What is MC’s Value ? Contents 1 Feature Section: Evaluating Mitsubishi Corporation’s Corporate Value 2 Corporate Profile 3 Organizational Structure 4 Network 15 Financial Highlights 17 To Our Stakeholders 30 Review of Operations 30 Business Groups at a Glance 34 Business Innovation Group 38 Industrial Finance, Logistics & Development Group 42 Energy Business Group 46 Metals Group 50 Machinery Group 54 Chemicals Group 58 Living Essentials Group 62 Global Strategies 64 Corporate Governance and Internal Control 77 Corporate Section 86 Financial Section 161 Corporate Data Forward-Looking Statements This annual report contains forward-looking statements about Mitsubishi Corporation’s future plans, strategies, beliefs and performance that are not historical facts. They are based on current expectations, estimates, forecasts and projections about the industries in which Mitsubishi Corporation operates and beliefs and assumptions made by management. As the expectations, estimates, forecasts and projections are subject to a number of risks, uncertainties and assumptions, they may cause actual results to differ materially from those projected. Mitsubishi Corporation, therefore, wishes to caution readers not to place undue reliance on forward-looking statements. Furthermore, the company undertakes no obligation to update any forward-looking statements as a result of new information, future events or other developments. Risks, uncertainties and assumptions mentioned above include, but are not limited to, commodity prices; exchange rates and economic conditions; the outcome of pending and future litigation; and the continued availability of financing, financial instruments and financial resources. Mitsubishi Corporation Annual Report 2008 AN EVALUAtion of MC’s CorporATE VALUE Suppose you are an investment analyst. How would you analyze Mitsubishi Corporation for investment purposes? AN EVALUAtion of MC’s CorporATE VALUE Evaluating Mitsubishi Corporation’s Corporate Value Mitsubishi Corporation has chalked up a string of record-breaking performances over the past several years. But where does its corporate value and competitiveness originate from? And can the company sustain such growth going forward? To explore these ques- tions, this feature section analyzes and evaluates Mitsubishi Corporation as follows: 1. Evaluate Mitsubishi Corporation’s working interests in natural resources and its natural resources-related businesses 2. Analyze Mitsubishi Corporation’s financial condition 3. Evaluate Mitsubishi Corporation’s non-resource-related businesses and business model reforms 4. Analyze Mitsubishi Corporation’s investment performance and risk management This analysis, “Evaluating Mitsubishi Corporation’s Corporate 5. Conclusion Value,” constitutes the feature section of Mitsubishi Corporation’s 2008 annual report. It was designed in the style of a hypothetical corporate analysis report to help foster an objective understanding of Mitsubishi Corporation’s corporate value among readers. Please understand that this is a corporate communication from Mitsubishi Corporation to readers of this annual report. Mitsubishi Corporation Annual Report 2008 1 Corporate Profile Mitsubishi Corporation (MC) is Japan’s largest general trading company (sogo shosha) with over 200 bases of operations in approximately 80 countries around the world, including Japan. With seven Business Groups and more than 500 sub sidiaries and affiliates, we serve customers around the world in virtually every industry. Moving forward, we remain determined to grow even stronger while contributing to the enrichment of society through business activities firmly rooted in the principles of fairness and integrity. Corporate Philosophy—Three Corporate Principles Corporate Responsibility to Society Integrity and Fairness International Under standing “Shoki Hoko” “Shoji Komei” through Trade “Ritsugyo Boeki” Strive to enrich society, both materially and Maintain principles of transparency Expand business, based on an all- spiritually, while contributing towards the and openness, conducting busi- encompassing global perspective. preservation of the global environment. ness with integrity and fairness. (The modern day interpretation of the Three Corporate Principles, as agreed on at the Kinyokai meeting of the 28 companies that constitute the so-called Mitsubishi group in January 2001.) The Three Corporate Principles were formulated in 1934, as the action guidelines of Mitsubishi Trading Company (Mitsubishi Shoji Kaisha), based on the teachings of Koyata Iwasaki, the fourth president of Mitsubishi. Although Mitsubishi Trading Company ceased to exist as of 1947, the principles were adopted as MC’s corporate philosophy, and this spirit lives on in the actions of today’s management and employees. The Three Corporate Principles also serve as the cornerstone of the manage- ment ethos of the ­­so-called Mitsubishi group of companies. Active in many business fields and united by a common history and philosophy, the Mitsubishi group companies continue to grow through a strong spirit of friendly competition with one another. Corporate History l Foundation to 1970s In 1954 the new Mitsubishi Shoji was founded, and that same year was listed on the company began expanding its development and investment-based businesses both the Tokyo and Osaka stock exchanges. In 1967, the company announced its on a global scale, as evidenced by iron-ore and metallurgical coal projects in first management plan, and in 1968, in response to its expanding organizations Australia and Canada, and salt field business in Mexico. In 1971, the company and businesses, introduced its Business Division System. Also that year, the made “Mitsubishi Corporation” its official English name. Two years later, in 1973, company committed to a large project in Brunei to develop LNG (liquefied natural MC established what was ultimately to become its CSR & Environmental Affairs gas). This was its first large-scale investment, and was undertaken to help secure Office, clarifying a firm commitment to CSR (Corporate Social Responsibility). a stable supply of energy to Japan. Not content with mere trade-based activities, l The 1980s The Japanese economy entered a recession due to the recent oil shock, meaning operating transactions to profits. That same year a new management plan was MC needed to construct new systems to generate profits. The company began drawn up. The “K-PLAN” placed emphasis on rebuilding commercial rights, select- streamlining its established businesses and developing more efficient operations. ing key business domains, and developing high “value-added” functions. In 1989, In 1986 the company firmly entrenched a new policy, shifting its focus from MC was listed on the London Stock Exchange. l The 1990s With the 1990s came accelerated globalization, and in 1992 MC announced a new established “MC2000” in 1998. The aim of this new management plan was management policy: namely to reinvent the company as a “Sound, Global Enter- “Self-reform for the 21st Century.” MC2000 introduced a “Select & Focus” prise.” MC began placing greater focus on its consolidated operations and increas- approach to business, strengthened strategic fields, and emphasized customer- ing the value of its assets. More efforts were made to globalize the company’s oriented policies. The new plan was instrumental in shoring up the company’s operations and its people. Amid uncertainty about Japan’s financial system, MC foundations and paving the way to a prosperous future. l Into the New Millennium In 2001, MC updated its management plan in response to an increasingly global was reshaped to allocate management resources more appropriately. In 2004, economy. “MC2003” came with a new theme: “Driven to Create Value.” The new plan “INNOVATION 2007” was unveiled. This new management plan sought to establish MC introduced an aggressive new blueprint for growth, involving an expansion of the as a “New Industry Innovator,” with an aim to open up a new era and grow hand in company’s value chains, a strengthening of its profitability, and focused strategies to hand with society. In 2007, MC selected the three fields of New Energy & the Environ- create new businesses. The same year, the Business Unit (BU) System was intro- ment, Medical Healthcare, and Finance, as “Next Generation Core Businesses,” and duced to the Business Groups, which clarified the strategic mission of each of their increased its Business Groups to seven by newly establishing the Business Innova- BUs, the smallest units for organizational control and earnings management. Mean- tion, and Industrial Finance, Logistics & Development Groups. The company continues while, a new standard, MCVA (Mitsubishi Corporation Value Added), was adopted to to refine its systems to ensure active involvement in next-generation, growth fields. In make performance evaluation more relevant, and the company’s business portfolio April 2008, MC announced its latest management plan, “INNOVATION 2009.” 2 Mitsubishi Corporation Annual Report 2008 Organizational Structure (As of July 1, 2008) Business Innovation Group CEO Office Business Innovation Group Controller Office General Meeting of ITS Business Unit Shareholders Automotive-Related Business Unit Business Innovation Innovation Center Group New Energy & Environment Business Div. Information & Communication Technology Business Div. Board of Corporate Auditors Human Care Business Div. Media Consumer Business Div. Corporate Auditors Corporate Auditors’ Office Industrial