Message from the President
Apr. 28, 2023
Mitsubishi Logistics presents the following message from President and Representative Director Hidechika Saito - to its stakeholders announcing the fiscal year ending results and financial statements for FY2022.
On behalf of Mitsubishi Logistics. I am honored to announce the results and financial statements for FY2022 and present the organization’s outlook for the next fiscal year.
Financial Results for the Past Fiscal Year (FY2022)
Over the course of the past fiscal year, operating revenue increased significantly, to 300.5 billion Yen (up 16.9% from FY2021), while operating income also grew to 23 billion Yen (up 26.9%). The growth that we have achieved this year is due to the rise in the volume of goods managed as a result of expanded sales activities in each Logistics Segment. In the international transportation business in particular, the following factors also contributed to this increased revenue:
- Significant increase in unit freight costs due to the disruption of global supply chains, primarily in North America, and a shortage of shipping containers etc. (unit freight costs more than doubled from 2021 to 2022).
- In FY2021, the exchange rate (which was in the low 110 yen to the dollar range) depreciated significantly, even reaching 150 yen at one stage during the previous fiscal year (now fluctuating around the 130 - 140 yen range).
- With the contribution of these factors, in conjunction with effective cost reduction strategies, both operating revenue and operating income achieved record high levels.
- Income rose by 29.8% to 30 billion Yen, with contributing factors from: positive yield in dividend income from shares held. Profit attributable to owners of the parent company was 27.2 billion Yen (up 52.2%), partly due to an increase in gains on the sale of investment securities from the sale of cross-shareholdings (which significantly exceeded those in FY2021).
As a result, ROE (Return on Equity) increased by 2.4% to 7.8%, exceeding the target of 7% for the final year of the management plan [2022-2024].
Financial Results for FY2023
In the current fiscal year, sales activities in line with our 2022-2024 Strategic management plan have progressed smoothly and are yielding results. Nonetheless, conditions surrounding our business and industry have become increasingly challenging due to factors such as labor shortages, soaring electric power and fuel costs. In the international transportation business, which performed strongly during the last fiscal year, unit freight costs began to decline during the second half of 2022 and are now returning to a level comparable with the beginning of 2021. The exchange rate is also fluctuating around 130 yen to the dollar, which represents a stronger yen than the previous fiscal year. The factors which contributed to the notable increase in revenue and income during the previous fiscal year are therefore expected to dissipate.
Additionally, with one-off expenses expected to be incurred in connection with strengthening the foundation of our overseas business base, operating revenue is expected to decrease by around 10% from the previous fiscal year, and operating income is expected to be around 18billion Yen (down around 22% from the previous fiscal year); the same level as in FY2021.
Going forward, we will work diligently to limit the decline in profit for the current fiscal year by strengthening our business foundation and sales capabilities in both the Logistics and Real Estate Segments, improving operational efficiency by utilizing digital transformation (DX), enhance profits by reducing costs, and work to steadily achieve our operating income target of at least 20 billion yen for the final year of our management plan [2022-2024].
Profit attributed to owners of the parent company are expected to be 24 billion yen (up by around 34% from FY2021, but down around 11% from the previous fiscal year), due to the sale of cross-shareholdings and gains on the sale of securities amounting to around 12 billion yen or more, exceeding the previous fiscal year.
As a result, ROE (Return on Equity) is expected to be 6.9%, but we will continue working to improve our business performance and capital efficiency with the aim of returning to the 7% range at an early stage.
In regards to shareholder returns, it is our policy to pay stable and continuous dividends of DOE 2% or more. In the previous year, we set our interim dividend at 41 yen and our end-of-year dividend at 49 yen, for a total of 90 yen. We plan to pay a dividend of 100 yen in total for the current fiscal year - an increase of 10 yen, consisting of an interim dividend of 50 yen and an end-of-year dividend of 50 yen—to further enhance shareholder returns while maintaining a DOE of 2% or more. There will be no change to our plans to purchase treasury shares to the amount of at least 30 billion Yen during the current 2022-2024 management plan period. We intend to acquire the equivalent of 20 billion yen in treasury shares from the current fiscal year to the next fiscal year and will continue to enhance shareholder returns.
Regarding the sale of cross-shareholdings as funds for strategic and business investments (which I will expand upon further) - we will continue to engage in dialogue with shareholders and aim to sell shares equivalent to over 40 billion yen as planned during the 2022-2024 management plan period, including around 12 billion Yen during the previous fiscal year. We intend to continue the sale of further cross-shareholdings so that they account for less than 20% of our net assets by the end of fiscal 2025. We will also continue to reduce them in the future.
Direction of Management
Our business performance and various measures have exceeded the targets of our management plan, and we expect to continue making progress in line with the management plan up until the fiscal year of 2024. Although income is expected to decrease this fiscal year - as I mentioned in my explanation of our financial results, there was a considerable increase in unit freight costs and a depreciation of the yen during the previous fiscal year.
We will take the following measures to achieve the targets of our management plan and MLC2030 Vision, to be enacted during the medium to long term.
- To enhance the profitability of our Logistics Segment, we will seek to increase the scale of our operations in four priority areas (categories), such as utilizing “ML Chain”: a logistics data platform for pharmaceuticals for medical/health care; building cold chains in Japan and ASEAN for food/beverage markets; expanding our handling of EVs in the machinery and electrical machine industries; and expanding our handling of materials for semiconductor devices in the new materials industries.
- We will secure stable profits in both the port and harbor transportation and Real Estate Segments.
In the port and harbor transportation segment, we will seek to further enhance the efficiency and sophistication of facility operations through digital transformation (DX).
In the Real Estate Segment, we will seek to strengthen the revenue base of our real estate leasing business and work to expand the real estate business regardless of land / property ownership. - We will work to expand overseas businesses partnerships
On April 26th, we issued a press release announcing our investment in In Do Trans Logistics Corporation (Vietnam), and then on April 28th, we issued another announcement that we have made the Cavalier Logistics Group (US) a consolidated subsidiary.
With In Do Trans Logistics (Vietnam) as an affiliate based on the equity method, we will continue to drive our expansion in the Asian region under the MLC2030 Vision, in which we aim to grow our overseas business operations.
By making Cavalier Logistics (US) a consolidated subsidiary, we will engage in integrated business in Japan, the US and Europe, and expect to see synergies with domestic pharmaceutical logistics. -
Engaging in Digital Transformation (DX)
In order to create value and innovation that will bring about changes in customer businesses and society, it is necessary for us to increase the efficiency and sophistication of logistics and facility operations by leveraging advanced technologies and developing logistics platform services that support them. Doing this requires digital transformation (DX) and collaboration with various partners. We have therefore established an in-house Digital Transformation Team engaged in developing and utilizing advanced technologies in association with external partners, and established a CVC (Corporate Venture Capital) system to strengthen relationships with start-up companies. - Practicing Sustainability Management
We will continue to contribute to solving environmental issues throughout our company. We are developing a CO2 visualization system, launching simulation and performance report services, and providing consultations on reducing CO2 emissions. We will also work to reduce CO2 emissions by 50% by 2030. We are currently in the process of developing a transition plan declaring net zero emissions by 2050 and will be installing solar power generation equipment and introducing renewable energy. We will also be switching to electric vehicles (EVs) for our company vehicles.
Additionally, we will be focusing on human rights due diligence to ensure compliance throughout our supply chain. - We will implement human capital management to enhance the feasibility of these measures.
We are formulating a management plan and human resource portfolio necessary to achieve our MLC2030 Vision and implementing various HR measures to bridge the gap between the current workplace environment and our ideal vision. In particular, we will work to systematize our education and training programs and establish an in-house academy. This in-house academy will advance more high-level professionals in their fields of expertise and develop the next generation of leaders .
We are also working to create an organizational culture that respects diverse values, in which each and every employee can freely express their opinions and make maximum use of their individuality and abilities. As one means of achieving this, we have conducted an engagement survey that identifies and responds to issues that needs to be addressed. We will aim to improve motivation and job satisfaction for all our employees.
We will also actively engage in strategic investments relating to M&A, digital transformation (DX), environmental initiatives, and human resource development as mentioned above.
Finally, I would like to explain our company’s purpose, which is currently in development.
Mitsubishi Logistics' basic philosophy is rooted in the Three Principles of Mitsubishi’s Business Management Philosophy (“Sankoryo”), namely Corporate Responsibility to Society, Integrity and Fairness, and Global Understanding through Business. Our corporate philosophy is that through our business activities, we seek to maintain an appropriate level of profit and achievable stable growth, and contribute to the realization of an affluent and sustainable society while rewarding our employees and shareholders. In addition to this traditional philosophy, by clarifying our purpose, of moving the company into a direction in which we can continue to grow while solving social issues, would be our reason for existing (our raison d’etre, if you will) for existing in the 21st century. We hope that every employee will always think about what they should do, to raise their level of thinking, and to achieve an increased level of solidarity. We would like to present this combined traditional philosophy and renewed purposed to our stakeholders as an indication of the direction our company is taking.
Based on the above management policy, we will continue to engage in dialogue with various stakeholders, grow together to improve our mutual values, and aim for sustainable growth as a company. Through these efforts, we believe that our management strategy will be recognized highly by the stock market, which would lead to an improvement in PBR.
We hope for your continued understanding and support of our business in the future. Thank you.
Hidechika Saito
President and Representative Director