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Gate 2 Strategic Edge

Business Impact from COVID-19 and Our Response

The COVID-19 pandemic has led to lockdowns in major cities around the world and restricted the movement across cities and countries. Mitsui’s businesses have been greatly affected as a result. We are working toward an early return to a growth trajectory by accelerating efforts to improve resilience to downward pressure in our ongoing operations.

Specific Impacts

Affected business area    
Energy

Decline in commodity prices
Weaker demand

Restrictions on the movement of people and cargo have led to a sharp drop in demand for jet fuel, gasoline and other transportation fuels. Crude oil prices fell on the uncertain economic outlook, and profitability worsened in petroleum-related businesses.

Mobility

Decline in operation rate
Weaker demand

Mobility-related demand has decreased. Demand and the operating rate for automobile-related businesses (production, sales, and financing), railways and aircraft leasing has dropped.

Healthcare

Decline in operation rate
Weaker demand

Healthcare demand is down from patients with mild afflictions and medical tourism has slumped, leading to lower operating rates in the hospital business.

Iron & Steel
Products,
Chemicals

Weaker demand
Decline in commodity prices

Demand weakened for durable consumer goods such as automobiles. Profitability has worsened in businesses related to iron & steel products and chemicals, for which the Company supplies materials.

Overall

Delays in asset recycling
and IPOs

Decreased activity in financial markets has caused delays in planned IPOs and the divestiture of assets.

Action Plan for the Fiscal Year Ending March 31, 2021

While prioritizing the health and safety of all employees and stakeholders, Mitsui is focusing efforts on minimizing damage as well as maintaining the competitiveness of existing businesses and relationships with customers that have been built up over many years.

Maintaining existing businesses and relationships with customers and partners

Using digital tools, we aim to maintain our network and expand businesses with customers and partners.

Minimizing damage

With demand falling in various domains, the business environment has worsened, but we are working hard to minimize the damage with thorough risk management.

Sharply reducing costs and reviewing investment plans

While thoroughly reviewing new investments and expenditures for already approved investments, we are keenly moving to reduce costs with the cooperation of our joint venture partners and operators, in a bid to improve resilience to downward pressures in operations.

Mitsui’s Response

We introduce below some of the measures that Mitsui took in response to the state of emergency being declared in Japan.

Encouraging working from home

Based on COVID-19 outbreaks in each country, we encouraged employees to work from home in crisis situations, placing their safety and health as our foremost priority. During the state of emergency, all employees were forbidden to come into work, in principle, and the approval of the head of Emergency Management Headquarters (Chief Human Resources Officer) was required before any employee could report for on-premises work.

Promoting work with digital tools

We increased the use of digital tools. In addition to internal meetings, we used online meeting software for meetings with suppliers, our entrance ceremony for new hires, employee training sessions, and also meetings of the Board of Directors. The number of employees using Microsoft Teams collaboration software increased from roughly 600 people in January 2020 to almost 13,000 by May. In addition, the number of digital signature software users grew over 10 times compared with pre-pandemic levels.

Launching Work-X initiative for a new work style

Mitsui launched the Workplace Experience (Work-X) project in August 2019 to coincide with the move to a new Head Office. To realize new work styles, we not only introduced new equipment and functions but also strived to change employee awareness and behavior with this initiative, which is also in line with “Transform and Grow,” the theme of Medium-term Management Plan 2023. For example, we have proactively introduced digital technologies and done away with assigned seating and desk telephones in workspaces in order to facilitate col­laboration among employees and be more flexible in teaming up. The Work-X project aims to make new work styles a reality, and we have seen success in efforts to go paperless and to use Microsoft 365 and smartphones instead of desk telephones, allowing a smooth transition for employees to work from home while restricting access to company offices.

A New Work Style in a “New Normal”

We will continue to examine an optimal balance between working in the office and working from home, assuming uncertainties persist as conditions change.

In order to leverage Mitsui’s comprehensive capabilities, a company strength, it is important for “intellectual chemical reactions” to take place among the diverse professionals at Mitsui, who have know-how in a variety of industries and areas. While taking advantage of both communication through digital tools and face-to-face communication, we aim to create new businesses.

Impact on Mitsui’s Strategies

Society has changed at an unprecedented speed during the COVID-19 pandemic, increasing the importance of taking initiatives with a long-term view. Mitsui’s direction has not changed significantly under the current medium-term management plan.

Strategic Focus

We are focused on the Environment and Health sectors in continuation from the previous management plan. Under the current medium-term management plan, we are confident in Mitsui’s ability to leverage its comprehensive strengths and have identified energy solutions, healthcare/nutrition, and Market Asia, which we believe are growth fields, as our strategic focus. Social needs related to the environment and healthcare domains have not changed due to COVID-19, in our opinion, and we intend to push harder on this strategy.

Initiatives for DX

IT tools that enable telework and online work have become more inevitable. We will accelerate efforts to create new businesses for which digital technology is utilized and enable new work styles with digital tools.