Mitsubishi Chemical’s first foreign boss vows to slim down sprawling group

Mitsubishi Chemical will streamline its sprawling businesses that span more than 530 subsidiaries as its first non-Japanese chief executive vows to tackle “sacred cows” to survive in the clean energy era. 

Jean-Marc Gilson, a 57-year-old Belgian who took the reins in April, told the Financial Times that he would launch an aggressive review of assets to return Japan’s largest chemical company to profitability following headwinds caused by the Covid-19 pandemic. 

The surprise appointment of a foreign leader has created excitement within the private equity industry and other investors, which hope the 88-year-old group will follow in the footsteps of Hitachi, Takeda Pharmaceutical Company and other Japanese groups that have sold off underperforming businesses to invest in more promising areas.

The group’s business ranges from petrochemicals and industrial gases to healthcare. It serves industries making cars, steel, semiconductors and LCD displays.

“There will be no sacred cows,” said Gilson, who previously headed French ingredients group Roquette. “So if a business is not our strength, or if a business is not in an industry of growth, or if we cannot solve the problem of carbon neutral, then I think we are going to have to ask ourselves some really tough questions.” 

Gilson faces the immediate challenge of plugging an estimated ¥48bn ($442bn) in annual losses Mitsubishi Chemical suffered as a result of Covid-19 disruptions, and raising a share price that fell 24 per cent last year. But an even bigger task is to refocus the company away from petrochemicals and other energy-intensive, volatile businesses to more profitable areas with a lower carbon footprint. 

“In the face of these [carbon neutrality] challenges, the number one priority is to position the company for growth,” he said. “Because if we don’t, it’s really an existential threat to the company.”

While not specifying the businesses that will be sold, Gilson said the company would continue to focus on semiconductor materials and demands created by connectivity and clean energy needs such as hydrogen. Another target area will be lightweight and durable materials for use in electric vehicles.

“People know what to do. We need to extract, consolidate, and then move on and do it. It’s not going to take two years. It’s probably a matter of months before we have a clear picture of what needs to be done,” he added. 

Before becoming Roquette chief in 2014, Gilson spent two decades at Dow Corning, including five years in Japan. 

Foreign chief executives are relatively uncommon in Japan and have a mixed record. Gilson is the first foreigner to be appointed to run a Japanese company since Carlos Ghosn, the former Nissan chair, was arrested in 2018 for financial misconduct charges, which he denies. 

Gilson said he sought advice from Glenn Fredrickson, the only other non-Japanese director on Mitsubishi Chemical’s board, to get a better understanding of internal relationships within the company before moving to Tokyo from California in March. 

Gilson said he was not concerned about being chief of what he called a “pure Japanese company”, pointing to governance improvements in recent years that have created a 12-member board in which five are non-executive directors. 

“My job would have been a lot harder if that kind of evolution of governance had not happened,” he added.