's to a year filled with achievements, growth, and global collaboration for the Sumitomo Corporation Group and may the coming year be filled with prosperity and joy for you and your loved ones.

*This is the New Year's address delivered to Sumitomo Corporation Group executives and staff on 4 January 2024.

---