The following is a record of Nagase & Co., Ltd. President Hiroshi Nagase’s New Year address for 2013.

First, allow me to wish everyone a Happy New Year.

I hope that 2013 will be a year of anticipation and hope for us all.

With the ongoing decline in China’s economy and austerity measures in Europe, the global economy experienced a slowdown during the second half of the last fiscal year. Under the circumstances, we cannot expect a quick or dramatic recovery. In Japan, the strong yen valuation have caused the poor performance in semiconductors and appliances while the end of eco-car subsidies and political friction with China regarding the Senkaku Islands have led to a shock to Japan’s automotive industry. Many nations experienced a change in leadership last year. Japan is greeting the second Abe administration. From the end of last year, we did see some movement in a weaker yen and higher share prices in the stock market. We can hope that this year will mark government leadership in enacting aggressive, effective policies.

The Nagase Group welcomed our newest member, Hayashibara Co., Ltd., in February of last year. We also saw our textiles business, part of our wholly owned Nagase Colors & Chemicals subsidiary, merge with the colors and imaging business of OG Corporation, starting Nagase-OG Colors & Chemicals Co., Ltd. We believe this will lead to a new start in the global expansion of Nagase-OG Colors & Chemicals. While this is a fifty-fifty venture, we intend to support the business as a member of the Nagase Group. Overseas, U.S. epoxy maker Engineered Materials Systems, Inc. came into the Nagase family. We also established a local entity in Brazil, and expanded the number of branches in China and Bangladesh under our local entities there. Last year marked the first year executing our new Change-S2014 medium-term management plan. However, our performance suffered with the impact of the slow economy, particularly during the second half of the year. By the numbers, our outlook for fiscal 2013 appears relatively strong. However, we have been underperforming plan by a wide margin. In addition, eliminating special factors (the new Hayashibara consolidation, for example) indicates that earnings performance will be at least as difficult as last year, if not more so. Despite the challenges, we are committed to our course. With our reorganized segments, every employee is more fully aware of their role and significance in the value chain.  You understand that you are a part of creating new business, and I believe you are acting accordingly. I feel we are making progress in a variety of areas where there is cooperation among and between business segments and regions. I find that local employees overseas are more aware of their importance to our value chain, reflected by the numerous suggestions for new business.

Shifting gears, I wish to address the special training workshop our directors attended last year. We considered and discussed a number of ways to improve the quality of our investments. Obviously, investing is about more than simply finding a place for money. Investment is an important means for creating high-quality businesses. We have seen an uptick in the number of proposed investments recently, and I am encouraged to see this aggressive push. On the other hand, I have also noted a somewhat unserious attitude toward investment in some cases, including several unprofitable projects. That is the reason why we drew up guidelines by which we will evaluate proposed investments and grade the performance of past investments. In no way are we trying to discourage new investment proposals. Rather, we have created a standard for investigating, analyzing, and preparing proposals to increase the likelihood of a successful new business. These guidelines will also help us make a timely review of our investments and the progress of new businesses. Let me reiterate that these guidelines are there to support new investment proposals–a means to help create new businesses. This will be the second year of our medium-term management plan. In this plan, we have set the goal that can only be achieved by doing things differently. I urge everyone to be mindful whether we trying to do things differently, and whether we are truly reaching our goals. I believe that if we make up our minds and continue to work, we will see concrete results.

Last, I wish to end my New Year’s greeting with wishes for a safe year, and for health and happiness for you and your families.