Mitsubishi Chemical HoldingsKAITEKI Value for Tomorrow

Message from the President

With the limited economic development in this low growthera, we need to grow based on our own efforts. We will steadfastly strive to achieve the medium-term management plan in order to establish a highly profitable financial position.

Looking back over the previous fiscal year as president of MCHC; Looking ahead to the future

In the over a decade since the establishment of Mitsubishi Chemical Holdings Corporation (MCHC) as a pure holding company, we have significantly restructured the business, working toward sustainable growth that balances our Performance Products, Industrial Materials, and Health Care domains. In particular, we have drastically reshaped our business portfolio by exiting commodity petrochemicals and inorganic products businesses, while consolidating Mitsubishi Rayon Co., Ltd., Taiyo Nippon Sanso Corporation, and pursuing acquisitions. With major structural reforms progressing smoothly, I passed the baton of my concurrent post as president of Mitsubishi Chemical Corporation to focus on my responsibilities at MCHC since April 2018, which allows me to lead further transformation.

In regard to strengthening corporate governance, I have been promoting the separation of management supervision and operational execution functions. We established a Corporate Executive Officers Committee to decide on important management matters for further flexibility, transparency, and independence. In addition, we revised MCHC Group Management Regulations in FY2018 to clarify the roles of the holding company and the operating companies. Furthermore, we have reinforced a monitoring framework that enhances internal control systems of each operating company for the purpose of reducing operating risks.

In respond to rapidly evolving technology while addressing increasingly complex social issues, I believe that it is crucial to develop a well-conceived medium- to long-term management plan for the Group’s sustainable growth.

With people, society, and the planet, as well as advancing technology at its core, our new medium- to long-term basic management policy “KAITEKI Vision 30” demonstrates what we aspire to be in 2030, based on backcastingfrom 2050. In accordance with this policy, in the next fiscal year we will formulate the next medium-term management plan starting from FY2021. The plan is expected to include a shift to a business portfolio that considers both financial and social risk indices.

Solutions for increasingly serious social issues

In the midst of globalization and rapid technology advancement in digitalization, biotechnology, robotics and others, the world is facing the escalating challenges such as pollution, climate change, water and food supplies, as well as poverty, income disparities, and educational opportunities. The United Nations declared the need for cooperation to achieve the SDGs (Sustainable Development Goals) in 2015, encouraging not only governments, but also corporations and citizens to make a united effort.

The MCHC Group has continued to reflect upon its role in society as a group that offers various solutions to address a range of social issues, and from FY2011 we have placed KAITEKI Management at our core. KAITEKI Management enables us to create value by solving social issues while achieving our own sustainable growth, and thus contribute to the global environment and sustainable development of society. This is my ambition to be a continuously growing group by addressing social concerns and delivering innovation.

The third stage of KAITEKI Management: Leveraging proactive individuals

In the first stage of KAITEKI Management, all employees acquired an understanding of KAITEKI value in order to better leverage the concept in their own roles. In the second stage, we generated both economic value and social value by offering solutions against material issues which we identified based on global macro-trends analysis, while restructuring our business portfolio. As a result, we obtained recognition in the form of inclusion in the Dow Jones Sustainability World Index. Another key achievement was our improved profitability, namely, growing core operating income from around ¥100 billion to ¥350 billion.

Now, moving into the third stage, we have redefined KAITEKI as “the sustainable well-being of people, society and our planet Earth” to express our determination and aspirational vision to attain health and well-being not only in our company or society, but also for all of humanity around the world. In order to achieve this vision, we dedicate more effort than ever. Each employee must take ownership of social issues and come up with ideas, which can become proactive action plans and be incorporated into business strategies for implementation. In other words: “dedication from forward looking individuals forges business strategy.” It is each of us, as part of the MCHC Group, who makes the group to create value for the future.

Developing the people who can deliver innovation

Upraising innovative capacity is indispensable for the Group to attain sustainable growth and deliver solutions for social issues. In 2017, we established the Emerging Technology and Business Development Office to enhance research function at each operating company, spark creativity of researchers, and promote open innovation. This office plays a key role in advancing our medium-term innovative capabilities by accelerating digital transformation, strengthening our business venture capabilities through cooperation with startups and accelerators, and developing new business models. We will further expand our network of domestic and overseas research institutes and universities, primarily through The Global KAITEKI Center, an allied center established within Arizona State University in the U.S., led by our subsidiary The KAITEKI Institute, Inc.

Such a shift requires integration of new technologies and perspectives into our system, which will come from employing talents from outside of the Group and mobilizing diverse internal talents. For this objective, we will also promote work-style reforms under KAITEKI Health and Productivity Management, while accelerating the personnel system reforms, revising the traditional seniority-based promotion system and the bulk hiring of new graduates. We will embrace true diversity both in Japan and abroad, thereby encouraging our “people” deliver innovation for a new age.

Safety and compliance are our management priority

The cornerstones of the Group are safety and compliance. Past disasters and events must not be forgotten. We ensure that thorough maintenance of production facilities are in place, as well as preventative measures using the latest technologies are properly planned and implemented. In addition, we will transfer expertise in operations and maintenance, and provide training on preventative measures at our 350 overseas subsidiaries. Regarding compliance, we will enhance the internal control system by applying tools such as the “internal control map,” which was newly introduced to help us promptly follow changes of local laws, regulations, and standards in the countries where we operate. Ultimately, what matters most for us is “people”, and I encourage each employee to take ownership of safety and compliance.

Listening to diverse opinions for value creation

Our business environment is rapidly changing, and the needs of society have become more diverse. In order to swiftly and accurately respond to these changes, we ourselves need to evolve. We must listen to a wide range of ideas and opinions, without being caught up in old thinking, and leverage diversity to enable value creation. Hearing various opinions through stakeholder engagement and dialogs is of great importance to me. With our KAITEKI Management, I am confident in achieving continued developments of both social value and economic value. I would like to express my deepest gratitude and appreciation to all stakeholders for their support and look forward to sustainable partnership.

Hitoshi Ochi
Representative Corporate Executive Officer
President and CEO