JFE Holdings, Inc.
New Year’s Message for 2015
Hajime Bada, President and CEO, JFE Holdings, Inc.
President and CEO
Happy New Year and greetings as we begin 2015!
The Japanese economy has improved moderately over the last two years. We have seen some encouraging signs, such as correction of the yen’s over appreciation and recovered corporate performance and stock prices due to the positive influence of monetary easing by the Bank of Japan and financial measures taken by the government. Thanks to the stronger Japanese economy, as well as the hard work of employees in our operating companies and their subsidiaries, the JFE Group is forecasting increased profits for a straight year in the current fiscal year ending March 2015.
Nevertheless, efforts to stimulate consumer consumption and regional economic growth in Japan are not complete, so the government and the private sector still have much to do. In addition, conditions are worsening in terms of Japan’s country’s decreasing birthrate, aging population, growing energy needs and rising fiscal deficits, creating increased uncertainty about the future.
Worldwide, the global economic outlook remains opaque. Russia’s annexation of Crimea, the intensifying Middle East situation, the spread of Ebola and other unpredictable events are impacting global politics and cross-border economics, leading to heightened uncertainties and dramatic shifts in geopolitical conditions, as well as increased needs for better forecasting and faster action.
In 2014, JFE focused on improved profitability in existing businesses under its fourth medium-term business plan. This year, we will continue to head in the same, aiming at a stronger revenue base in Japan, technological innovation, unprecedented product development and a corporate culture that facilitates sustainable growth.
There are three key challenges that we must address this year.
The first is continuous efforts to raise profitability and sustain growth. We are seeing more positive outcomes in our operating companies, but we need to do even better.
JFE Steel has expanded into China, Southeast Asia and India, particularly in the field of thin steel sheets for automobiles. To generate new revenue overseas, the company will now focus on additional regions and products, and build on its technological skills. Another important step is to actualize the various investments that have been planned out. In addition, I am looking to see JFE Steel achieve its goal of a 10% rate of return on sales at an early stage.
JFE Engineering aims to vigorously expand overseas through various means, including merger and acquisition investments made last year, business related to recovery from the Great East Japan Earthquake of March 2011, and demand created by preparations for the Tokyo 2020 Olympic Games.
As for JFE Shoji Trade, the company will leverage its trading expertise to drive overall market development, especially overseas, for the JFE Group.
The second challenge is to develop new initiatives for strengthened governance. Ever since JFE’s founding, we have placed a special focus on compliance. As a result, we dramatically cut the number of violations reported to our JFE Group compliance committee from 78 in 2003 to only two in our fiscal first half from April to September 2014 . But society’s attitudes toward governance are changing, so we are being evaluated more strictly than ever before by our customers, stockholders, partners and host communities. At the same time, society continues to evolve in other ways, including through the diversification of work styles. We must respond to such changes by tirelessly strengthening our governance. Each one of you can deepen the trust placed in JFE by helping to fulfill our obligations towards stakeholders and dedicating yourselves to socially responsible conduct.
Our final challenge is to secure and nurture human resources. In most of our operating and group companies of JFE Group, about 40 percent of our personnel will be replaced within the next 10 years, mostly due to retiring senior employees. Concurrently, however, the Japanese population, especially the working population, will shrink due to the decreasing birthrate and the greying of society. To sustain our business in such an environment, it is imperative that we widen our scope as broadly as possible to find the necessary human resources, and then nurture them with the education and technical skills they will need to succeed. In parallel to this, we will also take initiatives to rehire senior employees and attract mid-career personnel from outside the company, as well as enhance our corporate environment for female employees. Such moves will, of course, demand nimble responses, such as changing our current corporate structure flexibly.
We will have to attract people from the widest range possible. One of the appeals of the JFE Group is that we actually realize our corporate vision of contributing to society with the world's most innovative technology, and take the initiative to help solve problems in society. For example, JFE Steel makes steel products that lead to energy savings, and JFE Engineering develops solutions for the use of renewable energy, such as biomass power generation, that contribute to not only environmental protection but also regional economic development. These and many JFE Group products and services in diverse fields contribute to society in highly useful ways. But please remember that each of us also contributes to society as individuals, and that we all can help to make the JFE Group an increasingly responsible and appealing company. I firmly believe that the impact of such efforts can resonate within our group for the next one or two decades.
Under our fourth medium-term business plan, we have been busily carrying out a wide variety of undertakings, as I have described. And now, in this year first year of our next business plan, we will continue to move forward in the same direction. We have prepared our next steps after carefully reflecting on the outcomes of our previous plan, so I am eager to get started with the new plan from April.
These are my thoughts in the dawn of our new year. But before closing, please let me remind you to take good care of yourselves, both physically and mentally. We need strong individuals to enable us pull together as a group.
Very best wishes to you and your family for a prosperous 2015!