Marubeni Corporation Annual Report 2009 For the fiscal year ended March 31, 2009 Annual Report 2009 For the fiscal year ended March 31, 2009 For the fiscal year ended March Our Strengths Are Within Marubeni is a General Trading Marubeni’s strengths as a general trading company are its knowledge and implementation We leverage these strengths in many ways to create new value in business domains Corporate and Elimination 7% Food Division 12% Overseas Corporate Subsidiaries and Branches 10% Lifestyle Division 3% Iron & Steel Strategies and Coordination Department 2% Forest Products Finance, Logistics & IT Division 9% Business Division 5% * Name changed from FT, Total Assets LT, IT & Innovative Business as of April 2009. Chemicals Division 3% Real Estate ­Development ¥4,707.3 Division 7% Billion Plant, Ship & Industrial Machinery Division 7% Energy Division 11% Metals & Mineral Resources Division 8% Power Projects & Infrastructure Division 11% Transportation Machinery Division 5% Total Assets by Segment Marubeni’s 13 business segments, including the Abu Dhabi Trade House Project Department, engage in a broad range of businesses, from foods, textiles and other daily-use products to energy and resource development, and other infrastructure indispensable to nations. In addition to our legacy trading operations, in recent years we have been making investments to expand in the fields of resources, energy, electric power and infrastructure, and developing new businesses such as emissions credit trading. In all fields, we pursue a wide range of initiatives for creating new value. Marubeni Is a General Trading Company Marubeni’s strengths as a general trading house are its knowledge and implementation ability, built up over the 150 years since the Company’s founding. We leverage these strengths in many ways to create new value in business domains spanning a broad spectrum of industries and regions. Marubeni America Corporation Marubeni ASEAN Pte. Ltd. (New York) (Singapore) Marubeni Mexico S.A. de C.V. Dagangterus Sdn. Bhd. (Mexico City) (Kuala Lumpur) Marubeni Venezuela C.A. Marubeni Thailand Co., Ltd. (Caracas) (Bangkok) Marubeni Brasil S.A. P.T. Marubeni Indonesia (São Paulo) (Jakarta) Marubeni Argentina S.A. Marubeni Philippines (Buenos Aires) Corporation (Manila) Marubeni Chile Ltda. Hanoi Liaison Office (Santiago) (Hanoi) Marubeni Europe plc Marubeni (China) Co., Ltd. (London) (Shanghai) Moscow Office Marubeni (Beijing) (Moscow) Trading Co., Ltd. (Beijing) Marubeni Saudi Arabia Marubeni Hong Kong & Co., Ltd. (Riyadh) South China Ltd. (Hong Kong) Marubeni Iran Co., Ltd. Marubeni Taiwan Co., Ltd. (Tehran) (Taipei) Marubeni Nigeria Ltd. Marubeni Korea Corporation (Lagos) (Seoul) Marubeni India Private Ltd. Marubeni Australia Ltd. (New Delhi) (Sydney) Marubeni New Zealand Ltd. (Auckland) Overseas Network Marubeni has 114 bases in 69 countries (comprising 53 overseas branches and offices and 61 offices and branches of overseas corporate subsidiaries) and 242 operating companies. Each operating division is deeply involved in pro- moting the growth of world markets, working together with their respective overseas network, pursuing business in a wide variety of fields on a global basis. 1 To Our Stakeholders Marubeni Creates Value — Beyond your expectations...Marubeni Net Income/Core Earnings 269.6 239.6 202.1 171.3 109.9 147.2 119.3 111.2 73.8 41.2 2005.3 2006.3 2007.3 2008.3 2009.3 (Billions of yen) Net income Core earnings* Although net income fell for the first time in seven years, core earnings were up for a fifth consecutive year. * Core earnings is a management indicator that expresses the earning power of the main business of a general trading house with a diversified earnings structure including trading and business investments. Core earnings is calculated as follows: Gross trading profit + SGA expenses (exclud- ing restructuring costs up to FY2006 or prior) + Interest expense-net + Dividend income + Equity in earnings of affiliated companies Core earnings for FY2008 is calculated excluding appraisal loss on Daiei shares. 2 Marubeni Creates Value — Beyond your expectations...Marubeni In fiscal 2008, the year ended March 31, 2009, growth in emerging nations drove the world economy during the first half, with soaring prices for natural resources, including record-setting crude oil prices, characterizing a strong economic environment. In the second half, however, conditions took a sudden turn, with the business environment flipped on its head by turmoil in financial markets, a decelerating global economy, plummeting prices, rapid appreciation of the yen, and other factors. As a result, Marubeni’s consolidated net income declined for the first time in 7 years, to ¥111.2 billion. This decline mainly reflected downward pressure on earnings from precipitous drops in resource, share and commodities prices, the yen’s rapid appreciation, and conservative measures taken to avert potential future losses in real estate and various operating affiliates. Our earnings power, however, actually strengthened again during fiscal 2008, with gross trading profit, adjusted operating profit, and core earnings achieving record highs for the second, fourth, and fifth consecutive years, respectively. In fiscal 2009, although there appear to be a few bright spots in terms of market prices and economic indicators, business conditions will likely remain challenging. In the face of these conditions, Marubeni will take a measured approach to manage- ment, focusing on balance sheet management and enhancement of earnings strength as priority issues. In this year’s annual report, I will follow up on last year’s edition by introducing Marubeni’s management policies and goals going forward, with special focus on progress with our current medium-term management plan, “SG2009.” In the Feature section, we profile the grain and infrastructure businesses, which generated steady earnings even amid challenging conditions, and explain how we balance our business portfolio to promote stability and manage risk in new investments. Also, we have added new pages that explain the activities of our corporate governance committees, which have taken an active role in recent years, and we explain the framework of our internal control system. In the past three years, Marubeni has made over ¥900 billion in new investments. We look forward to harvesting the fruits of our labors in fiscal 2010 and beyond. Particularly in these difficult times, we will work as a partner that always transcends expectations, overcoming each manage- ment issue to achieve the sustainable growth envisioned in “SG2009.” I would like to thank all of you for your kind support, and ask for your continued help and encouragement going forward. August 2009 TERUO ASADA President and CEO 3 Marubeni’s Company Creed (formulated in 1949) Fairness Act with fairness and integrity at all times. Innovation Pursue creativity with enterprise and initiative. Harmony Give and earn the respect of others through cooperation. The Marubeni Management Philosophy (formulated in 2003, revised 2008) In accordance with the spirit grounded in “Fairness, Innovation and Harmony,” Marubeni Group is proudly committed to contribute to social and economic development and to safeguard global environment by conducting fair and upright corporate activities. Marubeni’s Corporate Principles (formulated in 1998) Marubeni Corporation, as a business enterprise, will actively pursue its business interests through the exercise of fair and legal competition. As a company, Marubeni will also continue to play its part in the enlargement of the global economy, while always striving to enrich the society within which it operates. In order to achieve all the elements of the aforementioned goal, Marubeni is committed to the following six basic principles of business: 1. Conduct Fair and Open Business Activities 2. Develop a Globally-Connected Company 3. Create New Value Through Business Vision 4. Respect and Encourage Individuality and Originality 5. Promote Good Corporate Governance 6. Safeguard Ecological and Cultural Diversity 4 Contents From the Top From From the Top 2-16 To Our Stakeholders 2 Marubeni’s Company Creed/The Marubeni Management 4 Philosophy/Marubeni’s Corporate Principles Page Consolidated Financial Highlights 6 8 Interview With The President and CEO 8 Feature: Strength in Stability 17-23 From the Top Feature Interview With The President A Stable Management Base 18 and CEO Stable Businesses: Grain Business and 20 Infrastructure-Related Businesses Marubeni President and CEO Teruo Asada dis- Corporate Governance and CSR cusses the economic environment and Marubeni’s 24-39 current financial position, and explains the Corporate Governance 25 Company’s management strategy going forward. Risk Management 32 Compliance 35 Corporate Governance CSR (Corporate Social Responsibility) 36 Business Segments/Overseas Operations 40- 81 and CSR At a Glance 40 Food Division 42 Lifestyle Division 44 Page 17 Forest Products Division 46 Feature Chemicals Division 48 Strength in Stability Energy Division 50 Overseas Operations In this section, we highlight the stability that makes Metals & Mineral Resources Division 52 Business Segments/ Marubeni unique by explaining the special char- Transportation Machinery Division 54 acteristics of its management base and strong Power Projects & Infrastructure Division 56 businesses. Plant, Ship & Industrial Machinery Division 58 Real Estate Development Division 60 Finance, Logistics & IT Business Division 62 Iron & Steel Strategies