Hiromichi Iwasa, Chairman of the Board and Chief Executive Officer
Masanobu Komoda, President and Chief Executive Officer
Mitsui Fudosan Group launched the second stage of our medium-term business plan Innovation 2017 (Stage II) in FY2015. Our objectives are clear: to be a leader that creates markets and grows continuously, and to secure a solid position globally. In order to achieve our vision for the next decade, we will create value by implementing three strategies: customer-centered management, business model innovation, and full implementation of Group management.
In FY2016, our Group recorded our third consecutive fiscal year of record-high consolidated results for with revenue from operations of 1,704.4 billion yen and operating income exceeding 232.6 billion yen. While these results have been buoyed by the bullish real estate market, I believe that our steady pursuit of the growth strategies outlined in Innovation 2017 (Stage II) has paved the way for these achievements and a solid start in FY2015, Year One of the second stage of our medium-term business plan. Profit attributable to the owners of the parent was 131.8 billion yen, exceeding the target of 130.0 billion yen for the final year of Innovation 2017 (Stage II) which had been set the previous year. While the tailwind of a buoyant real estate market can be partially credited for these favorable results, we believe that the steady and successful implementation of the strategies established in our Group’s Innovation 2017 (Stage II) have contributed to these achievements.
Fiscal year 2017 is the final and target fiscal year of Innovation 2017 (Stage II); however, it will not only be a year for our achievement of our objectives for this stage, but also serve as a solid foundation for supporting our steady growth in 2018 and beyond into the 2020s.
With a special focus on the Nihonbashi-Yaesu Area, the Group is steadily advancing numerous mixed-use neighborhood creation projects around Japan. In the current fiscal year, we will complete construction of TOKYO MIDTOWN HIBIYA. This Smart City project is an urban-type mixed-use development comprising offices and retail facilities, and will also serve as a center for the arts and culture. This flagship property concretely embodies our Group development philosophy of creating mixed-use facilities that will seamlessly fuse structural hardware with the software of services, coexist with local and peripheral facilities, and appreciate in value with the passing of time, and we are planning to greet the opening with the comprehensive support of our Group.
With our eyes firmly fixed on 2020 and beyond, our Group has positioned new business creation as a key strategy for the expansion of the scope of our business. In the Nihonbashi area home to many major pharmaceutical companies, we are redoubling efforts to advance our Nihonbashi Life Science Innovation Promotion Project. We have already established multiple life science centers in Nihonbashi, successfully obtained the cooperation of industry and academic organizations, and attracted venture businesses to this new hub of innovation. Founded in 2016 in collaboration with interested members of academia, Life Science Innovation Network Japan, Inc. (LINK-J) with over 100 corporate members is pursuing full-scale activities to promote open innovation and create new industries through a unique collaboration of the private sector, public sector and academia.
Established in 2016, 31VENTURES Global Innovation Fund I, our first corporate venture capital fund, has already invested in nine new domestic and overseas venture companies (as of June 2017), and we are pursuing investments in domestic and international venture capital funds with high growth potential. However, our venture co-creation initiative not only invests valuable funds, but also provides new ventures with a business platform that spans wide range of support from workplace provision to business match-making services, which will in turn give birth to new industries, generate new office demand, and contribute to our ultimate aim of strengthening and expanding our business.
One facet of our efforts to strengthen the existing office infrastructure is our launch of the Multi-Site Shared Office WORKSTYLING Project (Multi-Site shared Offices for corporate clients) for corporate clients. Leveraging our Group’s accumulation of knowhow in providing finely tuned solution services, this project does not merely respond to work space challenges, but also is platform for promoting and propelling a new age of workstyle reforms. Currently, 10 bases have been established, mainly in central Tokyo, and the objective is to develop bases in about 30 locations in the main areas of Japan within the 2017 fiscal year.
In the retail facility business, FY2015 witnessed the opening of 5 new facilities in Japan including the opening of LaLaport SHONAN HIRATSUKA in the previous fiscal year. In the current fiscal year and going forward, we will not only pursue the development of new facilities, but also aim at improving inbound demand at each facility through value enhancement as well as renovate and expand our existing retail facilities. Also from the perspective of mixed use, retail facilities are expected to play a major role in urban-type neighborhood creation, and we are aiming at an MD offering that only the breadth and strength of our Group’s tenant relations can build. In the future, our retail facility business will continue to evolve, anticipating shifts in customer needs and responding to the advance of e-commerce and other changes in the business environment.
In our housing business, favorable results in the mid- and high-rise condominium market in central Tokyo have contributed to a significant rise in profits. At the same time, it has become increasingly important for our Group to unite our efforts behind the timely provision of products and services that respond to the challenges of an aging and maturing society and diversifying lifestyle needs of our customers. Agilely responding to this changing market and customer environment, the Group is steering the evolution of our business model and taking appropriate steps such as the establishment of the Homes and Living Promotion Division in the current fiscal year.
The hotel and resort business has enjoyed continuing favorable market conditions thanks to the increase in inbound tourists and other factors. The successful openings of Mitsui Garden Hotels in Nagoya and Kyobashi in FY2016 will be followed by the launch of THE CELESTINE HOTELS the Group’s new upscale series of destination hotels in FY2017, starting with new hotels in Kyoto and Ginza and the rebranded opening of the existing hotel in Shiba, Tokyo. We are steadily advancing toward our target of 10,000 rooms in operation by 2020, and seize new business opportunities as they arise.
The Group’s logistics facility business also continues to steadily seize new business opportunities. In August 2016, Mitsui Fudosan Logistics Park Inc. was publicly listed on the Tokyo Stock Exchange REIT Index. While expanding our core logistics business model of ownership, development and management of facilities, the investment scale of the five REIT affiliated with our Group has topped 2 trillion yen and contributed to the expansion of the investment market.
While the uncertainties surrounding the impact of Brexit on European markets and the conservative commercial and trade policies of the Trump administration in the USA are increasingly weighing on our Group’s overseas business, each of highly competitive projects being advanced by our Group from the sales of residences in Television Centre Redevelopment Project and our office leasing business at 1 Angel Court in London to the leasing of 55 Hudson Yards Project (tentative name) in New York are making smooth and solid progress. In Asia, the bullish sales of MITSUI OUTLET PARK LINKOU, which opened last year in Taiwan have contributed to the steady local penetration of the Mitsui Fudosan brand and to our securing of new retail facility and hotel opportunities in the region. While continuing to foster the relationships established with blue-chip partners around the world, we are setting our sights on identifying and exploiting new business opportunities, and targeting dramatic growth in our overseas business.
In the over seven decades since the founding of our Group, our ability to grasp the changing times and then respond with innovative business models has paved the way for our success in new markets.
Our Mitsui Fudosan group logo "&" symbolizes our philosophy of linking diverse values and coexisting in harmony with society. Continuous innovation founded on this same philosophy will be essential to our sustainable growth in the coming 2020s.
The accelerating evolution of ICT, the advance of diversity, and other factors are driving ongoing change and increasing diversification in work- and life-styles. In order to respond to this changing environment and to create new value, Mitsui Fudosan Group must transform itself into a corporate group that fosters a corporate culture that welcomes diversity, and that can generate new synergies through the innovative combination of manifold talent.1. From this perspective, the Group is promoting work style reforms that will serve as a foundation for more active participation and advancement by all our human resources regardless of gender or nationality.
With the achievement of the objectives set forth in Innovation 2017 (Stage II) as our destination, our entire Group is united and working as one. Mitsui Fudosan Group shall continue to evolve to reach our goals of becoming a corporate group that can maintain sustainable growth into the next era and beyond.
Chairman of the Board and Chief Executive Officer
President and Chief Executive Officer