Mitsbushi SWOT

machinery-related transactions at the parent company as well as increased transactions at Metal One and the effect of new consolidations. The company's United States operating transactions increased to ¥1,600.8 billion, an increase of 16.0%, by converting some food-related companies into subsidiaries.Strong Financial PerformanceThe company's net income rose to ¥462.8 billion for the fifth year running, as an increase of 11% over the previous year. The company's net income increased despite the impact of a lower coking coal price, the absence of fiscal 2007 share sale gains and other factors. This higher earnings record reflected in all business segments including Energy Business Group (¥94.2 billion), Metals Group (¥158.2 billion), Machinery Group (¥66.5 billion), Living Essentials Group (¥51 billion), Industrial Finance, Logistics & Development Group (¥17.7 billion) and Business Innovation Group (¥1.1 billion).Strong Foothold in the MarketThe company serves as Japan's largest general trading company with over 200 operating bases in approximately 80 countries worldwide. MC carries a wide spectrum of business operations and serves a broad range of customer base in various industries such as energy, metals, machinery, chemicals, food and general merchandise. In addition, MC is a part of the Mitsubishi Group of Companies, which is one of the world's largest and most diversified businesses. The company has additional financial backing from the conglomerates as well as R&D support, financial and technological backing from the multinational conglomerate.WeaknessesRevenue Slowdown in few Business SegmentsThe company witnessed slight revenue down fall in few business segments as compared to the previous year 2007. The company's Business Innovation Group dropped to 42% as result of the absence of fiscal 2007 gains on sales of shares, etc. The Industrial Finance, Logistics & Development Group decreased 44% of its revenue due to absence of fiscal 2007 gain on sale of Diamond City shares. The Metals Group dropped 15% as a result of lower earnings at Australian coking coal subsidiary.OpportunitiesINNOVATION 2009 PlanUnder this plan, the company is planning to increase its consolidated net income by channeling business resources to high-growth fields. The company is forecasting consolidated net income of ¥580.0 billion by the year end 2009 and further targeting to record between ¥600 billion and ¥700 billion for fiscal year 2010. In addition, the company is also expecting to increase its total shareholders equity to ¥3.3 trillion by the end of March 2009 and expecting to reach a figure between ¥3.8 trillion and ¥3.9 trillion in March 2010. This will helps the company to maintain ROE at no less than 15% in both fiscal 2009 and fiscal 2010.Entry into New Business FieldsThe company is planning to enter into new business areas in the near future. This company is actively investing in the R&D and development of businesses. The company is principally focusing on five major growing business fields like nanotechnology and the electronics industry, the information and communication technology business, human care business, and media consumer business. The company is expecting to exploit these avenues by adopting a 'Vertical (Value Chain) Development Type business model, which includes investing in upstream and downstream businesses, shifting to the BPO model and venturing into new areas of R&D.ThreatsForeign Currency FluctuationsThe company has operational presence in Japan along with worldwide operations, where the company exposed to various foreign currency rates fluctuations relative to the yen as apart of its trading activities. The company's forward contracts and other hedging strategies may influenced by the foreign currency risk. In addition, the company received dividends from overseas businesses and equity in earnings of overseas consolidated subsidiaries and equity method affiliates are relatively high in proportion to its net income, and all these earnings are denominated in foreign currencies. The foreign currency exchanges of ¥1 change relative to the U.S. dollar would have an approximate ¥2.7 billion effect on consolidated net income.Laws & RegulationsThe company carries its operations worldwide, where it exposed to various environmental regulations related to global warming, which become more stringent in the recent years. As apart of the important developments is Kyoto Protocol, it calls for a global reduction in greenhouse gases. According to the Kyoto Protocol, all the industrialized countries are supposed to reduce their greenhouse gas emissions by 5.2% every year during 2008-2012 periods, as compared to their emissions in 1990. MC is facing a lots of problems are subject to environment regulations owing to its various activities like metal production, oil and natural gas exploration etc. The company adversely affects the company's profitability.Fluctuations in Oil PriceThe company's petroleum division is actively participating in various business domains across the petroleum industry such as crude oil, naphtha and petroleum products. The demand for petroleum and related products was influenced by the availability and prices of oil and related feedstock. The international prices of crude oil and refined products have fluctuated as depending upon many factors, where the company holds no control like global and regional economic and political developments, and supply-demand dynamics. The global and regional oil prices fluctuations adversely affect the company's growth.Source :Global Markets Direct Company Profiles 12 Jan 2009