According to the Chinese zodiac, 2018 is the year of Earth Dog. The designation has two contradictory connotations. The Chinese character for'Earth' implies luxuriant plants, while the one for 'Dog' suggests withering plants. When plants luxuriate too much, some leaves have little chance to receive sunlight directly. For further growth, excess branches and leaves must be cut off. This seems to suggest that all enterprises need to pluck up the courage to shed the shackles of the past if it wants to continue to evolve.
At the global level, society becomes increasingly fragmented as is witnessed by the rise of populism and a shift away from free trade to protectionism in some nations. Meanwhile, the world economy remains in good shape and global stock markets keep growing, driven by two major factors: the so-called fourth industrial revolution, i.e. innovation, and the easy monetary policy. Although the extension of the coordinated production cut props up crude oil prices, full attention should be given to the potential risk of a sharp drop in the prices, as West Texas Intermediate crude futures keep hitting a new high. As just described, with the global economy entailing a range of uncertainties, we need to always bear in mind the risk of a sudden downturn.
In Japan, demand for city infrastructure development and redevelopment is expected to continue rising, while consumer spending is picking up thanks to a recovery in consumer sentiment. I hope that the Abe administration will do its best to address essential challenges such as security enhancement and fiscal reconstruction, taking advantages of the long-term stable government and the economic recovery.
In the energy industry, legal separation of the power transmission/distribution sector as well as the gas pipeline sector is planned and this is likely to facilitate cross-border mergers and acquisitions. On the policy front, the discussion on how to achieve an 80% cut in green house gas emissions by 2050 from the current level has started. Also in reviewing the Basic Energy Plan, the focus is shifting to 'Discuss the 2030 framework, while looking ahead all the way to 2050.' Under these circumstances, the petroleum industry embarks on concrete actions in 2018 towards IMO's fuel sulfur content cap regulation scheduled to be enforced from 2020.
With the war of attrition deriving from excessive competition coming to an end, the petroleum business is currently building a sustainable revenue base. However, considering that domestic demand continues declining, we cannot stop here. Meanwhile other businesses are gaining competitive advantages to some extent as their growth strategies and structural reforms are bearing fruit.
On the other hand, earnings are at present supported largely by the improving external environment. Therefore, it is imperative that we continue to press ahead with business restructuring so as to build a strong profit structure that are not susceptible to fluctuating market conditions.
With regard to 'Brighter Energy Alliance' between Idemitsu Kosan and Showa Shell Sekiyu, we will not waste our time that elapses before the business merger to create synergy. This year, we will accelerate concrete merger efforts such as consolidation of business establishments of relevant Business Segments.
In 2018, the year of Earth Dog, the Fifth Consolidated Medium-term Management Plan will be launched. We would like to continue to be a company which is, even in uncertain times, soundly aware of possible crisis and aggressive in tackling reform, thereby creating new values. Let us make a first step this year towards the creation of 'Next-Generation Idemitsu.'
Idemitsu Kosan Co. Ltd. published this content on 09 January 2018 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 09 January 2018 04:19:07 UTC.
Original documenthttp://www.idemitsu.com/company/news/2017/180109.html
Public permalinkhttp://www.publicnow.com/view/C895E3EBB4E5E8B26CC69B31199339CFBF2C7F6F