Afternoon. Thank you very much for joining us today on such short notice. We will now begin this press conference regarding the appointment of the Chairperson, President, and Vice Presidents of Mitsui O.S.K. Lines, Ltd. We do have today's presenters coming into this venue. Let me introduce who will be addressing you today. To your left is President Takeshi Hashimoto, Representative Director and President. To your right is President- Designate Jotaro Tamura. Today's program will begin with remarks from Hashimoto, followed by remarks from Tamura. We will then move on to a Q&A session and a photo opportunity. We are scheduled to conclude by 4:00 P.M. Please note that this press conference is also being streamed online. Also, please be advised that we will accept questions only from those attending in person. With that, we will now begin. First, President Hashimoto will provide an explanation.
Good afternoon.
Thank you for being here with us. I know this is a very busy season of the year. We actually had a board of directors meeting in the morning today. We approved the organizational structure for the coming years. We would like to make an official announcement. As the press release was out, I've already given remarks on the page. I'm not going to be repeating what is in my mind, because it's already stated on the page. But I'd like to elaborate a little more about why I consider that this is the fitting timing for us to make such organizational changes. As you know, BLUE ACTION 2035 is a long-term business plan. The first three years of Phase 1 is coming to an end. Even before the phase, 2021 was when I actually became business President.
The first two years, back then, there was this rolling plan system. It was two single- year business plans we formulated. Since then, we have shifted to this more of a long-term, business plan-based business conduct. That was the background of the BLUE ACTION 2035. Phase 1, as I said, is ending in March 2026 . I think this is a nice one closure we are coming to. As you probably are aware, there were a lot of events, but our business performance expanded significantly during my being President. The roles and responsibilities of a President kept expanding as our organizational group's scale became larger. We are coming into this phase that cannot simply be carried out by a single person.
I just turned 68 years old. I thought that, well, maybe this is time that I pass this baton to a younger generation and make this an organization ready to build a future with these younger capabilities. We do have this Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, three CXOs. This is going to be a collaborative management structure led by the CEO, COO, and CFO. This was my strong request that the structure will be set in that way. It's coming from the previous five years' experience. I just realized that all these responsibilities that I was carrying out was really, realistically very challenging in terms of time and also how many people would be needed to carry out all these. Would like to have this executive team, very strong, with three capable members leading the whole group.
The now President will be the head of the whole group as part of this three collaborative management structure. This CEO Designate, Tamura, is a completely different person in terms of the background. He was long involved in the container business. He was long involved in overseas business. We expanded organizations, and he led this expanded team. I have full trust that he will be very capable as CEO leading this expanded organization. He has great trust internally and externally, and he has a great inner personality and great traits. We are still in the progress of making an execution plan for the Phase 2, and I think he is the very fitting CEO to be leading the group. I will remain as a Chairperson, and I will still be a Director board member, but I will step back more .
I will do my utmost to support the executive members of this group. I would love to seek your continuous support for us to be building even bigger, greater future. Thank you very much.
Next up, President Designate Jotaro Tamura will deliver.
Good afternoon. Today, following a resolution of the Board of Directors, I have been appointed to assume the position of a President and a CEO as of April 1st next year. My name is Jotaro Tamura, and I would like to do a quick introduction of myself. I joined the former Osaka Shosen Mitsui O.S.K. Lines in 1991 and was appointed Executive Officer in 2022. I am now in my fourth year in the role at the age of 57.
As Hashimoto kindly mentioned, for most of my career, I have been involved in managing overseas organizations, spending. I was an overseas person, spending 18 of my 31 years with the company stationed in London and Hong Kong. Over the latter two of my four years as an Executive Officer, I have been responsible for the Asia region, commuting from Tokyo to Singapore and other Asian locations while leading local organizations. In terms of business fields, approximately 2/3 of my career has been devoted to the container shipping business, along with involvement in the car carrier business and iron ore and raw material shipping. From 2020 onward, for four years, I was engaged in overall group management as a General Manager and Executive Officer of corporate planning.
In that capacity, I supported President Hashimoto and also contributed to the formulation of our current group management plan, BLUE ACTION 2035. Other initiatives I worked on during my time in corporate planning include the 2021 revision of the Corporate Philosophy and Group vision, the Group's values and Code of Conduct, as well as the subsequent formulation of the Environmental Vision and Corporate Governance policy. On the business front, these initiatives include the tender offers for Daibiru and Utoc, as well as the formulation of the cruise business strategy and acquisition of Mitsui Ocean Fuji. April next year marks the start of a new five-year period designated as a Phase 2 in our management plan, and receiving the baton of the presidency at this milestone carries significant meaning, and I take this extremely significant responsibility very seriously.
Looking back, our company posted exceptional results in 2021 and in 2022, which led to a rapid expansion of our balance sheet. In response, a key management challenge at that time was the need to redefine our medium- to long-term management policy. I believe that the management plan launched in fiscal 2023 enabled us to respond to this challenge relatively swiftly. During the three years designated as Phase 1, we made very proactive investments to enhance the competitiveness of our core shipping business and to create additional pillars of stable earnings. I myself have also been deeply engaged in these initiatives as the executive responsible for the Asia region. The next Phase 2 will be a critically important period in which we convert the results of our large-scale investments into tangible earnings.
We will place the greatest emphasis on executing strategies across each business and each region to achieve this goal. At the same time, while maintaining a balance between financial discipline and shareholder returns, we will also focus on the next investment cycle during the Phase 2 period. As a global company that develops a wide range of social infrastructure businesses centered on shipping, as stated in our group vision, we will further enhance our presence. We will continue to pursue value creation at a global standard. We will firmly uphold the three key strategies set out in our management plan: transformation of the business portfolio, addressing environmental challenges with a focus on vessel decarbonization, and expanding global business development through revitalization of regional organizations. In leading our global organization, I intend to fully leverage my experience to deliver concrete results.
Our group operates more than 900 vessels, including dry bulk carriers, tankers, LNG carriers, chemical carriers, and car carriers, making us a truly comprehensive shipping company. We take pride in being a globally unique presence in the industry. We will further strengthen each of these areas of expertise to make them even more robust. In the container shipping business, which I continue to oversee, I will continue to actively support the management of Ocean Network Express, ONE, from our position as a shareholder. Today, as part of the new management structure, the appointment of two new Executive Vice Presidents were announced alongside my assumption of the presidency. The three of us will serve respectively as CEO, COO, CFO, forming the core of the management team. Together, we will build a collaborative management style. That's our thinking.
Given the significantly expanded scale of our business compared to the past, collaboration with all stakeholders is essential to maximize corporate value. This requires top management to continuously demonstrate balanced decision-making and execution based on a broad perspective and foresight. At the same time, the ability to foster deeper teamwork within the management team will be more important than ever, and the three of us executives will take on the role of leading this teamwork aspect. I sincerely would like to ask for your continued support and cooperation going forward. Thank you very much.
Thank you very much. That was from Hashimoto and Tamura. We will now move on to the Q&A session. As questions will only be accepted from those attending in person, online participants with questions are asked to contact us, our corporate communications office, after the press conference. If you have a question, please raise your hand. Please state your affiliation, company name, and your name, and limit your questions to one or two per person. It's very much appreciated.
Thank you very much. This is Kaiji Press, Kusakabe, and I have two questions, and one question for each to the gentlemen. First, to Mr. Hashimoto. You navigated the last five years, and you implemented various initiatives. What is the most proud the results that you brought? If you have something that's still to be accomplished, what would that be? To Mr. Tamura, for this new appointment, when were you approached, and when were you announced? What came up in your mind when you first heard the news?
Thank you very much for your question. I will answer the question that came to me.
When I came to become President back in 2021. From the beginning of 2020, was the pandemic, and there were a lot of confusion in the environment. Even in the last 10 years, right before the pandemic, there was this shipping business hard period, and we needed to do several structural reforms in that 10 years. People's mindset as a result, wasn't necessarily a growth-centered mindset. It was rather reserved, it was more of like a risk- avoidance kind of mindset. It was, I guess, to a certain degree necessary, the trend was changing. Abenomics in Japan started showing results, the share prices of the companies were coming up. The economy was better. Our internal mindset or morale was more to do with cost reduction.
We weren't necessarily having this in a full spirit of expanding into new areas or expanding our business to the next level. Mindset change internally was what I consider to be very vital. From defense to offense. That was what I was strongly thinking when I became President. With that conviction, I rolled out various initiatives: the compensation system changes, HR system changes, we changed the organizational structure. We did numerous things, and I think those are things brought significant changes. Now we have really great motivation, morale motivation, and we do have very open discussion, valued culture. That's something that I am proud of, and I think the certain results had been achieved or have been achieved. Yes, we do have a lot that we can grow or improve further. I might highlight two aspects.
One, the last five years, we actually accumulated a number of investments of significant scale, and it's to grow our stable businesses. Chemical tank terminal businesses would be one type, or cruise ship business. Shipping business, FLNG, or offshore power plant or generation. For these investments to bring in earnings, we need continuous effort to bring those investments into a successful, earnings- generating form. I think it will take a few years before these investments will start bringing in significant earnings. We can't really wait five years. Apologies, I can't really be going in for another five years as a President, so I thought that this should be the timing to pass the baton to Tamura. We expanded new business areas up until now. I look forward to seeing the flourishing of these new businesses.
But how great a success they're going to be, I know that I didn't really deliver till the very end, because it still requires a few more years in. I guess now I needed to realize at a much earlier timing, but what I learned as we went along was that human capital is the vital part. If you create a strong team, even you have a very complicated, difficult business, you will be able to overcome it, but you need to nurture people. You need to bring the best of everybody. That's something that wouldn't happen overnight. It requires very robust, sustainable effort. So, training, nurturing people so that we will be ready for the bigger future is something that will continue to be a big challenge for our management team. We are already clear on what are the challenges we need to tackle.
I think what we have left is how well we can execute. So I will stay. As a member of the board, I will be supporting in every possible way for him to lead that execution part.
Right. I'd like to answer the question from my end. So when was I informed? What came up in my mind when I heard the news that I will be the next President? So from 2021 for three years, I was the Head of the business planning under the leadership of Mr. Hashimoto for three years from 2021. So I was involved in daily strategic discussions. I had visibility of how he was formulating these strategies. 2021 was the timing. That's been where I was fortunate to be in the position of.
Yes, this timing was the official timing when I got this idea of a succession plan. As you would imagine, I was very surprised. But how I'm interpreting it, my stance has always been: if I can be of any service, any contribution, I'm willing, that I would have taken any responsibility I'm trusted upon graciously. So I responded, saying that, "If I can be of any help and contribution, yes, I will graciously take this on."
Any other questions, please? We will go to the first row of the right block, please.
This is the [Marine newspaper], Hashimoto. This is the. Sorry, to Mr. Tamura. I might be overlapping in what I'm asking, but the challenge. In the profile statement, there was the word challenge.
You've been seeing the Asian market as leader, and you probably know a lot of challenge needed to go through these challenging times as well. As the President now, for your company to grow globally , what other transformations you think or changes you think you will be needing to lead?
Well, thank you very much for your question. I might be repeating what Hashimoto said, but for a long time, there was this shipping business, hard at times. It changed, and now it's in a very favorable environment. So what are we gonna do was a big question. But mindset-wise, we weren't experiencing this in a favorable environment. So we needed it to create everything from scratch with a totally different mindset of going aggressive, going into new arenas. So what do we need to do?
How do we need to- there were all these explorative things, and it wasn't just in the North Asia region that I was leading, but in every region. Until then, it was totally headquartered in Tokyo, being top-down and giving instructions, but we decided to change it completely. It took time for us to transition. I think, spending those three years, we managed to transform ourselves. So here onwards, it's not just going to be the challenging spirit that we're going to be exercising. We need to really bring results, concrete results. We need to focus on how we can effectively execute what we planned or what we envisioned. As President, yes, headquarters is going to be a very important functionality. Now we're going through this awakening period of all these regional organizations, and I would like to really make things happen with all these regional organizations.
Okay, the next question will be from the left block.
Yes. Thank you. This is a Nikkei newspaper. Two questions, one for each. One question to Mr. Hashimoto. It'd be great if you can elaborate more, what kind of person Tamura is, and a question to Mr. Tamura. Okay, so it was mentioned that your business has been diversified with a lot of investment you did in the Phase 1, but in the Phase 2, I guess now you need to see which one would be a long-standing one, which one you need to recede.
Okay, so I don't know how credible my description of him would be, or how I'm a good person to describe. For method of things, he takes a very logical approach, breaks something big down into elements, components, and he would like to be able to have these analytical eyes and be able to construct the solution mechanically or systematically. So he has a very logical approach. He has a very clear- cut of building strategies and an execution plan. I think that helps him garner trust from people. But at the same time, he's very passionate, and then it's very quiet, but very passionate flame at the core.
When you are a very logical, capable person, you might appear to be someone who's cold or robot-like. But no, he has this passionate side as well. I think that's one of the many balances that he has at a great level.
Another thing: in my experience of five years of being President, what's really critical is how well you can communicate to outside world. Particularly in English, it's been more important than ever . One, because our customers, clients, business partners are global, and we need to have one-on-one at the top , and then that's really important. But it's not necessarily just that. We have so many global talents working in our group, and we have business leaders, and we have an increasing percentage of non-Japanese leaders and employees, and then you need to really motivate those colleagues. If you can't communicate effectively, it wouldn't happen. So not just the language, the capabilities, you need to be able to effectively influence or to garner mutual understanding in both languages. He can even speak Chinese.
We do business in China, Taiwan, and also in the Southeast Asia, where we have a lot of Chinese-speaking partners. Him being a great communicator in all the three languages, the English, Chinese, Japanese are really great trait, I look up to him. I'm envious in a way.
Okay. I'd like to answer my question. How are we going to be having this selection and concentration? What is the approach of us getting into Phase 2? I guess there are two aspects, external environment- related and internal environment. If we think that something keeps having this potential to succeed, that we need to keep pushing. External environment, from the beginning of this year, it's particularly prominent of this geopolitical risks coming about and the global trend change towards environmental topics.
We'd like to really be attuned to what's happening outside the world and fine-tune , orchestrate, and adjust in what we intend to do and how we do it. Anything we do, if it's fitting to our strength, then that should be something that we need to continue. I'm sure, as you pointed out, that we will find that certain things are not going in the way we originally thought. My answer is that we will closely monitor what's happening outside and inside of our organization, and we will continue to make necessary decisions as we go along, without really staying complacent where we are.
Okay. Another question, please. From the back end, on the left-hand side, please.
All right. Thank you very much. This is Maritime Bridge Japan, Yamamoto. My question is also two, one each.
Mr. Hashimoto, you said that if you don't have enough, like the gust or the energy, that you can no longer be President. I'm sure you're still full of energy, but you're now going to be Representative Director, Chairperson of the Board and, Tamura, President. Is this the very first time for your company that you take this kind of segregation and the separation of roles and responsibilities? How are you going to be supporting the management team from your new position? That's a question to Hashimoto. To Mr. Tamura, PBR is often talked about target, and then the shareholders require. If you do this equity, 2021 to 2025, it has become six times, and the PBR denominator is much larger.
Even maybe it's really difficult to catch up with the scale of expanding, but the PBR is what investors continue to see. How are you going to continue improving the PBR?
Okay, I will answer my part. This arrangement of the organization that we made today is a little bit irregular. Directors and appointments: we can actually have these special meetings. Normally, the Directors' appointment has always been the June meeting. On April 1st , he wouldn't be a Director, so he would be President, Chief Executive Officer, but wouldn't be a Director until June. For the three months from April to June, I would continue to be the Representative Director while he being President. That's just, I think, principally, the Representative Director should be President. As of April 1st , he wouldn't be Director.
I would be, for the formality, Representative Director. Tamura, Umemura, with the assumption that they will be chosen as Directors , I will actually be stepping aside from this Representative Director, and the three gentlemen will be the Representative Director. April to June will be slightly irregular. There will be two timings of organizational change, and then as for what's in my intention. It might take some time, but I would like to be transitioning from the execution aspect to the Board of Directors leading. But during the April to June, it will be a transitioning period. I will be handing over. I'll be passing all the necessary information and duties. That's the setup. My stamina and energy level is still high, yes. But it's like physical stamina. Yes, it's becoming more challenging. I'm well. I'm not suffering from any un-wellness.
But this year, I had quite a lot of overseas trips, and it was 1.5x a month. It was, at times, very physically demanding. I had it 2x or 3x when I thought that it was very physically demanding, and it told me that maybe this is good timing. Now we have Tamura, so I'd like Tamura , Umemura, and Hamazaki all thriving in their responsibilities. Just a little more. I'm sure Tamura will talk about this, but regarding the PBR, well, one, we would be investing at the front, because we need to grow in the long run for the future. The LNG business in particular, it takes, averagely, four years to construct a vessel. The money will go out, but then the return is going to take some time to come back.
It takes at least a few years, and we can't really control that. Cash flow-wise, I guess avoiding investment would make the cash status position better and enrich the shareholder return, might be one thing that we can do, to make it look pretty PBR. Or just thinking how investment is going to bring returns from day one. For that, maybe one thing that we can do is to purchase bonds. We do have ways to improve PBR sooner. But as management, I think what we really need to focus, emphasize, prioritize is this mid- to long-term business growth. I know we do have shareholders who's seeing our performance in a long-term vision and understanding. Our return coming from these investments are going to continue being better, second year more than the first year, third year better than the second year.
I would like to really ask a long-term vision. The short-term improvement, yes, we can do share buybacks, but is that really the way we go? I'm not really sure. I wouldn't agree. I don't really agree that's the way to go about. Well, it's ultimately to the next executive team, but okay. I agree with what Hashimoto just said. I guess another one important thing is prioritization. Well, we have both at hand, and then we do have this current PBR state. All this is a set- in-s tone investment to be brought to a very successful state of maximizing earnings. We would like to shorten the time for these investments to start bringing earnings. The speed is important, and the scale is another.
So we know that is the first priority, try to maximize the speed and the scale. Again, the executive team will continue fine-tuning.
Okay, another question.
Sankei Shimbun. So geopolitical risk is what I would like to ask a question about. So during the Hashimoto period, there was this Ukraine situation, and you needed to. Well, in a possible situation in the future as well.
We were not expecting that Russian conflict to happen. The Suez Canal and the tariff ports charge issue, and then this tension between the U.S. and China, and the retaliatory tariffs. We have been shaken by so many different factors. So that was how I would summarize the five years. But for shipping businesses, the geopolitical risks are not necessarily acting negatively to our business. With the Suez Canal being blocked, we needed to change the route, and then the supply-demand situation actually got tightened.
It actually helped our improving the earnings. So, all these geopolitical situations, would it be a headwind or a tailwind? Would it be long-term, short-term? It will be different one by one, and we need to be very agile, adjusting how we invest or how we respond. What we did in the last five years, well, it is limited in how much we could do, but one thing that we focused on is this intelligence gathering. So it was partly new. We opened an office in Washington, D.C., and also in Beijing to gather intel. There is a World Economic Forum member we became. It is an annual event. The Davos meeting is the January in Switzerland annual. But WEF has this summer forum and New York meeting. Also, there is this meeting in China.
There are various global conferences, and it is not just me who attended, but various directors and leaders went there, had a networking, and not just forming a stronger network within the shipping businesses, but we try to create this network where the various topics and intel will come swiftly to our team. We invested quite significantly, both time and money, to strengthen that network. From last year, we created this new Advisory Board, which invites specialists and experts of various areas, and them acting as our board advisors. So this is a mechanism which ensures us to be exposed to all this, the cutting edge or the very expertised knowledge. So it is not going to be whim decisions that we are making. It is going to be a intel, information intelligence, that supported the decision- making that we can now have.
Number of people who are working in back office is higher as a result. So it is a burden on an expense side, and it can be quite challenging. But I think this is a very vital part that we continue to have. We need to get information, and we need to create scenarios and then hypothesis, and we need to be making business decisions based on these mechanisms. I think we have matured to do that now quite a bit.
Okay, so one more. The shipping business, the vessels are always moving around the nation, and yes, the international policies, the trade patterns, and when changes are made. It is constantly changing anyhow. When an investment is on land, you cannot really mobilize it. But when it is in the ocean business. Sorry, I have to listen.
Trend patterns can actually work for us, and then we can actually leverage changes to turn it into our opportunities. That was what we captured: these opportunities in the last five years. We like to really see what can be turned into opportunities and then again be agile. But structural changes of the world is something that we can't really accommodate with that kind of stance. Where there's such changes, I guess we need to have this long-term vision and make our trajectory-connected decisions .
Okay. Non-shipping businesses is what you are doing more, whether some are real estate businesses, how would you evaluate that?
Daibiru Business managed to expand this real estate business outside and inside of Japan, has 100 years history. It has always had various business intelligence know-how.
What we did was just unleash all this potential, and they were very agile when we proposed all these investment opportunities, and as we were very grateful. In India, London, we managed to invest in real estate and then a little bit of real estate. But warehouse operation is what we started in Southeast Asia, and it's a quite a wide diverse business portfolio we managed to create. We're very pretty confident and proud of what we achieved. We do have this power generation business, is quite a new arena for our company, and we are increasing our presence. But for us to nurture this business into earnings pillar, we need to be very patient, and we need to keep tackling this challenge. But I think we need to have a long-term thinking in nurturing it. What I would say would be incremental.
Cruise ship business next year, MITSUI OCEAN SAKURA, the new cruise ship, will start, I think in 2026 September. We're super looking forward to it and would love you to feature this, the new endeavor. We're going to start with that new cruise ship.
Great. Any other questions?
All right. This is Misaki from Nihon Keizai. This is a question to Mr. Tamura. Longer- term, BLUE ACTION 2035 is there, and you're moving into this now, Phase 2. You already have this direction that's set, and it's going to be a collaborative and management team approach. But how do you intend to give this Tamura way? I know that you would value this teamwork approach, but how would it be very unique to Tamura now that you will be the President?
I haven't prepared anything that's very cool or dashing, but I would have these three months from today till the April 1st. I would like to talk with various people, and when I sign in Hamazaki, I would like to talk a lot, and then I'd like to set how I will be President. But just now, listening to everyone's input, feedback, and just adding the map, is not going to be dynamic or agile enough. I think it is really important that there are edges. I will be all ears, getting advice and input from everybody. But at the end of the day, I will be the one who needs to bear all the responsibility. I'd like to make a decision on how I'm going to be leading as the President before becoming one.
Okay, this is going to be the last one.
Diamond, the company, Tamura. You said that if you just incorporate everyone's advice and opinions, then it's not going to be blunt and it's not going to be edgy. But anything that you would like to really value or prioritize or change as you become P resident?
I don't have a very direct answer to that question, but as I said earlier, BLUE ACTION 2035 first three years, I was the formulator. A part of the formulation of this action, and I was assisting Mr. Hashimoto. Now we're moving into this Phase 2, five years, and it's 13 years plan. The basic direction, basic approach is not going to change, but the next five years would be the recent three years as a foundation, and we're going to calibrate how we go about with observing what's happening inside and outside, and there will definitely be some calibrations.
I don't have anything definite now, but that's the stance that I have. I would like to really keep monitoring what happens around us and then be agile and calibrate as things become necessary.