2024 New Year Message
Dear all,
This is my 6th New Year message as CEO of CapitaLand/CapitaLand Investment, and I have found that this year’s message has been by far the most challenging I have had to write. This might seem surprising to you. After all, the Covid-19 pandemic and the Great Lockdown across the world seemed to be the lowest economic point in business.
2023 has been an unusually difficult year. We have remained relentlessly focused and clear on our goals, and we have worked extremely hard. Yet, three weeks ago, CLI announced a profit warning to caution investors that there will be asset valuation losses for FY2023 across various markets that we are operating in. Even though these losses may be non-cash in nature, they will still impact CLI’s full year results. This is despite the fact that our underlying operating performance continues to be resilient and our business units continue to position strongly for the future. Our operating profit also remains strong, driven by our fee income, and we are moving in the right direction. So why do I say that the year has not been an easy one?
The world is facing serious geopolitical and economic headwinds. In aviation, the term headwind is commonly used to describe wind that is blowing in the opposite direction a plane is flying in and slows it down. The ongoing war in Ukraine-Russia, the unfolding crisis in the Middle East, a high inflation and interest rate environment, mounting government regulations – these are but a few of the headwinds affecting the global economy. Clearly, these headwinds are outside of our control. Yet they have significant impact on how fast we as a company can move and grow and of course, on our overall financial performance.
Am I disappointed? Definitely. I reflected very hard and asked myself: Could we have done more as a team? What could we have held back on? There are no straightforward answers. It’s always easy to lead when the whole company is firing on all cylinders with fantastic results and all our stakeholders are happy. But when faced with circumstances outside of our control, where despite great plans, focus and clarity, long hours and hard work yet the results aren’t there, the gap between expectations and reality is a challenging place to be in.
Am I discouraged? No, absolutely not. Instead, I am optimistic. In a time when interest rates were kept low, it was tough to make major acquisitions because there was abundant supply of cheap capital, pushing assets and portfolios to high valuations. It was a time when the rising tide lifted all boats. However, Warren Buffet has a famous saying: “Only when the tide goes out do you discover who has been swimming naked”. I am of the view that many companies could struggle to navigate a persistently high interest rate environment and a politically divided world. We must be ready to turn this into our advantage. Already, we are seeing some interesting opportunities emerge which would not have been available when times were good. The key is never to waste a crisis. We will continue to ensure we have the balance sheet and stand ready to make bold moves to bring a step change to our businesses. We will focus on meeting the needs of our customers and in so doing, we will build a base of recurring fee income and strong enterprise value in line with our vision to be the preferred global real asset manager creating positive sustainable impact.
Am I confident about what is to come? The answer is a resounding yes. What gives me motivation to power on is what I see in our people. I have said many times that an organisation is only as good as the people and culture we have. We have been intentional in our efforts to foster an environment which motivates everyone to do their best, and they must enjoy what they do and have fun along the way. Today, I see colleagues who are comfortable giving their points of view and engaging in healthy, balanced debate. I see many colleagues prioritise our company’s goals and demonstrate a genuine willingness to collaborate, learn, and grow together. Collectively, I know we are making better and more informed decisions. We are continuing to build a strong, diverse and global team with a winning mindset that works closely together to drive results.
At the same time, I see managers and leaders stepping up, taking ownership, making decisions and pushing boundaries to make CLI stronger and more competitive. We continue to set high standards for our team, and especially more so for those in leadership positions. Building a thriving culture may take years, and the journey never truly ends as new team members come on board and as we venture into new businesses and new markets. But I know we are building a strong foundation for a truly great company, brick by brick.
In 2020, I urged everyone to build a CapitaLand that truly lasts, to make CapitaLand a force for doing good and to be a company that has a soul – one that cares for our people and for the communities we operate in. There is a special heart and soul in our company that goes beyond mere work and transactions that continues to inspire me and the CLI leadership team to push ourselves to constantly do better. We want to grow CLI into a truly global and successful company that fully harnesses the strengths of its people and provides unique opportunities for everyone. I see this as our own very special kind of tailwind that propels our plane forward even when we are navigating and flying through these turbulent times.
What I see today fuels my conviction that we are on the right track. I am most touched to see colleagues caring for each other. I see and hear of colleagues who go beyond their call of duty to look after and stand in for others who may not be well or who need the time to attend to personal matters. We have all had to make sacrifices on various levels in order to get our jobs done. Thank you from the bottom of my heart. There is much more to do as we execute and deliver on our strategy, and we will press on. We want to shape the future, rather than be shaped by it.
Looking ahead, I am confident that there are exciting opportunities for growth in all our business verticals, and especially in Asia Pacific where we have deep roots and strong heritage. I would like to congratulate our teams in China, India and Vietnam which will be celebrating 30 years of successful country operations, and our Ascott team which will be celebrating its 40th anniversary in 2024.
Wishing you and all your loved ones a healthy, peaceful and successful 2024. I look forward to working closely with you in the new year.
Yours sincerely,
Chee Koon