MOL: LOW RATES, EXPENSIVE BUNKERS ARE NO EXCUSE FOR LOW RESULTS
Kunio Suzuki, president of Japan’s Mitsui O.S.K. Lines group, said that low freight rates and high bunker costs must not be used as excuses for insufficient profitability.
Suzuki admitted that the recovery of the both liner shipping and non-liner trades has remained slow, and “freight rates are below the levels needed to sustain profitability.” Meanwhile, bunker costs have remained high.
“But we must not use those factors as excuses,” he said.
“In times like these, executives and division leaders must look at new ways and execute their leadership to ensure profitability,” Suzuki said in a message to the company’s staff. “And I urge the younger generation of MOL group employees to take the initiative, not simply wait for orders,” he added.
Looking ahead at the year 2003, the MOL executive identified three priorities. They are: reaffirming the commitment to reach the sales and profit goals of the group’s “new expansion target” corporate plan; ensuring compliance and a high standard of corporate ethics; and safety.
For fiscal year 2002/2003, ending on March 31, 2003, MOL’s results will fall short of the targets set in the group’s corporate plan.
“I truly regret the fact that an increasing number of divisions are showing inferior strength in terms of sales and profits when compared to some other shipping companies,” Suzuki said. “I, as the captain, along with all directors and staff, must work even harder if we are to reach our goals for the final year of the program in fiscal year 2003 (ending in March 2004).”
Under the group’s corporate plan, MOL aims to triple group net income to 34 billion yen (about $260 million) in 2003/2004, from Yen11 billion ($79 million) in 2001/2002. Over the same period, revenue would increase to Yen1 trillion (about $7.5 billion), from Yen904 billion ($6.8 billion).
“Change is the only way we can survive in these difficult times,” Suzuki said.
To strengthen cost competitiveness, MOL has a plan to reduce costs by Yen30 billion (about $225 million), he added.