Summary of President Kobayashi's New Year Message

Mitsubishi Chemical Holdings Corporation

2013: Among all countries in the world, Japan changed most

The first two arrows of “Abenomics” were “Aggressive monetary policies” and “Flexible fiscal policies,” which in effect turned Japan’s economy around. In 2013, of all the countries in the world, Japan changed the most. Now we are unmistakably standing in a different place and facing a different direction than we were just a year ago.

The outlook for 2014

In 2014, we will see if Japan can get out of its deflationary spiral and put itself on the road to new growth in the true meaning of the word. From that point of view, it is very fortunate that Tokyo was chosen to host the 2020 Olympic-Paralympic Games. That gives everyone a single objective to work towards, and naturally their motivation will increase. And it puts Japan in an excellent position. Therefore, I think one of our major priorities should be to help assure the success of the 2020 Tokyo Olympic-Paralympic Games.

Last year, we officially set “THE KAITEKI COMPANY” as the corporate brand for the Mitsubishi Chemical Holdings Group, and we must all set our sights on a paradigm shift that will help us realize our innovative changes. In particular, we need to draw on information and communication technology (ICT) to further accelerate globalization of the Group’s common corporate functions and create a system that allows working women to play a more active role.

About Group Companies

Targeting April of this year, MCHC will amalgamate businesses in the Health Care domain and create our fifth core operating company. We expect that company to show agile growth in healthcare and medical businesses outside of drug discovery and pharmaceuticals. At the same time, we will strive to expand our synergy with Taiyo Nippon Sanso Corporation, with which we now have a capital and operating alliance contract. We must move aggressively to meet the challenges of these new fields. At the same time, merging and cross-linking common functions in research and development, which can function for all Group companies, must go forward.

Mitsubishi Chemical Corporation has been unable to extract itself from the severe situation caused by worldwide economic stagnation and an extreme oversupply out of China. It is no longer enough to employ such simple innovations as finding new buyers or changing production bases. Rather, a major revolution must take place from the foundation; one that changes the very essence of the business. On the other hand, we must conclude that our advances in growth driver businesses such as lithium-ion battery materials, gallium nitride substrates for LEDs and organic light emitting diode (OLED) lighting, sustainable resources, and organic photovoltaic modules and materials have not been aggressive enough. I expect every employee to have the “will to win” and to work for visible progress in everything you do.

Mitsubishi Tanabe Pharma Corporation will enter a very tough phase this year, mostly because of pricing changes in pharmaceuticals and increased use of generic drugs. Still, the company will see a continued severe business climate, and it must review and revise its drug discovery strategies as well as marketing, and speed up internationalization. Please move assertively to establish new business models.

At Mitsubishi Plastics, Inc., the complete review of unprofitable businesses cost reduction, inventory adjustment, and other efforts have begun to show good results. Making Quadrant a wholly owned subsidiary and building new facilities in China for polyester film and agricultural film — I saw the fruits of such major overseas projects, and I look forward to even more progress in the coming year.

Mitsubishi Rayon Co., Ltd. has been hit hard by the sluggish market for Methyl Methacrylate (MMA), its core business, but it remains the top company in the world in this field, and it has the strongest production process in the world as well. I hope to see the company establish stable global operations as soon as possible while aggressively promoting local projects that are already under way. I also hope to see it swiftly establish the second and third pillars of profits coming from carbon fiber and composite materials, water treatment systems and services, and others, boosting the business structure into steady profitability.

The KAITEKI Institute, Inc. looks 30 to 50 years into the future, but specific results are already coming to light in agribusiness and healthcare sectors. This year, I hope to see the Institute innovate not only science-based technology but also social science-based factors as well.

Have the “Will to Win,” break the shell, and take action with speed and intensity

We should not change the targets of our medium-term management plan APSIS 15, which we just reviewed, but we see that achieving our targets will be quite difficult. Therefore, to achieve those targets, we need an indomitable will to win. Group synergy must be a reality, and we must begin to see results. In other words, we need to really start “orchestrating” our efforts. Looking at Management of Sustainability (MOS), last year, the Development Bank of Japan Inc. gave our environmental responsibility rating at the highest possible rank, and we received a certificate of special recognition, so we must begin showing concrete results in this field.

In this Year of the Horse on the sexagenary cycle, we should read and understand our sign as “Break the shell and bring something real into the world. Work with enthusiasm. Leap forward.” Our structural reforms and orchestration have already passed the point of just recognizing possibilities and thinking about what can be done. Rather, the swift horse should break into a full gallop, and aim for realization and execution.

Safety and Compliance without Compromise

Unless we are uncompromising in terms of safety and compliance, neither our company nor our business can exist. Our every corporate endeavor must begin with uncompromising safety and compliance. Last year, unfortunately, our safety and compliance were not perfect. This year, let’s resolve to achieve complete safety and compliance in every way.

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Mitsubishi Chemical Holdings Corporation
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