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AnnUAL REpORT 2013
Year ended March 31, 2013
AnnUAL REpORT 2013 One Direction
MOL suffered from a difficult business environment and recorded consecutive losses in fiscal 2011 and 2012. But
things have started to change after MOL executed Business Structural Reforms (BSR), which are designed to steer
MOL in one direction toward renewed growth. In the feature section of this report, MOL’s president is interviewed about
the company’s focus on one direction. The feature comprises three parts in which the president discusses his
recognition of the company’s circumstances (Why) and the measures taken to address them (How): (1) a review of
fiscal 2012 and the BSR executed in the fourth quarter; (2) “RISE 2013,” MOL’s fiscal 2013 business plan for restoring
the company to profitability; and (3) MOL’s scenario for renewed growth based on this foundation from fiscal 2014
onward. Later in the report, in “Overview of Operations,” the heads of each business division discuss divisional strategy
in the same three‑part format. And under “Key Systems Underpinning MOL,” we explain in detail our corporate gover‑
nance and safe operation initiatives, which underpin our growth.
MOL GROUp CORpORATE pRInCIpLES
1
as a multi-modal transport
group, we will actively seize
opportunities that contribute
to global economic growth
and development by meeting
and responding to our cus-
tomers’ needs and to this
new era.
2
we will strive to maximize cor-
porate value by always being
creative, continually pursuing
higher operating efficiency and
promoting an open and visible
management style that is
guided by the highest ethical
and social standards.
3 we will promote and protect
our environment by maintain-
ing strict, safe operation and
navigation standards.
Forward-Looking StatementS
This annual report contains forward‑looking statements concerning MOL’s future plans, strategies and performance. These statements represent assumptions and beliefs based on information
currently available and are not historical facts. Furthermore, forward‑looking statements are subject to a number of risks and uncertainties that include, but are not limited to, economic
conditions, worldwide competition in the shipping industry, customer demand, foreign currency exchange rates, price of bunker, tax laws and other regulations. MOL therefore cautions readers
that actual results may differ materially from these predictions.
Contents
02 FInanCIaL hIGhLIGhts
03 key InDICatoRs
06 to ouR shaRehoLDeRs
08 FeatuRe:
one Direction
our new Growth scenario
In fiscal 2012, we implemented Business Structural
Reforms (BSR) to make MOL more resilient to the
risk of changes in market prices, particularly in
dry bulkers. In fiscal 2013, we are now drawing
on all our strengths to execute “RISE 2013,” a
single-year management plan that is designed
to return MOL to profitability. Among other
initiatives, this plan seeks to enhance the mea-
sures set forth in the BSR, to expand highly
stable profits and to strengthen
the cost competitiveness of
our containership business.
Beyond that, we are work-
ing in one direction—to
put MOL on a new
growth trajectory.
22 MoL at a GLanCe
24 MaRket PosItIon In the InDustRy
26 oveRvIeW oF oPeRatIons
49 key systems underpinning MoL
50 boaRD oF DIReCtoRs, CoRPoRate auDItoRs anD
exeCutIve oFFICeRs
52 MessaGe FRoM an exteRnaL DIReCtoR
54 CoRPoRate GoveRnanCe
58 RIsk ManaGeMent
60 saFe oPeRatIons
62 CoRPoRate soCIaL ResPonsIbILIty (CsR)
67 Financial section
106 the MoL GRouP
108 WoRLDWIDe oFFICes
109 shaRehoLDeR InFoRMatIon
MoL’s IR WebsIte
http://www.mol.co.jp/ir-e/index.html
MoL’s CoMMunICatIon tooLs
MOL produces the following publications as
a means of promoting communication with
stakeholders:
*The latest versions of all reports can be found on our website.
http://www.mol.co.jp/menu-e.html
annuaL repOrt*
A detailed explanation of investor
relations information such as a
message from top management,
management strategy, business
environment, operating results and
financial data. Primarily for
shareholders and other investors.
envIrOnMentaL and
sOcIaL repOrt*
This report introduces the company’s
approach to corporate social
responsibility (CSR) and the
environment, and our latest initiatives,
to all stakeholders. The report uses
illustrations, tables and graphs and
reflects the voices of our forefront staff
where possible.
MOL InvestOr
GuIdebOOk*
Easy-to-understand analysis
using tables, charts and
graphs of the MOL Group’s
management plans, key
financial indicators, business activities, market position
and operating environment in each business. Primarily
for shareholders and other investors.
Market data*
This report uses graphs and tables
to introduce the latest marine
transport-related information, such
as freight rates for dry bulkers and
tankers, and containership trade
volume. Primarily for shareholders
and other investors.
cOrpOrate prOfILe
Easy-to-understand discussion of
the company’s business activities.
Mainly for customers, business
partners, local communities, and
job-hunting university students and
professionals, as well as the general
public.
01
FInanCIaL hIGhLIGhts
Mitsui O.S.K. Lines, Ltd. Years ended March 31
2013
2012
2011
2010
2009
2008
2013
Millions of yen
Thousands of
U.S. dollars
for the year:
Shipping and other revenues . . . . . .
¥1,509,194
¥1,435,221
¥1,543,661
¥1,347,965
¥1,865,802
¥1,945,697
$16,046,720
Shipping and other expenses . . . . .
1,432,014
1,368,795
1,328,960
1,228,479
1,564,486
1,544,109
15,226,093
Selling, general and
administrative expenses. . . . . . . . .
Operating income (loss) . . . . . . . . . .
Ordinary income (loss) . . . . . . . . . . .
Income (loss) before income taxes
and minority interests. . . . . . . . . . .
Net income (loss). . . . . . . . . . . . . . .
92,946
(15,766)
(28,568)
(137,939)
(178,847)
90,886
(24,460)
(24,320)
(33,516)
(26,009)
Free cash flows [(a) + (b)] . . . . . . . . .
(25,285)
(129,298)
91,300
123,401
121,622
95,367
58,277
46,970
98,547
20,939
24,235
27,776
12,722
104,105
197,211
204,511
197,732
126,988
110,303
291,285
302,219
988,261
(167,634)
(303,753)
318,202
(1,466,656)
190,321
(1,901,616)
(40,055)
(71,038)
23,291
(268,846)
Cash flows from
operating activities (a) . . . . . . . . . .
Cash flows from
investing activities (b) . . . . . . . . . . .
Tangible/intangible fixed
assets increased . . . . . . . . . . . . . .
at year-end:
78,956
5,014
181,755
93,428
118,984
283,359
839,511
(104,241)
(134,313)
(134,785)
(133,484)
(190,022)
(260,068)
(1,108,357)
164,890
175,726
220,443
204,190
223,208
303,573
1,753,216
Total assets . . . . . . . . . . . . . . . . . . .
2,164,611
1,946,162
1,868,741
1,861,312
1,807,080
1,900,551
23,015,534
Net vessels,
property and equipment. . . . . . . . .
1,303,967
1,293,803
1,257,823
1,209,176
1,106,746
1,047,825
13,864,615
Interest-bearing debt . . . . . . . . . . . .
1,046,865
Net assets/Shareholders’ equity . . .
619,493
869,619
717,909
724,259
740,247
775,114
735,702
702,617
695,022
601,174
11,130,941
751,652
6,586,847
amounts per share of common stock:
Yen
U.S. dollars
Net income (loss). . . . . . . . . . . . . . .
¥(149.57)
¥(21.76)
¥48.75
¥10.63
¥106.13
¥159.14
$(1.590)
Cash dividends applicable to
the year . . . . . . . . . . . . . . . . . . . . .
–
5.00
10.00
3.00
31.00
31.00
–
Management indicators:
Gearing ratio (%) . . . . . . . . . . . . . . .
Equity ratio (%) . . . . . . . . . . . . . . . .
ROA (%) . . . . . . . . . . . . . . . . . . . . .
ROE (%) . . . . . . . . . . . . . . . . . . . . .
Dividend payout ratio (%). . . . . . . . .
Number of MOL Group employees:
(the parent company
and consolidated subsidiaries) . . . .
196
24.7
(8.7)
(30.5)
–
136
32.8
(1.4)
(4.0)
–
110
35.4
3.2
8.8
20.5
118
35.4
0.7
2.0
28.2
113
34.5
6.9
19.5
29.2
88
35.8
10.8
30.9
19.5
9,465
9,431
9,438
9,707
10,012
9,626
Please refer to the notes on p. 72, for “Translation of foreign currencies” and “Presentation of net assets in the balance sheet.”
02
key InDICatoRs
shIppInG and Other revenues/
OrdInary IncOMe (LOss)
tOtaL assets/net assets
(¥ billions)
2,000
1,500
1,000
500
0
–500
08/3
09/3
10/3
11/3
12/3
13/3
400
300
200
100
0
–100
(¥ billions)
2,500
2,000
1,500
1,000
500
0
1,000
800
600
400
200
0
08/3
09/3
10/3
11/3
12/3
13/3
Shipping and other revenues (left scale)
Ordinary income (loss) (right scale)
fy2012
shipping and other revenues
fy2012
Ordinary income (loss)
¥1,509.1 billion
¥(28.5) billion
Total assets (left scale)
Net assets (right scale)
fy2012
total assets
fy2012
net assets
¥2,164.6 billion
¥619.4 billion
Although revenues increased ¥73.9 billion year on year, MOL recorded an
ordinary loss that was ¥4.2 billion larger than fiscal 2011. This result
reflected soft spot market rates due to a deterioration in the supply-
demand balance of vessels, and the loss arising as a result negated highly
stable profits derived from medium- and long-term contracts.
Total assets as of March 31, 2013 were ¥218.4 billion higher than at March
31, 2012 due to increases in cash and deposits, and other long-term
assets, the latter because of the yen’s depreciation. Net assets decreased
¥98.4 billion year on year due mainly to a decrease in retained earnings.
OrdInary IncOMe (LOss) by cOnsOLIdated seGMent
net IncOMe (LOss) per share/
cash dIvIdends appLIcabLe tO the year
(¥ billions)
300
200
100
0
–100
08/3
09/3
10/3
11/3
12/3
13/3
(¥)
200
150
100
50
0
–50
–100
–150
08/3
09/3
10/3
11/3
12/3
13/3
Bulkships
Containerships
Other segments, etc.
Net income (loss) per share
Cash dividends applicable to the year
fy2012
bulkships
fy2012
containerships
fy2012
Other segments, etc.
¥(24.7) billion
¥(11.2) billion
¥7.4 billion
fy2012
net income (loss) per share
fy2012
cash dividends applicable to the year
¥(149.57)
¥
Bulkships posted a larger ordinary loss than fiscal 2011 due primarily to
lower spot rates in dry bulker markets. Containerships, meanwhile,
recorded a smaller ordinary loss despite no substantial improvement in the
vessel supply-demand balance. This was the result of efforts to reduce
costs and operate more efficiently.
MOL posted a net loss of ¥178.8 billion, partly reflecting the fourth-quarter
cost of Business Structural Reforms and reversal of deferred tax assets.
MOL took the decision not to pay a dividend throughout the fiscal year.
03
cash fLOws
(¥ billions)
300
150
0
–150
–300
08/3
09/3
10/3
11/3
12/3
13/3
Cash flows from operating activities
Cash flows from investing activities
Free cash flows
fy2012
cash flows from operating activities
fy2012
cash flows from investing activities
fy2012
free cash flows
¥78.9 billion
¥(104.2) billion
¥(25.2) billion
Operating activities provided net cash of ¥78.9 billion, up ¥73.9 billion
year on year. On the other hand, investing activities used net cash of
¥104.2 billion, ¥30.0 billion less year on year. The net result was negative
free cash flows for the second straight year.
rOa/rOe
(%)
40
20
0
–20
–40
ROA
ROE
fy2012
rOa
fy2012
rOe
08/3
09/3
10/3
11/3
12/3
13/3
(8.7)%
(30.5)%
ROA and ROE both deteriorated sharply because the net loss widened by
¥152.8 billion year-on-year.
Interest-bearInG debt/sharehOLders’ equIty
GearInG ratIO/equIty ratIO
(¥ billions)
1,200
1,000
800
600
400
200
0
08/3
09/3
10/3
11/3
12/3
13/3
(%)
200
150
100
50
0
40
35
30
25
20
08/3
09/3
10/3
11/3
12/3
13/3
Interest-bearing debt
Shareholders’ equity
fy2012
Interest-bearing debt
fy2012
shareholders’ equity
¥1,046.8 billion
¥535.4 billion
Gearing ratio (left scale)
Equity ratio (right scale)
fy2012
Gearing ratio
fy2012
equity ratio
196%
24.7%
* “Shareholders’ equity” in this section comprises the total of owners’ equity
and accumulated other comprehensive income (loss).
Interest-bearing debt increased ¥177.2 billion to ¥1,046.8 billion, as the
company procured funds by bank loans, corporate bonds and other
means to cover negative free cash flows.
The gearing ratio increased 60 points, reflecting the ¥177.2 billion rise in
interest-bearing debt and the ¥102.0 billion decrease in shareholders’
equity. The equity ratio fell 8.1 points due to the ¥218.4 billion increase in
total assets.
04
cOst reductIOns
hIGhLy stabLe prOfIts
(¥ billions)
120
90
60
30
0
13/3 result
12/3 result
11/3 result
GEAR UP! MOL Original Plan
Results
11/3
12/3
13/3
fy2010
result
fy2011
result
fy2012
result
¥49.0 billion
¥24.5 billion
¥29.0 billion
(¥ billions)
80
60
40
20
0
11/3
12/3
13/3
fy2012
highly stable profits
¥50.0 billion
In fiscal 2012, MOL achieved total cost reductions of ¥29.0 billion,
exceeding its ¥28.0 billion target. This was achieved by reducing bunker
expenses through slow steaming, improving vessel allocation efficiency
and taking other actions. The fiscal 2012 figure exceeded its target, as
was the case with the fiscal 2011 figure of ¥24.5 billion.
Highly stable profits are firm profits based on medium- to long-term
contracts exceeding one year, and profits from highly stable businesses.
MOL generated highly stable profits of ¥50.0 billion in fiscal 2012.
credIt ratInGs (As of July 2013)
capItaL expendIture
JCR
R&I
type of rating
rating
Short-term debt rating
(CP)
J–1
Long-term preferred
debt (issuer) rating
Long-term debt rating
Issuer rating
Short-term debt rating
(CP)
Long-term individual
debt rating
A
A
A–
a–1
A–
Moody’s
Issuer rating
Baa3
(¥ billions)
300
200
100
0
08/3
09/3
10/3
11/3
12/3
13/3
Jcr
r&I
Moody’s
a
a–
baa3
fy2012
capital expenditure
¥120.8 billion
MOL’s financial indicators deteriorated due to the company’s lackluster
performance, and MOL’s credit ratings were downgraded by credit rating
agencies, losing its position in fiscal 2011 of having the highest rating of
any company in the global marine transport industry.
Capital expenditure is the actual amount calculated by deducting
proceeds from the sale of vessels when delivered from “Tangible/intangible
fixed assets increased” contained in the annual securities report.
05
to ouR shaRehoLDeRs
akIMItsu ashIda
Chairman
kOIchI MutO
President
06
Loss for the second
straight year in
fiscal 2012
fourth-quarter
business structural
reforms
fiscal 2013 single-
year Management
plan “rIse 2013”
working toward
sustainable Growth
The MOL Group completed the “GEAR UP! MOL” midterm management plan at the end of March 2013.
Despite making a bright start in the first year of this three-year plan, the subsequent two years saw us
exposed to an extremely harsh external operating environment. We had to contend with a number of
negative factors all at once, including the European financial crisis, slowing growth in China and other
emerging markets, the Great East Japan Earthquake and other natural disasters, the yen’s appreciation,
and soaring bunker fuel prices. Coupled with these and other negative factors, there was a supply glut of
vessels caused by continued deliveries of large numbers of vessels. We worked hard to overcome these
difficulties that could be described as once-in-decades conditions. However, in fiscal 2011 we posted an
ordinary loss of ¥24.3 billion as our containership, dry bulker and tanker divisions were all unable to stave
off market declines caused by the supply of vessels outstripping demand. In fiscal 2012, we recorded a
second straight ordinary loss of ¥28.5 billion. While the loss in containerships was dramatically reduced
thanks to cost cutting and improved operational efficiency, an unprecedented slump in the dry bulker
market negated our work to turn around results.
Given this situation, and with no immediate prospects for a full-fledged recovery of the shipping market in
fiscal 2013 because the vessel supply-demand equation will take some time to correct, we decided to
implement Business Structural Reforms in the fourth quarter of fiscal 2012. We decided it was vital to
implement full-scale reforms to improve our performance without waiting for the external operating envi-
ronment to pick up. One action we took was to shift sales and operations of free vessels in dry bulkers to
Singapore. This action was prompted by the need to turn around free vessel earnings, as these vessels
had largely undermined highly stable profits from medium- to long-term contracts. We also decided to
strengthen our ability to withstand the risk of market changes by reducing the number of free vessels in
our dry bulker and tanker operations. As a result of these actions, we regrettably took large restructuring
charges in fiscal 2012. However, we believe that our actions have secured us the competitiveness to
move back onto a growth trajectory from fiscal 2013.
Since April 2013, MOL has been working company-wide on a single-year management plan, “RISE
2013,” the goal of which is to ensure that we return to profitability in fiscal 2013. This year would ordinar-
ily have seen us announce our next midterm management plan. However, we decided instead to launch
a single-year plan designed to instill a crisis mentality in all corporate officers and employees and to lay a
solid foundation for sustainable growth by restoring profitability and building up cash flows.
Business model reform is the cornerstone of “RISE 2013.” We are returning to the essence of the
MOL Group Corporate Principles, and strengthening sales to respond to customer needs and increasing
the number of cargo shipping contracts to build up highly stable profits. In tandem with this, we are
scaling down our market exposure to a more appropriate level. In addition, so that we can always sur-
pass market expectations by creating added value in any market, we will demonstrate creativity and
ingenuity in terms of cargo collection and operations, as well as execute more strategies to achieve
deeper cost cutting. As part of these initiatives, we will reinforce business in Singapore, which is becom-
ing a hub for international shipping, and other overseas bases.
Through “RISE 2013,” MOL aims to equip itself with the ability to capture cargo volume, which is
expected to be continually created in step with world economic growth, as well as rebuild a solid founda-
tion to that end. We intend to work hard to put MOL back onto a growth trajectory after that and further
grow the company’s corporate value. We would like to ask for the continued understanding and support
of shareholders as we work to achieve these goals.
August 2013
akIMItsu ashIda
Chairman
kOIchI MutO
President
077
kOIchI MutO
President
08
one
Direction
our new Growth scenario
In fiscal 2012, we implemented Business Structural Reforms (BSR) to make MOL more resil-
ient to the risk of changes in market prices, particularly in dry bulkers. In fiscal 2013, we are
now drawing on all our strengths to execute “RISE 2013,” a single-year management plan that
is designed to return MOL to profitability. Among other initiatives, this plan seeks to enhance
the measures set forth in the BSR, to expand highly stable profits and to strengthen the cost
competitiveness of our containership business. Beyond that, we are working in one direction—
to put MOL on a new growth trajectory.
09
one Direction /our new Growth scenario
special Charge for spot vessels
¥ 101billion
10
Why
Fiscal 2012 was the final year of our three-
year midterm management plan “GeaR uP!
MoL,” which began in fiscal 2010. For fiscal
2012, we set the initial target of achieving
ordinary income of ¥10.0 billion. however,
we ended up posting an ordinary loss of ¥28.5
billion, which was even bigger than the ¥24.3
billion ordinary loss recorded a year earlier, as
a result of continued volatility in market con-
ditions in the marine transport industry and
strong supply pressures created by new ships.
Looking more closely, our fiscal 2012 perfor-
mance differed to fiscal 2011 in certain
respects. on the one hand, we saw a major
improvement in the containership business.
on the other hand, however, dry bulker
market conditions remained as soft as they
have ever been, and this negated the profit
improvement in the containership business.
the containership business posted an ordi-
nary loss, but held it to ¥11.2 billion. this was
an ¥18.6 billion improvement on the ¥29.9
billion ordinary loss it recorded in fiscal 2011.
this marked improvement owed much to the
restoration of freight rates by adjusting space
supplied, and to strengthening the competi-
tiveness of the service network by expanding
and enhancing alliances. In stark contrast, the
bulkships business, which includes the dry
bulker business, saw the ordinary loss worsen
by ¥17.8 billion from ¥6.9 billion in fiscal
2011 to ¥24.7 billion in fiscal 2012. this busi-
ness was severely impacted even more than
the previous year by depressed dry bulker
market conditions as the number of new ship
deliveries remained at a historically high level.
In this way, the deterioration in our fiscal
2012 performance was mainly due to lacklus-
ter market conditions for our free vessels *1 in
dry bulkers. as the forecast for fiscal 2013 was
looking challenging again, we took some
forthright actions in the fourth quarter of
fiscal 2012. With market conditions not
expected to recover until mid-2013 at the
earliest based on market participants building
a consensus that vessel oversupply had peaked
out, we decided not to wait for a recovery in
market conditions to turn our performance
around. Considering also the expected number
of deliveries of tankers and containerships, we
implemented business structural Reforms
(bsR) designed to dramatically raise our infor-
mation gathering capabilities to enable us to
generate earnings even amid soft market con-
ditions. these reforms caused us to take one-
time charges of ¥101.5 billion as extraordinary
losses (cost of bsR), breaking into retained
earnings in fiscal 2012. but we saw this as an
opportunity to take the first step toward put-
ting MoL back on a growth trajectory.
the focus of our recent bsR was shifting
sales and operations of free vessels in dry
bulkers to singapore, a central point for ship-
ping in asia and for customers and informa-
tion. Many MoL customers and brokers
already have bases in singapore, meaning that
differences have arisen in the volume of infor-
mation obtainable from traditional tokyo-
centered sales. even though advances in
information technologies have enhanced com-
munication, there is still no substitute for
face-to-face communication in daily business.
tokyo is no longer the ideal location as a sales
base in a global market. this is what led us to
decide to centralize the free vessels of dry
bulkers in singapore.
Regarding the transfer of operations, mainly
time charter agreements were assigned to
MoL’s wholly owned local subsidiaries in
singapore at market price, resulting in large
losses *2 on assignment as extraordinary
losses. this accounted for the lion’s share of
the ¥101.5 billion in cost of bsR. the large
net loss of ¥178.8 billion for fiscal 2012
reflected the addition of these extraordinary
expenses to the ordinary loss of ¥28.5 billion
as well as the impact of reversing deferred tax
assets. Importantly, however, the bsR have
lowered the cost of MoL’s free vessels of dry
bulkers now in singapore to the market rate.
We expect this to yield a ¥40.0 billion earn-
ings improvement in fiscal 2013, followed by
projected improvements of ¥30.0 billion and
¥20.0 billion in fiscal 2014 and fiscal 2015 *3.
In other words, we believe that MoL now has
one of the world’s most competitive fleets of
free vessels in singapore.
11
*1: free vessel: So-called free
vessels comprise ships contracted
at spot rates or on contracts of
less than one year. As a result,
these vessels are exposed to
changing market conditions.
*2: Large losses: The assignment
losses represent the difference
between the original charter rate
and the prevailing market rate.
*3: The projected earnings improve-
ment is in comparison with fiscal
2012. Total benefits, which are
expected to continue flowing
through fiscal 2016 and beyond,
match the ¥101.5 billion. While the
extent of the benefits will decline
year by year, this should not
negatively affect earnings, because
the number of free vessels will also
decline at the same time, reducing
the source of costs.
(3) cost reductions at different stages
along with reforms in both dry bulkers and
tankers, MoL is pursuing deeper cost-cutting
on a company-wide scale. In addition to past
cost-cutting measures such as reducing fuel
expenses through slow steaming, MoL will
pursue all manner of means to return the
company to profitability. It has also cut direc-
tors’ compensation further and reduced the
remuneration of managerial personnel, as
well as closed some welfare facilities.
We were able to execute the bsR while
leaving sufficient corporate strength amid
expectations of a continued difficult business
environment with no marked improvement
in the vessel supply-demand gap. We were
able to do so partly because our comprehen-
sive risk management functioned on a com-
pany-wide level. In other words, our total
risk management functioned. I have managed
the company thus far by constantly looking at
the extent to which we can take on challenges
or risk based on the volatility of each business
segment and our shareholders’ equity. We
have lessons to learn for sure: the abnormal
market conditions are the worst-case scenario
and our dependence on free vessels in dry
bulkers was a little too high. but we have
been able to embark on a new journey to put
MoL back on a growth trajectory again
because our total risk exposure had not
reached the danger zone.
how
there were three main aspects to our bsR.
First was accelerating expansion to singapore,
as I mentioned earlier. second was scaling down
market exposure of dry bulkers and tankers.
third was cost reductions at different stages.
(1) expansion in singapore
accelerated
In the past, MoL has taken steps to develop
business operations in singapore, including
transferring sales and operations bases for free
vessels in the tanker business. With sales and
operations of free vessels in dry bulkers now
centered on singapore, MoL will improve its
sales and information gathering capabilities.
(2) scaling down market exposure of
dry bulkers and tankers
Free vessels of dry bulkers and tankers have
exerted considerable pressure on MoL’s
earnings, because they were forced to operate
at a loss due to soft market prices. as of
september 30, 2012, MoL had 170 dry
bulkers and 80 tankers operating as free
vessels. by March 31, 2014, MoL plans to
reduce these numbers to 120 and 60, respec-
tively. through a combination of redelivering
vessels after expiry of charter contracts, sell-
ing vessels owned by MoL, and increasing
the number of vessels operating on medium-
to long-term contracts, MoL plans to scale
back its exposure to market rates. therefore,
MoL does not expect to incur any new
extraordinary losses.
12
13
one Direction /our new Growth scenario
Fiscal 2013 ordinary Income
¥ 60billion
14
*1: The depreciation period for most
of the bulkship fleet has been
extended to 20 years from fiscal
2013. (The depreciation period for
LNG carriers was extended to 20
years in fiscal 2010.)
Why
the main theme of the single-year management
plan RIse 2013 is to “achieve profitability in
fiscal 2013 to make it the first year of MoL’s
growth stage.” under this plan, in fiscal 2013 we
are projecting ordinary income of ¥60.0 billion,
which would represent a large improvement of
close to ¥90.0 billion from fiscal 2012. breaking
this down, we expect ¥40.0 billion in benefits
from bsR, ¥10.0 billion in benefits from
extending the depreciation period *1, ¥25.0
billion in benefits from a weaker yen and bunker
price fluctuations (lower prices), and a ¥15.0
billion contribution from cost-cutting. however,
if the first two benefits are taken out—they are
accounting benefits that do not affect cash—that
leaves only ¥10.0 billion in ordinary income. as
our business environment remains as difficult as
ever, I am urging all corporate officers and
employees to see ¥60.0 billion in ordinary
income as the minimum target we should
achieve and calling on them to work to build up
cash flow as an even more important imperative.
normally, fiscal 2013 would have seen us
launch a new three-year medium-term manage-
ment plan. Instead we opted for a one-year plan.
the reasons warrant an explanation. Given the
unprecedentedly difficult business environment,
with freight rates softening or remaining low for
an extended period of time in all main ship
types, including dry bulkers, tankers and con-
tainerships because of the continued delivery of
factOrs behInd prOJected chanGe
In OrdInary IncOMe In fy2013
(¥ billions)
Effect of weaker yen,
stronger euro, and lower
bunker prices
Forex and
bunker
¥25.0
Depreciation
period
extension
¥10.0
Business
Structural
Reforms
¥40.0
FY2012 ordinary loss
¥28.5
(Announced Apr. 2013)
numerous new vessels, MoL’s urgent task is to
create an earnings structure that isn’t reliant on
market conditions and, based on this policy, to scale
back our risk exposure to the market (i.e., the size
of our free vessel fleet). at the same time, we will do
our utmost to build up highly stable profits from
medium- to long-term contracts, leveraging our safe
operations and high-quality services. We believe,
however, that ensuring we return to profitability in
fiscal 2013 is imperative for creating the platform to
grow. that is why we decided on a one-year plan.
as above, it is difficult to see market conditions
improving substantially in fiscal 2013. but if we can
achieve ordinary income of ¥60.0 billion under
these conditions, this would represent a start
toward transforming our earnings structure and
provide proof that we had begun to make progress.
RIse 2013 encapsulates that sort of meaning.
that brings me to the positioning of free vessels
in our plan. the bsR we executed utilizing share-
holders’ equity has equipped our free dry bulkers
with world-leading cost competitiveness. the spot
market is a place where a marine transport com-
pany can show its strengths in terms of how well it
can utilize its free vessels to both satisfy customers
and generate profits. Going forward, MoL plans to
continue doing business in the spot market albeit
with a smaller fleet and procure vessels with stron-
ger market resilience. I wish to point out that a free
vessel itself as a business model is not the problem,
but a free vessel with a high cost is. therefore, there
will be no change to MoL’s portfolio management
approach of pursuing maximum returns while
controlling risk through the optimal combination
of different types of vessels and cargo transport
contract periods.
P/L reflection among the
through-year target of
¥31.5 in cost reductions
Market and cargo
volume changes
¥10.0
Others
¥11.5
Cost
cutting
¥15.0
FY2013 ordinary profit
¥60.0
(Announced Apr. 2013)
15
how
our ¥60.0 billion ordinary income forecast
for fiscal 2013 is based on various premises.
starting with the business environment, there
have been signs of an upturn in the macroeco-
nomic environment, highlighted by the u.s.
economic recovery and yen depreciation. the
yen's value against the u.s. dollar naturally has
an impact on our earnings, because freight
rates are generally denominated in u.s. dol-
lars in the international ocean shipping busi-
ness. Given that approximately 80% of our
revenues are in u.s. dollars, a 1-yen deprecia-
tion in the yen can bolster our ordinary
income by ¥2.0 billion. For fiscal 2013, we
are assuming a sharp depreciation in the yen
with an average exchange rate of ¥95, from
the average of ¥82.31 in fiscal 2012. While
yen depreciation and euro appreciation will
have a slight negative effect, we are projecting
a positive effect on earnings of approximately
¥25.0 billion. this includes the positive effect
on earnings of lower bunker prices, where we
are assuming an average price of us$650 for
fiscal 2013, compared with the actual average
price of us$662 in fiscal 2012.
on the other hand, our fiscal 2013 earnings
forecast does not assume a major recovery in
market prices, because the gap between supply
and demand for vessels is still expected to take
some time to close. Put another way, our ¥60.0
billion ordinary income forecast assumes that
market rates will be close to the lowest level.
this could probably be seen as the lower limit
for estimating our earnings going forward.
In terms of fiscal 2013 divisional forecasts, we
are projecting ordinary income in bulkships of
¥40.0 billion. this would equate to a ¥64.7
billion turnaround from the fiscal 2012 ordinary
loss of ¥24.7 billion. as we lowered the cost of
our 130-strong fleet of free vessels to prevailing
market rates due to the bsR, we expect a ¥40.0
earnings boost as a result and dry bulkers to act as
a key driving force for the earnings turnaround.
Looking at market rates by vessel size, Capesize
bulkers are expected to see improved market
rates from summer toward the second half of
fiscal 2013 in step with the return to normal
levels of shipments of iron ore from brazil, which
had stagnated since the start of the year due to
heavy rain and scheduled port facility mainte-
nance. a projected reduction in the number of
new ships delivered and progress with scrapping
are also reasons for the improved outlook for
market rates. Contrastingly, small- and medium-
sized dry bulkers are expected to see any increase
in market rates capped, as more time is needed to
eliminate the vessel supply glut. Meanwhile,
tankers have suffered from abnormally low
market rates, generating an operating loss. but,
due to reduced market risk exposure resulting
from the bsR and backed by the benefits of unre-
lenting cost-cutting, a return to profitability of
the tanker segment is now in sight. LnG carriers
fy2013 sInGLe-year ManaGeMent pLan “rIse 2013”
MaIn theMe:
“achieve profitability in Fy2013 to make it the first year of
MoL’s new growth stage.”
OutLIne Of “rIse 2013”
transform business model
(1) Enforce our sales structure to meet customer needs and add stable profits through expansion of
business in overseas markets.
(2) Scale down market risk exposure (free tonnage)
Realize an appropriate fleet scale through skillful combination of increasing cargo contracts and
decreasing fleet by sale or redelivery.
(3) Pursue business opportunities by capitalizing on safe operation know-how and sophisticated services.
achieve a higher level of business intelligence
(1) Track supply capacity of major shipbuilding countries accurately and increase capabilities in fleet
supply and demand analysis.
(2) Pursue business opportunities arising from the shale gas revolution, next-generation fuels, etc.
Reduce costs on an entirely different stage than before
16
are expected to see higher earnings from the
continued generation of highly stable profits,
mainly from long-term contracts. With car
carriers, we don't expect to see much of a
change from the trend among Japanese carmak-
ers of producing vehicles in the region where
they are sold. our forecasts factor in higher
earnings from car carriers based on growth in
freight in terms of cross trade and inbound trade
by capturing growth in emerging markets such
as India, Mexico and asean countries as the
central focus of our strategy.
turning to containerships, this business was
unable to turn a profit in fiscal 2012, record-
ing an ordinary loss of ¥11.2 billion. this loss
was attributable to factors specific to fiscal
2012: delays in securing sufficient cargo in the
asia-to-north america east Coast trade (via
the suez Canal) that was restructured last
year, and a drop in freight rates on the east
Coast of south america route, where MoL
has a major share. however, route profits have
improved sharply, with new services for the
east Coast of north america route growing in
recognition among customers. Coupled with
¥10.0 billion in cost cutting, including reduc-
tion of system costs due to the delivery of
large vessels, a ¥7.0 billion profit contribution
from the yen's depreciation and bunker price
decline, and a ¥10.0 billion contribution from
freight rate recovery (mainly pushed up by
higher reefer container freight rates) and an
increase in lifting volume, we are projecting
ordinary income in containerships of ¥10.0
rIse 2013: fLeet scaLe transItIOn
(as Of aprIL 2013)
(No. of vessels)
billion for fiscal 2013. this would represent a
¥21.2 billion improvement from fiscal 2012.
amid continuing vessel supply pressures,
almost all participants in this business will be
forced to operate at a loss on freight rates like
fiscal 2012, so we expect to see companies
move in earnest to restore freight rates them-
selves, and to limit the cargo capacity by reduc-
ing service frequencies and using slow steaming.
the ferry & domestic transport business posted
its first profit in five years in fiscal 2012, and
associated businesses delivered stable earnings.
We therefore expect both businesses to continue
making a contribution to earnings in fiscal 2013.
the risk of not achieving the projected earn-
ings is probably in containerships. the number
of new ships to be supplied in 2013 is set to
increase by 7% from 2012, while demand is
forecast to rise by only 3% to 4%, leaving a gap
of around 3 percentage points between growth
in supply and demand. Most of the large new
vessels will ply europe routes, where demand is
rather weak, meaning that if the supply of cargo
capacity isn't accurately adjusted, the supply-
demand balance could collapse. MoL will of
course take steps according to demand such as
adjusting the supply of cargo slots, but the
potential instability of the supply-demand bal-
ance is a risk that must be watched vigilantly.
In a market environment that must be watched
at all times, we will manage our businesses with
an extreme sense of urgency, setting the goal of
achieving profitability with a minimum of ¥60.0
billion in ordinary income in fiscal 2013.
September
30, 2012
4q
fy12
March 31,
2013
RIse 2013
March 31,
2014
bulkships
Fleet Scale
Dry bulkers
Tankers
Fleet Scale
Free tonnage
Fleet Scale
Free tonnage
LNG carriers
Fleet Scale
Car carriers
Fleet Scale
containerships
Fleet Scale
Other
total
Fleet Scale
Fleet Scale
execution
of business
structural
reforms
814
414
170
201
80
68
131
116
51
981
794
404
194
69
127
115
49
958
729
365
120
177
60
68
119
117
44
890
Note: “Fleet Scale” shows the total number of owned vessels (including those owned by joint ventures) and chartered vessels (long, short-term), at each date.
17
one Direction /our new Growth scenario
and
More
our new Growth scenario
18
Why
the sound platform created by the execution
of bsR and the achievement of ordinary
income in fiscal 2013 of ¥60.0 billion will be
the first step toward new growth for MoL.
sustainable growth is required of the company
to realize its corporate principles of increasing
corporate value and contributing to global
economic growth and development. to this
end, we must transform our business model
so that we can deliver something more, every
quarter and every fiscal year.
as we execute our RIse 2013 single-year
management plan in fiscal 2013, we aim to
restore ordinary income to a level where we
are profitable based on built-up cash flows
without relying on the profit contribution on
an accounting basis of bsR.
In the spring of 2014, we plan to announce a
new three-year medium-term management
plan. this plan will see us aim to strengthen our
financial position to the extent that we restore
our equity ratio to its former level of at least
around 35%, and if possible 40%, after it fell to
25% at the end of fiscal 2012. trust in the com-
pany underpinned by a strong balance sheet is
an essential and important prerequisite for
securing medium- and long-term contracts,
which contribute to highly stable profits, the
source of sustainable growth. In fiscal 2013, we
first intend to build some momentum by gener-
ating net income of ¥50.0 billion and
strengthen our ability to generate cash flows by
pushing ahead with business model reforms.
thus, we do not envisage repairing our share-
holders’ equity by increasing capital. In terms
of shareholder returns, we aim to maintain the
consolidated dividend payout ratio at 20% and
will look at raising it to around 30% over the
medium- and long-term. We have not decided on
dividends for fiscal 2013 at this stage, because we
would like to see what RIse 2013 delivers.
19
19
how
a key factor in promoting the business model
transformation for enabling sustainable growth
will be how well we can develop the free vessel
business, particularly dry bulkers. In the mid-
2000s, when dry bulker market rates were
very high, we generated earnings by owning
and chartering out free vessels to other ship-
ping companies. however, the situation is
different these days because the world has
more than enough shipbuilding capacity. today,
it is difficult to envisage a future where market
rates soar to unprecedented levels, pushed by
the sort of demand we saw in the past, because
many ships of the type wanted can be built
quickly at low cost. accordingly, we have aban-
doned our business model of the mid-2000s of
owning and chartering free vessels with the
expectation that market rates will continue to
rise. Instead, we have returned to our origins
as a shipping company. In other words, we will
revert to a business model that seeks to build
up highly stable profits by offering value-added
service, that is, safe operation.
safe operation is the social mission for MoL
as a marine transport company, as outlined in
our corporate principles. It is also the most
important element for being chosen by custom-
ers. that’s why MoL has worked to make our
safety performance visible to everyone by intro-
ducing objective numerical indicators and
implementing various measures for reinforcing
safe navigation, such as establishing and operat-
ing the safety operation supporting Center.
notwithstanding, I must report that in June
2013, the MoL-operated containership MOL
COMFORT suffered a crack amidships and sank
while under way in the Indian ocean. MoL is
yet to pinpoint the cause of this serious marine
incident, but I deeply regret the troubles this
caused customers and other stakeholders, and
the loss of cargo. together with the shipyard
that built this vessel and the classification soci-
ety, we are working hard to identify the cause
of the incident. Meanwhile, in order to elimi-
nate any possibility of recurrence of a similar
incident, MoL decided to immediately imple-
ment preventive safe operation measures such
as reinforcing the hulls of six sister vessels to a
level above that of international standards.
We see LnG transport and offshore businesses
as becoming core business models that can gen-
erate highly stable profits. MoL is currently
involved with 85 LnG carriers in the MoL
Group (including 16 vessels under construction).
this is approximately 18% of the 475 LnG car-
riers in the world, making MoL the world’s
largest LnG carrier operator. With market
20
observers suggesting that another 100 or so
vessels will be required by 2020, MoL’s track
record and presence in LnG transportation
will position it well to capture major business
opportunities. that’s why we see it as a major
driving force for our growth strategy. MoL’s
track record of safe operation has been lauded
when securing contracts, so we are determined
to maintain and raise the quality of safe opera-
tion going forward. When shale gas projects are
developed in earnest in north america, it is
expected that the number of seafarers required
will also increase sharply. It is necessary to plan
and prepare for this different stage. We will
pursue seafarer expansion in line with business
expansion while ensuring the safe operation
quality. and, we will secure as many LnG
transportation contracts as we can, as the lead-
ing player in LnG transportation.
as I said earlier, we are also actively partici-
pating in offshore businesses which are con-
nected with seafloor oil and gas field
development. MoL isn’t directly involved in
development itself, but since the development
takes place offshore, facilities are needed off-
shore to produce, store and offload the
extracted crude oil and gas and for regasifica-
tion in the case of LnG. MoL is already par-
ticipating in three projects providing FPsos
(Floating Production, storage and offloading
systems) to Petrobras. and we want to lever-
age our know-how in LnG carrier transporta-
tion to make further inroads into the field of
FsRus (Floating storage and Regasification
units), which is an area where we can use LnG
carriers that come off long-term contracts.
another field we hope to grow further is
Capesize bulkers, the largest type of dry bulk-
ers. We already operate 70 of these ships on
medium- to long-term contracts, and aim to
increase that number. the dry bulker business is
facing extremely difficult market conditions, as
evidenced by companies going bankrupt
because of low market prices. If viewed another
way, however, this presents us with more
opportunities to win contracts as the Carrier of
Choice, given our financial base, safe operating
system and other management resources.
to secure medium- to long-term contracts,
I think it is necessary to maintain a certain
number of free vessels. high-cost free vessels
pressure operations when market rates are
low, but free vessels that are resilient to market
rates can increase a company’s competitiveness
and increase the chances of securing medium-
to long-term contracts by offering a proposal in
combination with such free vessels. that said, as
I explained before, we have eschewed our
former business model of procuring free vessels
and relying on rising market rates.
MoL boasts one of the world’s largest tanker
fleets. It also has a well-balanced fleet, compris-
ing crude oil tankers, product tankers, chemical
tankers and LPG tankers. the nature of the
cargo carried means that the operational level
required is as strict as that for LnG carriers,
and large customers like oil majors are becom-
ing even more demanding in respect of safe
operation. there is also a procession of compa-
nies exiting this market because they cannot
live with these demands. any company that can
meet these demands has an opportunity to
grow as a market survivor. In fact, MoL’s rela-
tive competitiveness is increasing due to its
ability to meet these demands, including in
terms of its financial strength. on another
front, the shale oil and shale gas revolution has
everyone talking in the energy transportation
sector. using our business intelligence, we will
capture transport demand steadily by spotting
changes in trends.
another growth vehicle is Daibiru
Corporation, the fulcrum of our real estate
business. Daibiru generates stable earnings
from the ownership of many prime properties
in Japan. this company is searching for more
growth overseas and in 2011 successfully
advanced into ho Chi Minh City, vietnam. I
expect Daibiru to accumulate stable earnings by
developing overseas and overseas tenants.
to my regret, MoL recorded losses for two
consecutive years in fiscal 2011 and fiscal 2012,
causing considerable concern to shareholders
and other investors. but we are determined to
move back into the black and transform our
business structure so that it is impervious to
market rates in fiscal 2013 under our RIse 2013
single-year management plan after having exe-
cuted the bsR in the 4th quarter of fiscal 2012.
We will also continue to focus our efforts to the
utmost on strengthening safe operations so that we
can achieve sustainable growth while contributing
to global economic development, and thereby
strive faithfully for higher shareholder value.
21
MoL at a GLanCe
saLes breakdOwn by seGMent (Fiscal 2012 results)
ASSOCIATED BUSINESSES
7%
FERRY &
DOMESTIC TRANSPORT
4%
CONTAINERSHIPS
40%
buLkshIPs (Dry Bulkers, Tankers, LNG Carriers and Car Carriers)
buLkshIPs
(Dry Bulkers, Tankers, LNG Carriers and Car Carriers)
Please refer to pages 26–41 for details.
perfOrMance
(¥ billions)
800
600
400
200
0
11/3
12/3
13/3
100
75
50
25
0
–25
Revenues (left scale)
Ordinary income (loss) (right scale)
BULKSHIPS
48%
Dry Bulkers
21%
Tankers
10%
LNG Carriers
3%
Car Carriers
15%
[Dry bulker] Bulk carrier: LAMBERT MARU
[tanker] Crude oil tanker: MITAKE
[Dry bulker] Wood chip carrier: WHITE KINGDOM
[tanker] Product tanker: IRIS VICTORIA
[Dry bulker] Heavy lifter: ATHENA TRIUMPH
[tanker] LPG tanker: GAS ORIENTAL
22
buLkshIPs (Dry Bulkers, Tankers, LNG Carriers and Car Carriers)
ContaIneRshIPs
FeRRy &
DoMestIC tRansPoRt
assoCIateD busInesses
Please refer to pages 42–45 for details.
Please refer to pages 46–47 for details.
Please refer to page 48 for details.
perfOrMance
(¥ billions)
perfOrMance
(¥ billions)
600
400
200
0
60
40
20
0
90
60
30
0
–30
11/3
12/3
13/3
11/3
12/3
13/3
perfOrMance
(¥ billions)
120
90
60
30
0
11/3
12/3
13/3
3
2
1
0
–1
12
9
6
3
0
Revenues (left scale)
Ordinary income (loss) (right scale)
Revenues (left scale)
Ordinary income (loss) (right scale)
Revenues (left scale)
Ordinary income (loss) (right scale)
[LnG Carrier] GDF SUEZ POINT FORTIN
[Car Carrier] EMERALD ACE
ContaIneRshIPs
FeRRy & DoMestIC tRansPoRt
assoCIateD busInesses
[Containership] MOL MODERN
The Jacksonville Container terminal in the U.S.
[Ferry] SUNFLOWER GOLD
[Cruise ship] NIPPON MARU
23
MaRket PosItIon In the InDustRy
MOL operates a large and balanced oceangoing fleet.
In terms of its total fleet size and presence in individual market
categories, MOL ranks among the world’s largest shipping companies.
wOrLd MaJOr carrIers’ fLeets (aLL vesseL types)
(Million deadweight tons (DWT))
0
20
40
60
80
68
120
100
958
MOL (Japan)
nyk (Japan)
cOscO (china)
a.p.Møller-Mærsk (denmark)
k Line (Japan)
china shipping (china)
Oldendorff (Germany)
Zodiac (u.k.)
teekay shipping (canada)
swiss Marine (switzerland)
frontline (norway)
bw Group (singapore)
0
(Number of vessels)
200
DWT
Number of vessels
400
600
800
1,000
1,200
Source: MOL internal calculation based on each company’s published data and others.
As of March 2013
wOrLd MaJOr carrIers’ revenue pOrtfOLIO by seGMents
(%)
0
20
40
48
60
80
40 11
100
MOL
nyk
k Line
a.p.Møller-Mærsk
evergreen
nOL
OOIL
MIsc
frontline
teekay
pacific basin
Golar LnG
Bulkships
Containerships and related business
Other businesses
Source: MOL calculations based on each company’s financial statements and/or website.
MOL’s containerships and related business includes revenue from Containerships, Terminal and Logistics.
NYK’s containerships and related business includes revenue from Containerships, Air freighters and Logistics.
24
dry buLkers
(Thousand deadweight tons)
Source: Companies’ published data
and Clarkson Research
Services Limited 2013
As of March 2013
nyk
MOL
k Line
cOscO
china
shipping
tankers
(Thousand deadweight tons)
MOL
fredriksen
scf
nyk
MIsc
teekay
nIOc
a.p.Møller-Mærsk
dynacom tankers
angelicoussis
Source: Clarkson
Research
Services
Limited 2013
As of March 2013
LnG carrIers
(Number of vessels)
MOL
nyk
nakilat*
k Line
MIsc
MOL
nyk
k Line
eukOr
hOeGh
wwL
*Qatar Gas Transport Company Ltd.
Source: MOL internal calculations
As of March 2013
car carrIers
(Number of vessels)
Source: MOL internal calculations
As of March 2013
cOntaInershIps by
teu capacIty
(Thousand TEU)
Mærsk
Msc
cMa-cGM
cOscO
evergreen
hapag-Lloyd
hanJIn
nOL
cscL
MOL
haMburG-sud
OOcL
nyk
yanG MInG
ZIM
k Line
hyundaI
csav
uasc
pIL
Source: MDS Transmodal
“Containership Databank”
Feb 2013
As of February 2013
0
0
0
0
10,000
20,000
30,000
40,000
50,000
34,928
5,000
10,000
15,000
20,000
15,458
20
40
60
80
69
40
80
120
123
160
0
500
1,000
1,500
2,000
2,500
496
25
oveRvIeW oF oPeRatIons
buLkshIPs
Dry Bulkers
kenIchI naGata
Senior Managing Executive Officer
fiscal 2012 in review
The market for dry bulk shipping, especially
the largest class of ships—Capesize bulkers—
has been negatively affected by the recent
delivery of many newly built vessels, which
has caused an oversupply in the market *1.
During the 2012 calendar year, the average
daily charter rate fell below US$10,000 and
drifted at the lowest level recorded since
the Baltic Exchange first began publishing
market rates. The supply of new vessels
has also affected market conditions for
Panamax and smaller vessels. This vessel
supply pressure *1, combined with the
impact on demand of an economic slow-
down in China and drought in North
America during the summer, generally kept
average daily charter rates for those sizes
of vessels below US$10,000. Steaming
coal carriers enjoyed somewhat stronger
demand and maintained high operating
rates, as coal-fired thermal power plants
which had been damaged by the Great
East Japan Earthquake came back on line
and revived coal shipment volume. Wood
chip carriers experienced sluggish condi-
tions due to the impact of softer markets
for small and medium-sized dry bulkers
with which they compete in some cargoes.
MOL’s dry bulkers business worked to
maintain highly stable profits by securing
long-term contracts to transport iron ore
and coking coal mainly by Capesize bulkers,
and for wood chip carriers, steaming coal
carriers and other vessels. The company
also improved operational efficiency, with
these actions leading to higher earnings and
lower costs. Meanwhile, we are aggressively
scrapping older Capesize bulkers and wood
chip carriers to lower the average age of the
fleet and boost ship quality, thus allowing
MOL to offer high-quality transport services
26
Singapore as part of Business Structural
Reforms (BSR), which was executed in the
fourth quarter (Jan-Mar 2013). Charter con-
tracts of about 130 free vessels, mostly small
and medium-sized vessels, were assigned to
wholly owned Singapore subsidiaries *3, one
by one, at present market value at that time.
The disparity between original charter rates
and the current market rates was booked as
an extraordinary loss, which was the main
factor of the total charges related to the BSR
of ¥101.5 billion.
fiscal 2013 profit recovery
scenario
In fiscal 2013, we aim to restore earnings
from the record ordinary loss we posted in
fiscal 2012 to a profit. For now, this is the
one target that we believe must be
achieved. The majority of the ¥101.5 billion
in restructuring charges taken in fiscal 2012
was generated by the dry bulker segment.
This includes the assignment of the approxi-
mately 130 free vessels, allowing them to
operate at costs that are much closer to
market level. For example, the cost of small
and medium-sized dry bulkers operated by
MOL Bulk Carriers Pte. Ltd. has fallen to
less than US$10,000/day. At this level, the
segment will be able to take a big step
towards recovering its competitive vigor. We
estimate that these business restructuring
vessels
12/3
392
13/3
404
thousand deadweight tons
12/3 34,911
13/3 34,928
Note: Figures include spot-chartered ships and those
owned by joint ventures.
to customers. Nevertheless, depressed
market conditions for Capesize bulkers
prevented the company from covering
losses on free vessels *2 exposed to the
market with highly stable profits from
medium- to long-term contracts. Further-
more, in Panamax and smaller vessels, the
higher ratio of free vessels created an
unprecedented unprofitable business envi-
ronment. As a result, losses in this segment
were substantially larger than in fiscal 2011.
To address these harsh market condi-
tions, MOL initiated steps to revive compet-
itiveness and return to profitability as quickly
as possible. Sales and operations for free
vessels has been transferred from Tokyo to
MaIn rOutes
Iron ore
Grain and others
GLObaL
seabOrne
trade Of
MaJOr dry
buLk carGO
(Million tons)
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
Source: MOL internal
2012
calculations based on
data for each cargo type
2012
0
500
1,000
1,500
2,000
2,500
3,000
Iron ore
Coking coal
Steaming coal
Grain
measures will reduce fleet costs by ¥40.0
billion in fiscal 2013. The weaker yen will
also benefit the company, and it plans to
lower costs by reducing navigating speeds
and through other means. This should
make it possible for the segment to return
to profitability.
The outlook for the dry bulker market in
fiscal 2013 is likely to be influenced by the
decreasing number of deliveries for new
Capesize bulkers and the scrapping of
vessels. This process is likely to ease some
of the pressure on the supply-demand gap.
Looking at the demand side, shipments of
iron ore from Brazil, which were delayed
due to heavy rain at the beginning of the
year, as well as the regularly scheduled
maintenance of port facilities conducted
during the rainy season, should return to
normal. This is likely to revive demand and
improve market conditions over the
summer and the remainder of the year.
Panamax bulkers may continue to experi-
ence problems due to the continuous
delivery of new ships, which is preventing
the market from achieving a substantial
improvement. However, MOL is assuming
the market will improve slightly as demand
is not likely to be as weak as it was in fiscal
2012 when there were unusual factors
such as the drought in the U.S.
Looking ahead
Prior to the Lehman Shock, MOL and its
competitors raced to build new ships amid
soaring rates in the dry bulker markets. To
some extent, it seems that companies took
their eyes off the most basic, underlying
purpose of the shipping industry—“to
transport cargoes for customers.” Many of
the newly built vessels were ordered with-
out actual contracts from direct clients and
were thus exposed to fluctuations in the
spot charter markets. As a result, MOL
found itself with too many free vessels and
unable to fully manage market risks.
Traditionally, the mission of the shipping
business has been to build a fleet that
closely matches and responds to the vari-
ous needs of customers, provide the best
possible service, and perform a central
function in the customer’s supply chain. It is
also important to have an appropriate bal-
ance of ships for long-term, medium-term
and short-term contracts in line with cus-
tomers’ needs. In this sense, it is necessary
to have some free vessels in a company’s
fleet. What is important is that vessels gen-
erating stable profits should be increased in
parallel with any increase in the number of
free vessels. In other words, exposure to the
spot market should be limited to a level
which can be covered by the highly stable
profits from long-term contracts. In fiscal
2013 and beyond, MOL intends to intensify its
focus on total risk management, seeking to
increase the number of vessels generating
highly stable profits and limit exposure to the
spot market for free vessels.
In terms of generating highly stable profits
centered on large vessels operating on
medium- to long-term contracts, an operator
cannot attract contracts merely by procuring
the cheapest ship available. Shipping custom-
ers can choose from among a large number of
providers, which makes earning the trust of
cargo owners key. This trust includes the level
of technical support for cargo shipments, a
track record of making deliveries on schedule
and safe ship operation, as well as a solid
financial base. In addition to these fundamental
qualities, a shipping company must maintain
close communication with clients, and provide
them with a sense of security. By focusing on
these factors, MOL aims to enhance the com-
petitiveness of its dry bulker operations and
thereby increase highly stable profits.
Regarding free vessels, by relocating the
hub of this business to Singapore, MOL hopes
to enhance sales and operations as Singapore
is located at a crossroad of global shipping
lanes. Many ocean transport companies are
based in the country and information on the
business is thus concentrated there. By taking
advantage of centering its activities in
Singapore, MOL expects to increase the
dry buLker fLeet tabLe
(As of March 31, 2013)
vessel type
Capesize
Panamax
Handymax
Small Handy-size
Steaming coal carriers
Wood chip carriers
Other (Heavy lifters, coastal vessels)
Total
standard
dwt
no. of
vessels
use
170,000
103
Steel raw materials (iron ore, coking coal)
72,000
38
Iron ore, coking coal, steaming coal, grains, etc.
55,000
28,000
93,000
50,000
12,000
68
52
41
Steaming coal, grains, salt, cement, steel
products, etc.
Steel products, cement, grains, ores, etc.
Steaming coal
44 Wood chips, soybean meal, etc.
58
–
404
Glossary
*1 During calendar 2012, a total of 215 new Capesize
bulkers were completed and delivered worldwide.
Deducting the 75 older vessels that were scrapped
during the year, there was a net increase of 140
vessels. At the end of December 2012, there were
1,510 such vessels in operation, an increase of 10%
from the previous year. This followed a 16% increase
in 2011. This increase in shipping capacity severely
weakened the structural supply-demand balance in
the bulker markets, and represents the main reason
for the historically low level of charter rates. While
there are expected to be half as many new Capesize
bulker deliveries in 2013 as in 2012, there is still an
obvious sentiment of over-capacity. The number of
new Panamax vessels to be delivered in 2013 is also
expected to remain high. Thus, the market outlook for
2013 is still challenging.
cOnsOLIdated
revenues
breakdOwn
(Results of FY2012)
Subsidiary (Mitsui O.S.K. Kinkai, Ltd.)
Steaming Coal
Wood Chip
8%
13%
12%
21%
General Bulk
Iron Ore and Coking Coal49%
*2 free vessel: Vessels that operate on spot contracts
(contract period of less than one year) and are thus
exposed to changing market conditions.
Iron Ore and Coking Coal
48%
*3 singapore subsidiaries: MOL Cape (Singapore)
Pte. Ltd. and MOL Bulk Carriers Pte. Ltd. Charter
contracts of Capesize bulkers were assigned to MOL
Cape (Singapore) Pte. Ltd., while those of Panamax
and smaller vessels were assigned to MOL Bulk
Carriers Pte. Ltd. Both are wholly owned subsidiaries
of MOL based in Singapore.
*4 cOa (contract of affreightment) is a type of
contract to transport cargo based on weight or
volume. They are usually concluded on a long-term
basis to transport large bulk cargoes of iron ore, coal
or crude oil. The contracts are based on the volume of
cargo transported and the delivery period, so vessels
are not specified and the method of transporting the
cargo is left to the discretion of the shipping company.
27
number of COA *4 and other actual ship-
ping contracts to transport cargo. This may
allow us to reduce the number of free ves-
sels exposed to market fluctuations. In
addition, MOL intends to redouble efforts to
develop business in Southeast Asia, India
and Australia through Singapore subsidiar-
ies *3, allowing ships to combine cargoes
on routes within the region and thereby
reduce the number of ships travelling on
non-income-generating ballast voyages. In
this way, MOL aims to generate higher
profitability than the market average.
Although MOL’s aim is to develop a
business structure that is not reliant on
market conditions, we also believe that the
market reached its bottom in fiscal 2012,
and that it will gradually begin to recover
from here on. The number of new Capesize
bulkers to be delivered in 2013 is expected
to be half the number of vessels delivered in
2012 *1. In the latter half of the year, there-
fore, market sentiment should begin to
improve and we anticipate a certain
rebound in rates. In the market for
Panamax and smaller vessels, many load-
ing ports are placing stricter regulations on
the age of ships, and rapid advances in fuel
performance are increasing the obsoles-
cence of old ships. With global environmen-
tal restrictions being tightened as well, it is
becoming too expensive to repair or
upgrade many older vessels. Owners are
scrapping ships instead. As more of these
older ships are taken out of service, market
conditions are likely to improve gradually.
Nevertheless, it is unrealistic to expect the
dry bulker segment to return to the lucrative
conditions it experienced in the mid-2000s.
It will probably remain difficult to make large
profits on the operation of free vessels.
Some ship owners and shipping com-
panies, particularly outside Japan, have
responded to falling ship prices by continu-
ing to invest in new construction. However,
most expect the dry bulker markets to
remain weak for the time being, which
conversely may give MOL the option of
chartering some vessels at low rates. As
noted above, the primary consideration for
the company at present is to stabilize and
improve earnings. On the other hand, MOL
will maintain a flexible and alert stance on
ways to obtain shipping capacity and
respond to market trends. In this way, while
maintaining some degree of free vessel
capacity, the company intends to build a
cost structure that can generate profits
28
even without a large rise in market rates.
As outlined above, the company aims
to return operations to the black in fiscal
2013 by minimizing exposure to market
conditions. At the same time, we will place
top priority on the basics of transporting
cargo for customers safely and efficiently.
MOL will work to improve sales capabilities
to respond to customers’ various needs,
while making full use of the cost-competi-
tive fleet built up through the BSR. In this
way, MOL intends to put the dry bulker
business back on a trajectory of sustain-
able growth.
wOrLd dry buLkers aGe prOfILe
(As of March 2013)
capesIZe
(100,000 DWT–,1,513 ships)
panaMax
(60–99,000 DWT, 2,320 ships)
25+
22
1%
20–24
124
8%
15–19
173
11%
0–14
1,194
79%
25+
123
5%
20–24
136
6%
15–19
299
13%
handyMax
(40–59,000 DWT, 2,718 ships)
handysIZe
(10–39,000 DWT, 3,017 ships)
0–14
2,037
75%
25+
752
25%
20–24
133
4%
15–19
372
12%
25+
217
8%
20–24
94
3%
15–19
370
14%
Source: Clarkson March 2013
IMpOrt/expOrt
1,200
areawIse wOrLd
IrOn Ore
1,000
seabOrne trade
(Million tons)
800
1,200
1,000
800
600
600
Age
No. of ships
%
0–14
1,762
76%
0–14
1,760
59%
2012
export
400
200
400
200
2007 – 2012
Import
China
Others
Taiwan
Korea
Japan
0
0
07
08
07
09
08
10
09
11
10
12
11
12
12
12
Others
Sweden
Canada
India
South Africa
Brazil
Australia
Source: Tex Report, Clarkson, Trade Statistics
Import
export
IMpOrt/expOrt
1,000
areawIse wOrLd
steaMInG cOaL
seabOrne trade
(Million tons)
800
600
2007 – 2012
Import
1,000
800
600
400
400
200
200
China/Hong Kong
Others
India
Taiwan
Korea
North America
Europe
Japan
Source: SSY
0
0
07
08
07
09
08
10
09
11
10
12
11
12
12
12
Import
export
2012
export
Others
South Africa
Columbia
Australia
Indonesia
buLkshIPs Dry Bulkers
the Capesize bulker
ORE SaO LuiS
(tubarao, brazil)
Ore SaO LuiS is a Capesize bulker that transports iron ore between Brazil
and China under a long-term contract with Brazilian resource company
Vale. MOL strives to provide safe, reliable ocean transport services, taking
advantage of its advanced safe operation management system and fleet
scale to meet continually growing demand for iron ore transport.
29
buLkshIPs
Tankers
tsuneO watanabe
Senior Managing Executive Officer
fiscal 2012 in review
Demand for oil dropped off following the
Lehman Shock in 2008, and this coin-
cided with the delivery of many new ves-
sels, creating a wider gap between supply
and demand for shipping capacity. For the
past four years, that gap has remained a
critical factor in depressing the market for
tanker transportation. While there are
signs of recovery for some types of tanker
vessels, the tanker business as a whole
has posted losses for the past four con-
secutive fiscal years.
As of the start of 2012, there were 588
Very Large Crude Oil Carriers (VLCCs)—the
largest ships used to transport crude oil—
in operation worldwide. During 2012, 49
more VLCCs were delivered, while 21 were
scrapped. Thus, the number of ships in
operation increased approximately 5%
during the year, to 616. China, among
other leading oil consumers, expanded oil
imports from distant countries in South
America and West Africa. This produced a
slight, albeit temporary, improvement in the
VLCC market, but an economic slowdown
in China caused crude oil inventories to
swell. Coupled with traditionally low
demand during the summer, market condi-
tions deteriorated. Though a slight pick-up
during the high-demand winter months
eased the sense of vessel overcapacity, it
was not enough of an improvement to
close the supply-demand gap. The market
as a whole therefore remained depressed.
The product tanker market remained
range-bound during the first half of the
fiscal year, but in the latter half there was
an improvement due to several factors.
Strong naphtha demand in East Asia and
overall demand for fuel oil during the winter
boosted shipping volume. On top of that,
30
volume from the Middle East. However,
economic sanctions placed on Iran by the
EU disrupted LPG shipments from that coun-
try. This crippled the balance of supply and
demand for Very Large Gas Carriers (VLGC)
and caused market conditions to weaken in
the second half of the fiscal year.
MOL operates 17 methanol tankers on
long-term charter contracts, meaning that it
has a 40% share of the market. The steady
contribution from these tankers supports the
earnings of the tanker business.
The company introduced Business Struc-
tural Reforms in fiscal 2012, which included
the sale of five crude oil tankers. This helped
reduce MOL’s exposure to market risk. As of
September 30, 2012, we operated 80 free
vessels in this segment; but this number had
been reduced to 74 by March 31, 2013.
recovery scenario toward
profitability in fiscal 2013
During 2013, the number of new VLCC
deliveries is expected to drop to just 35—
fewer than in 2012. Furthermore, tighter safe
operation standards are increasing mainte-
nance costs for older ships, and driving up
costs related to vessel inspections. It is likely
that many older vessels will be scrapped as
a result of becoming less profitable. And the
oil majors are now avoiding the use of
VLCCs that are over 15 years old; there are
about 70 VLCCs which have been in service
for more than 15 years in the world. It is
vessels
12/3
200
13/3
194
thousand deadweight tons
12/3 18,756
13/3 19,037
Note: Figures include spot-chartered ships and those
owned by joint ventures.
the closure of refineries in Australia caused
an increase in trade volume, improving
market conditions in the Pacific region.
With the additional boost from demand in
Africa and South America, the market
recovered all around the globe.
The chemical tanker market remained
harsh in 2012 due to soft economic growth
in China, the largest source of demand,
and the fiscal crisis in Europe. Since the
start of 2013, however, the chemical tanker
market has shown signs of recovery as a
whole, as demand for transporting vegeta-
ble oils and others increased while the
market of product tankers, which can also
transport them, upturned.
LPG tanker rates rose in the first half of
2012 with an increase in LPG export
MaIn rOutes
Crude oil
Product
tanker fLeet tabLe
(No. of vessels)
Crude oil tanker
Product tanker
Chemical tanker
LPG tanker
Total
11/3
12/3
13/3
pool Management
48
60
85
13
46
62
79
13
47
61
75
11
206
200
194
VLCC
LR1
Plan to start in autumn 2013
VLGC
therefore likely that the owners of these
older ships will choose to scrap the vessels
in the near term. As this process continues,
the market should gradually return to more
normal conditions.
Although the business environment has
been very harsh of late, the success of the
Business Structural Reforms and progress
on the current “RISE 2013” management
plan are helping to reduce the market
exposure risk in fiscal 2013. Not only are
conditions for product tankers improving,
but U.S. exports of LPG are beginning to
improve the VLGC market as well. Diligent
efforts to reduce costs are also helping to
improve earnings conditions, and a return
to profitability is in sight.
Looking ahead
In order to meet global demand for energy,
the absolute volume of oil consumption is
expected to continue rising. According to
the U.S. Energy Information Administration
(EIA), total energy demand worldwide is
likely to increase by around 50% between
2010 and 2035, and demand for oil is
expected to increase by 30–35%. This will
create a steady increase in shipping volume
of crude oil and petroleum products.
Oil tankers play a vital role in supporting
the global economy, but operating profit,
the net result of freight revenues minus
operational expenses, has fallen close to
zero. It is abnormal for such conditions to
last so long. In order to alter these condi-
tions, it is necessary to address structural
changes in trade patterns and prevailing
business transactions of oil in a manner of
a commodity deal.
In recent years, as the market price of
crude oil has fluctuated dramatically, it has
come to be traded like any other commod-
ity. The same is very true of petroleum
products and petrochemicals. The linkage
among oil and these products is intensify-
ing, and the entire petroleum sector has
been transformed into a single market. In
the past, it was typical for crude oil trans-
portation contracts to be concluded on a
10-year basis or longer. However, the
contract period is tending to be shortened.
Since oil prices are so volatile, oil shippers
cannot maintain their competitiveness if
they do not change to match market con-
ditions. In the product tanker market, the
cargoes are already commoditized, and the
same thing is happening in the LPG tanker
and chemical tanker business fields.
There has also been a structural shift in
the nature of the petroleum product trade.
The development of shale oil reserves in
the U.S. has reduced the shipping oil
volume to the U.S., one of typical long-
distance trades. On the other hand, oil
refineries in leading industrialized countries
outside North America are being closed
down, while shipments from facilities in the
Middle East, India and the U.S. are increas-
ing. Furthermore, demand is shifting from
the leading industrialized countries to
places such as the Middle East, Africa and
South America. As a result, Singapore has
become an important player for these
trades, and the main theme of MOL’s busi-
ness structural reforms was to accelerate
expansion in Singapore. Having stepped
up efforts to make Singapore the center of
sales and ship operations early, we are
starting to see the benefits of this.
Meanwhile, as the petroleum market
becomes increasingly interlinked and com-
moditized, MOL is striving to develop busi-
nesses that more fully meet the needs of
customers. The key, in our view, is to
establish a reputation as a leading player in
all sectors of the transport market, from
crude oil to petroleum products and petro-
chemicals. By itself, MOL cannot change
the current market conditions. However,
we believe a pool system is the best busi-
ness platform to make ourselves regarded
as the No. 1 player.
In 2011, we jointly established Straits
Tankers Pte. Ltd., a ship pool
management company for LR1 product
tankers (approx. 75,000 DWT). This com-
pany operates 30 LR1 vessels at present.
In VLGCs, we are operating VLGCs in a
pool through a Singaporean subsidiary.
This subsidiary operates 12 vessels at
present. In another move, in 2012 we
established Nova Tankers A/S as a VLCC
pool management company together with
four other companies. All of MOL’s spot
operations have been transferred to this
company, which presently operates 44
vessels. As with other pools, it is leverag-
ing economies of scale to provide high-
quality services in all sea areas to garner
more support from customers. At the
same time, it is improving profitability by
raising efficiency in vessel allocation
through reductions in ballast voyages and
so forth. In the fall of 2013, chemical
tanker operations will be turned over to
another pool management company
created in cooperation with a European
shipowner, under the name Milestone
Chemical Tankers Pte Ltd. In this way,
MOL hopes to achieve unprecedented
efficient operations in this sector as well.
Due to the current abnormal market
conditions, it is still too soon to identify any
confirmed impact from these measures.
However, when business players offering
high-quality services survive and the
market returns to normal, our entire tanker
business, including the spot trades, will be
able to make a major contribution to MOL’s
sustainable growth.
Crude Oil
36%
Product
29%
cOnsOLIdated
revenues
breakdOwn
(Results of FY2012)
Chemical (Tokyo Marine Co., Ltd.)
24%
Methanol/LPG
12%
GLObaL OIL
deMand
(Million b/d)
Source: IEA’s “Oil Market
Report”
2007
2008
2009
2010
2011
2012
0
20
40
60
80
100
North America
Europe
Japan
Other Asia/Pacific
Latin America
Others
China
31
buLkshIPs Tankers
the vLCC
SELENE TRaDER
(keiyo sea berth, Chiba)
32
Singapore-based Nova Tankers A/S, a VLCC pool management company MOL established together with four other companies, currently
owns 44 vessels. Young vessels, sophisticated vessel management capabilities and the sound financial bases of the partner companies are
the source of this VLCC pool’s competitiveness. It is leveraging economies of scale to provide high-quality services in all sea areas that have
garnered the support of customers.
33
buLkshIPs
LNG Carriers
takeshI hashIMOtO
Managing Executive Officer
fiscal 2012 in review
As a result of the unprecedented deteriora-
tion in market conditions for the shipping
industry, MOL as a whole posted a loss for
the second consecutive fiscal year. On the
other hand, earnings from LNG carriers,
which were mainly derived from long-term
contracts, roughly matched levels in the
previous fiscal year, lending continued
support to the company’s highly stable
profits; nearly all of MOL’s 69 LNG carriers
are operated under long-term contracts.
Furthermore, the volume of global trade of
LNG remained strong. Although economic
stagnation in Europe has depressed
demand in that region, this has been offset
by increased demand from Japan’s electric
power companies. Consequently, the spot
charter rate remained as firm in fiscal 2012
as in the previous fiscal year.
During fiscal 2012, there was a growing
disparity in spot charter rates; the rates for
aging vessels diverged from those for
newer, more advanced vessels. This
reflects the fact that older vessels are less
efficient to operate, consuming more fuel
while offering less cargo tank capacity. This
trend has not been a tailwind for MOL,
since the company has been in the LNG
carrier business for a long time and has
many older vessels in its fleet. However,
MOL has been able to keep the negative
impact to a minimum, because of its fairly
strong profit structure. As above, most of
the company’s earnings from LNG carriers
come from vessels operating under long-
term contracts.
In fiscal 2012, the company succeeded
in attracting orders which placed three new
LNG carriers under long-term contracts to
deliver LNG to Japan. One of these is a
Moss-type *1 LNG carrier of the largest
34
With the three vessels described above,
MOL has procured long-term contracts for
nine ships in total since 2010—five transport
cargo to Japan and four travel delivery
routes to China. These vessels are due to
be delivered one by one from 2014, thus
contributing to highly stable profits.
MOL is also continuing aggressive devel-
opment of its offshore businesses. For
example, in the FPSO *3 business, the com-
pany has already taken part in two projects
for Brazil’s national oil company, Petrobras,
and in fiscal 2012 MOL was chosen to par-
ticipate in a third project, which is due to
commence operations in 2015.
fiscal 2013 earnings Growth
scenario
In fiscal 2013, earnings are expected to
increase in response to cost reduction and
the impact of a weaker yen, among other
factors. The company’s single-year manage-
ment plan—“RISE 2013”—aims to restore
the company to profitability overall. The LNG
carrier business can continue to contribute
greatly to this goal since it provides highly
stable profits that are not excessively
affected by short-term market fluctuations.
The company will also work aggressively to
lay the groundwork for new long-term con-
tracts, as part of the ongoing effort to
expand highly stable profits.
vessels
12/3
69
13/3
69
thousand deadweight tons
12/3 5,306
13/3 5,310
Note: Figures include spot-chartered ships and those
owned by joint ventures.
class that is able to transit the expanded
Panama Canal. The other two are Moss-
type LNG carriers with four spherical tanks
covered by a continuous cover. This
peapod-shaped continuous cover is inte-
grated with the ship’s hull, achieving weight
reduction while maintaining overall hull
rigidity. All three vessels will adopt a new
steam turbine engine that reuses steam for
heating. This will also reduce fuel con-
sumption. And they feature an advanced
heat insulation system that offers the
lowest LNG vaporization rate—0.08%/
day—of any LNG carrier in the world. Its
environment-friendly and economically
advanced design also effectively controls
surplus boil-off gas *2.
MaIn rOutes
Anticipated future routes
LnG deMand
fOrecast
(Million tons/year)
Source: MOL calculations
based on Poten & Partners,
etc.
2012
2013
2014
2015
2016
2017
2018
2019
2020
0
100
200
300
400
Japan
Korea
China
Taiwan
India
Europe
Americas
Others
Looking ahead
Since the start of fiscal 2013, the company
has concluded contracts for two additional
projects, one in Japan and one overseas.
In May 2013, MOL secured a long-term
contract (for one ship) to transport LNG
from the Ichthys LNG Project in Australia to
Japan. This contract marks the first time
that an LNG carrier wholly owned by a
Japanese shipping company will serve on
joint transport for an electric power com-
pany and a gas company in Japan.
In the other project, MOL will take part
in a project to supply LNG to China Petro-
leum & Chemical Corporation, known as
“SINOPEC,” which will obtain its LNG from
Australia Pacific LNG Pty Limited. It will be
a massive LNG transport project, involving
the use of six newly built LNG carriers. All
six of the vessels are being built by
Hudong-Zhonghua Shipbuilding (Group)
Co., Ltd. (Hudong) in China. This is our
second big milestone in the burgeoning
business of LNG transportation to China,
after our participation in the ExxonMobil
China project *4, which was announced in
March 2010. MOL has 30 years of experi-
ence and expertise in the LNG transport
business, and has earned a very positive
reputation for safe and stable operations.
This reputation and the experience gained
through the ExxonMobil China project has
allowed MOL to develop a relationship of
trust with Chinese partners, and contrib-
uted to the company’s selection to take
part in this project. Engagement in this
project will enhance MOL’s presence in the
business of transporting LNG to China, and
strengthen its close relationships with
Chinese partners for further cooperation
and opportunities. All of the LNG carriers
for the above project and the ExxonMobil
China project are due to be completed and
delivered by 2017. This will give MOL a fleet
of 10 LNG tankers delivering LNG to China.
Global demand for LNG stood at
around 240 million tons in 2012. Demand
is expected to increase further in the future.
This is because LNG is attracting attention
as a clean energy resource amid surging
demand for energy in emerging countries.
LNG is also in higher demand in Japan
after the Great East Japan Earthquake and
in Europe where there are moves away
from nuclear power generation. By 2020,
global demand for LNG could rise to as
high as 400 million tons. In order to meet
this rising demand, it is estimated that
around 100 additional LNG carriers will be
required, in addition to ships that have
already been ordered.
While the expectation of rising demand
has pushed up spot charter rates for LNG
carriers, it has also contributed to specula-
tive orders for new LNG carriers. Between
2013 and 2017, over 100 new carriers are
due to be delivered. Considering that there
are already approximately 370 LNG carriers
operating worldwide, the number of these
ships in operation is expected to reach
approximately 480 by 2017. Expectations
of a supply glut could contribute to a weak-
ening in spot market conditions from the
latter half of 2013. On the other hand, a
number of new LNG projects currently
under development in Australia and else-
where are due to start full-scale operations
from around 2015. When these projects
begin supplying LNG, their output is likely
to take up all of the additional capacity
created by the new vessels. For that
reason, we believe that the market will
once again start to face a shortage of LNG
vessels from around 2016.
Since demand for LNG carriers is
expected to increase dramatically over the
next few years, we plan to expand our fleet
of LNG carriers to around 110 vessels by
2020, and intend to further enhance our
industry-leading position in the LNG trans-
port business. It will be important for us to
utilize our skills and know-how as the world
leader in safe operations in order to
accomplish this goal. Ingenuity is also
required to meet a broad range of cus-
tomer needs, as are networks to put solu-
tions into effect.
Another critical prerequisite to building a
larger fleet of LNG carriers is the training
and retention of skilled crews on board
LNG carriers. MOL has launched its own
seafarer education and training program
and is building education and training
infrastructure. This training program com-
plies with SIGTTO *5 and TOTS *6
requirements, and also recently received
certification from Norway’s Det Norske
Veritas AS (headquarters in Oslo) for com-
pliance with the Competence Management
System (CMS) *7. Operation of this CMS
enhances MOL’s existing training program
by identifying the skills required of seafarers
and the current situation and pinpointing
issues in this regard so as to continuously
improve the program. By continuing to
develop and conduct this seafarer training
program to expand the LNG fleet, making
revisions whenever necessary, MOL is
striving to develop the skill of seafarers who
will help it maintain its status as the world
leader in safe operations.
Glossary
*1 Moss-type tankers (developed by norway’s Moss
rosenberg) are LNG carriers which have indepen-
dent spherical cargo tanks.
*2 boil-off gas: This refers to the gas released from
LNG during transport, due to vaporization caused by
external heat.
*3 fpsO (floating production, storage and Offload-
ing system): A facility for producing oil and gas
offshore. The oil is stored in tanks in the facility and
directly offloaded to tankers for direct transport to the
destination.
*4 exxonMobil china procject: This project is a joint
venture between MOL and Chinese partners, to
transport LNG from Papua New Guinea and Australia
to China under long-term contracts. MOL has ordered
four new LNG carriers from Hudong to be used in this
project, and the first completed vessel is to be
delivered in early 2015.
*5 sIGttO: The Society of International Gas Tanker &
Terminal Operators Ltd. This organization is responsi-
ble for setting standards for safe operations in the
LNG industry, covering everything from LNG produc-
tion to the transport and consumption of natural gas.
These include the “SIGTTO Standards” for the training
of LNG carrier crews.
*6 tOts: Tanker Officer Training Standard. This is a
standard set by the International Association of
Independent Tanker Owners (INTERTANKO) for the
training of personnel working on tanker vessels, either
on board ship or at ports of call. It is designed to raise
the skill level of these workers.
*7 competence Management system (cMs) is a
management system which assesses the skills of crew
members and identifies any disparities between these
skills and the standards required to achieve the
corporate goals of a shipping company. The system is
designed to continuously improve the quality of crew
training programs.
Japan’s LnG
IMpOrts by
cOuntry
(%)
Source: BP Statistical Review
of World Energy 2013
Equatorial Guinea
Nigeria
Oman
UAE
3%
5%
5%
6%
7%
7%
Brunei
Indonesia
Others
Australia
4%
18%
Qatar
18%
Malaysia
Russian Federation
17%
10%
35
buLkshIPs LNG Carriers
the Moss-type LnG Carrier
ENERGY PROGRESS
(tokyo bay)
36
There are approximately 370 LNG carriers operating worldwide at present. MOL operates 69 vessels, including 45 managed vessels,
making the company’s fleet of LNG carriers the largest in the world. MOL has outstanding orders for 16 vessels, all of which will be
managed by MOL. With demand for LNG carriers expected to surge over the next few years, MOL plans to increase the size of its LNG
carrier fleet to around 110 vessels by 2020.
37
buLkshIPs
Car Carriers
takashI kurauchI
Senior Managing Executive Officer
fiscal 2012 in review
There were initial expectations that exports of
completed Japanese cars would grow on the
back of a shift towards vehicle production for
export following the termination of govern-
ment subsidies for purchases of eco-friendly
cars. Nevertheless, growth in exports of
completed cars from Japan remained elu-
sive, mainly due to increasingly prolonged
market stagnation in Europe. Furthermore,
Japanese carmakers increasingly produced
cars in the markets where they were to be
sold as part of moves to step up local pro-
duction for local consumption. Under this
environment, we increased business in such
areas as exporting cargo from Asian coun-
tries other than Japan as well as handling
cross trade and inbound cargo, and worked
to secure new business opportunities. As a
result of these measures, this segment
recorded much higher profits than those of
fiscal 2011, when the Great East Japan
Earthquake hit the Japanese economy.
Global auto sales reached 81 million
units in 2012, a new record high for the
second straight year. The number of vehi-
cles transported by sea worldwide also
reached a new record high of approximately
14 million units, exceeding the 13 million
unit figure set in 2007. MOL transported 3.9
million units, a record for the company.
One of the defining features of the ocean
transport of automobiles in recent years has
been the ongoing diversification of trade
patterns. In the past, the main routes were
from Japan to Europe and the U.S. Today,
however, we are seeing more countries
producing and consuming automobiles.
Vehicle exports are increasing not only from
BRICs nations, but also Thailand, Mexico,
Indonesia, Turkey, Morocco, South Africa
and other countries. In this changing
38
region where they are sold, even if the yen
softens. They are also expected to increase
auto production in the U.S., Mexico, Russia
and elsewhere. In the U.S., where auto sales
remain brisk, sales are shifting towards larger
cars, which are the forte of the “Big Three” U.S.
automakers. Even though we anticipate these
factors going forward, we expect our earnings
to increase, considering the weaker yen.
Since the start of 2013, the yen has weak-
ened considerably. If it should reach levels of
more than ¥100 to the U.S. dollar, some
models of vehicles manufactured in Japan
might still be competitive in overseas markets.
Consequently, if the yen should remain at cur-
rent levels for a few years, it is possible that
there might be a revival of auto production in
Japan, and a recovery in exports of completed
vehicles from Japan. Nevertheless, based on
the current strong trend towards production of
vehicles in the region where they are sold, MOL
has not reflected such a comeback scenario in
its earnings forecasts for fiscal 2013.
Looking ahead
Global auto sales are currently being driven by
growth in the markets of India, Brazil, Russia
and China. Unit sales are expected to reach
84 million in 2013, 90 million in 2015 and as
high as 100 million in 2020. Although sales in
Europe are not likely to rebound as long as the
eurozone countries face fiscal problems, rising
demand in the U.S. for large-model SUVs and
vessels
12/3
128
13/3
127
thousand deadweight tons
12/3 2,055
13/3 2,063
Note: Figures include spot-chartered ships and those
owned by joint ventures.
business environment, it is vital to respond
flexibly to information concerning loading
and discharging locations, which changes
by the day. As a result, we are seeing an
increase in the number of vehicles we trans-
port on cross trades and inbound trades.
fiscal 2013 earnings Growth
scenario
Looking at prospects for 2013, we expect
exports of completed vehicles from Japan
to stay at roughly the same level, or per-
haps decline year on year. Shipments to
Europe should stay stagnant due to the
ongoing euro fiscal crisis. Meanwhile,
Japanese automakers are likely to continue
their policy of manufacturing vehicles in the
MaIn rOutes
GLObaL car
seabOrne
trade
(Thousand units)
Source: MOL internal
calculations, excluding CKD
2007
2008
2009
2010
2011
2012
0
5,000
10,000
15,000
Exports from Japan
Exports from Korea
Others
pickup trucks is likely to boost sales to
around 15 million units a year. While there
will be regional variations in the strength or
weakness of the auto market, the trend in
demand worldwide is likely to support a
steady increase in unit sales. The ocean
transport of automobiles is also likely to
increase, though the overall pace of growth
is expected to weaken, due to the trend
towards local-based production.
Transportation patterns will become ever
more complex than in the past. For example,
Thailand and South Africa have become
major auto exporters, and India is also
emerging as a major auto exporting country.
There are a number of other countries that
have become key production bases, such as
Mexico, Brazil, Turkey and Morocco, and
cars built in these countries are sold over a
wide area, creating many new trade routes.
This reflects the fact that automakers are
always considering a range of factors, includ-
ing exchange rate-related risks, when select-
ing the most appropriate base for production.
In order to avoid exchange rate-related
risks, automakers not only seek to increase
local production, but often produce the
same model in several countries. By doing
so, they can adjust their operations flexibly
in response to exchange rate fluctuations,
seeking the most profitable combination of
production site and site of final sale. To do
this, they need to establish the necessary
production and transport network. For
example, vehicles manufactured in Mexico
are not only sold in the U.S.; increasingly,
they are being shipped to Europe and Asia
for sale. Manufacturers need to set up an
export structure to handle these shipments.
In this way, many new seaborne trades are
developing. In response, MOL must try to
deal adroitly with the complexity of custom-
ers’ shipping needs. It must also take steps
to compete successfully against railroads
and other forms of cargo transportation.
In order to turn this competitive opportu-
nity into a new source of income, MOL
needs to intensify its efforts to achieve
efficient distribution and operation of its
vessels, while offering services that help
customers reduce their logistics costs. To
this end, the company has continued to
align its fleet, placing priority on the stan-
dardization of vessel size by designating
6400 RT-type car carriers as the company’s
“basic standard.” These car carriers are the
largest vessels at present, with high usabil-
ity in various sea lanes and ports across the
past it has been relatively difficult to respond to
the trade in short-range cargo transport, such
as shipments between ports in Southeast Asia,
or cargo transport within the North American
and South American continents. MOL will
respond with efforts to establish a shipping
network that serves these short-distance
shipping needs, and will pursue new cargo
movements from Asia other than Japan while
minimizing the operation of empty vessels.
In newly emerging economies, the devel-
opment of inland transport infrastructure has
an impact on the shipping business in terms
of the number of vehicles exported. MOL has
responded with measures such as developing
terminal operations at the Ennore Port in India
and inland transport businesses in the coun-
try. In addition to operations in India, MOL has
launched terminal operation businesses in
Australia and Turkey. In each of these cases, it
is essential for us to generate synergies with
our mainstay ocean transport business, while
working to strengthen ties with customers
who are expanding into each region.
In June 2012, MOL began operating the
world’s first hybrid car carrier, the emeraLd
ace. The ship is equipped with lithium-ion
batteries that are charged by solar power gener-
ation systems while at sea. The emeraLd ace.
then uses this power while at berth, which allows
the diesel power generators to be completely
shut off. As a result, the emeraLd ace. can
achieve “zero emissions while at berth.” Having
actually operated this vessel, MOL has con-
firmed a reduction in the environmental burden.
globe, and account for over 60% of the
vessels in MOL’s car carrier fleet. In recent
years, some companies have placed orders
for even larger, 7000 RT and 8000 RT-type
car carriers. However, MOL recognizes that
size alone is not what matters. Based on a
comprehensive evaluation of factors such
as fuel efficiency and vessel cost, as well as
the physical restrictions of various ports
around the world and the average loads
and shipment volumes needed on the
world’s main shipping routes, MOL has
determined that the 6400 RT-type vessels
currently are the best solution to respond to
and match our customers’ needs. By main-
taining a large fleet of similarly sized ves-
sels, it is easier for MOL to respond to
problems such as bad weather or port
congestion that hinders shipping sched-
ules. In case these problems emerge, the
company can respond flexibly to the situa-
tion and dispatch a replacement vessel of
the same size, thereby ensuring that cus-
tomers receive reliable service.
The MOL Group’s fleet of car carriers is
currently the largest in the world in terms of
the total number of ships in operation. How-
ever, the key to the company’s competitive
strategy is not simply to assemble the larg-
est fleet. In the future, it will become increas-
ingly important to anticipate the needs of
customers and respond flexibly by providing
finely tuned services that meet these needs.
This is the foundation of MOL’s strategy for
increasing earnings. For example, in the
car expOrt
frOM Japan
(Thousand units)
Others
Oceania
Central/South America
Africa
Middle/Near East
Asia
Europe
North America
8,000
6,000
4,000
2,000
Source: MOL internal calculations,
destination-wise/excluding CKD
0
2007
2008
2009
2010
2011
2012
car expOrt frOM
eMerGInG cOuntrIes
(Thousand units)
ex. Mexico
ex. South Africa
ex. India
ex. China
ex. Thailand
6,000
4,000
2,000
Source: MOL internal calculations
based on FORIN data, etc.
0
2007
2008
2009
2010
2011
2012
39
buLkshIPs Car Carriers
the Car Carrier
ELEGaNT aCE
(Durban, south africa)
40
The eLeGaNT ace, a 6400 RT-type car carrier departing from the South African port of Durban. The “4 Continents Express Service” does
an anti-clockwise loop around the Atlantic Ocean calling in at ports on four continents (Africa, Europe, North America and South America),
starting from Durban. Since its launch in 2001, this service has won high marks from customers for providing stable, regular services with
dedicated vessels. At present, MOL’s share of the transport of finished vehicles from South Africa exceeds 50%.
41
ContaIneRshIPs
JunIchIrO Ikeda
Senior Managing Executive Officer
fiscal 2012 in review
In fiscal 2011, almost all containership
companies were forced to operate in the
red, particularly on East-West routes, due
to overheated freight rate competition.
Critical reflection on this state of affairs led
to changes in the overall market in fiscal
2012 as companies independently made
adjustments to the supply of vessels and
moved to restore freight rates. This
improved rate levels to a certain extent.
MOL also aggressively promoted opera-
tional efficiency improvements and cost
reductions by strengthening the competi-
tiveness of its service network, through
alliances called TNWA *1 and G6 *2, and by
more fully implementing slow steaming and
other measures. As a result, we improved
earnings by ¥18.6 billion compared to the
previous fiscal year, although fiscal 2012
ended with an ordinary loss of ¥11.2 billion.
Worldwide containership trade volume in
2012 increased by 4.1%, but vessel supply
also rose by 6.1% as supply growth out-
stripped demand growth, as was the case
in the previous fiscal year *3. A significant
number of ultra-large containerships with
capacity exceeding 10,000 TEU were deliv-
ered and this was the main cause of the
increase in supply. There was concern
about the negative impact on supply and
demand because these ships would oper-
ate mainly on European routes, but contain-
ership companies dealt with the problem by
reining in supply through such measures as
laying up vessels, reducing service frequen-
cies, and slow steaming, which helped
restore freight rates toward the beginning of
spring to a considerable extent. Freight
rates gradually softened from the summer
onward, however, due to prolonged
42
Consequently, on Asia–Europe routes,
freight rate levels improved year on year
despite cargo movement slowing, and on
Asia–North American and other routes, we
were able to significantly increase lifting
numbers. In addition to these develop-
ments, yen depreciation (¥78.85/US$ in
fiscal 2011 to ¥82.31/US$ in fiscal 2012)
and a slightly lower bunker price (US$667/
MT in fiscal 2011 down to US$662/MT in
fiscal 2012) played a part as well, and we
were able to significantly improve earnings
on all routes. However, the containership
division overall was not able to return to the
black, despite stable income from the termi-
nal business and the logistics business.
fiscal 2013 profit recovery
scenario
In fiscal 2012, we were only able to reduce
the division’s margin of loss, but in fiscal
2013 we are targeting positive ordinary
income of ¥5.0 billion (as of the July 31, 2013
announcement). This would represent an
improvement of approximately ¥15 billion
compared to fiscal 2012. This forecast is
premised on an improvement in external
conditions, specifically, substantial yen
depreciation (¥82.31/US$ for fiscal 2012
versus an assumption of ¥99.20/US$ for
fiscal 2013) and a lower bunker price. The
forecast also reflects the Europe-originated
vessels
12/3
115
13/3
115
thousand deadweight tons
12/3 6,205
13/3 6,370
Note: Figures include spot-chartered ships and those
owned by joint ventures.
sluggishness in cargo movement to Europe.
That said, the operating results of European
routes on a full-year basis improved sub-
stantially over the previous year.
Regarding cargo movement on other
routes, trade was firmly rooted along Asia–
North American routes, while in Inter-Asia
trade increased. This reflected the return to
normal levels after trade was impacted last
fiscal year by the flooding in Thailand. The
increase was also the result of companies
shifting production to ASEAN countries and
away from excessive clustering in China.
North-South routes were affected by
import restrictions in Argentina, but cargo
movement was maintained.
MaIn rOutes
cOntaInershIp
seabOrne trade
(1995 = 100)
400
300
200
100
Source: MOL internal
calculations based on Clarkson
Research Service Shipping
Review Database Spring 2013
0
1995
2000
2005
2010
2012 (estimated)
G6 Alliance expanding to the North Ameri-
can East Coast, reduced slot costs and
increased lifting volume derived from large
vessels being added to the fleet, as well as
additional progress in restoring freight
rates, including reefer containers. Addition-
ally, in order to improve our earnings
regardless of market conditions, we intend
to aggressively promote cost cutting and
other self-reliant efforts under the division’s
three-year plan, “Operation CORE” (Count
On Reliability and Excellence), which runs
from fiscal 2012 to fiscal 2014.
For Asia–North America routes specifi-
cally, with the G6 Alliance expanding its
range to include the North American East
Coast, we will promote even more efficient
vessel allocation and cost reductions and
work to increase lifting numbers while
accommodating North American-bound
cargo, which is expected to remain firm. In
addition, through GRI *4, PSS *5 and other
measures, we will continue to restore freight
rates. On Asia-Europe routes, we will
actively work to increase stable contracts
with cargo owners known as BCOs *6 that
do not go through NVOCCs *7 and increase
lifting numbers by utilizing space on new
large vessels that will be delivered during
fiscal 2013. Also on Asia–Europe routes,
although it is expected that market condi-
tions for freight rates will potentially soften
given economic conditions in Europe, we
will continue to restore freight rates through
GRI, PSS and other measures while tighten-
ing vessel supply by such means as laying
up vessels, reducing voyages, and imple-
menting slow steaming. We also plan to
increase lifting numbers by accommodating
increased cargo movement along Inter-Asia
and North-South routes.
In the terminal business and the logistics
business, which support containership
routes, we will generate steady profits.
Capital investment is currently being made
in the terminal business, primarily overseas.
At the Port of Los Angeles, we are investing
in automation using IT, conversion to on-
dock rail and other projects. At Cai Mep
Port in Vietnam, terminal business opera-
tions have been stable since commencing in
January 2011. At Rotterdam Port, we are
making investments with a view to com-
mencing operations in 2014. From fiscal
2014 onward, when all of these overseas
terminals are operating, the terminal busi-
ness will contribute in a major way to
enhancing its presence as a stable business
in the containership division. The logistics
business also continues to generate steady
profits. Leveraging the respective strengths
of MOL Logistics (Japan) Co. Ltd., Utoc
Corporation, MOL Consolidation Service
Limited, Mitsui O.S.K. Lines (Thailand) Co.,
asIa-nOrth
aMerIca
cOntaIner trade
carGO
MOveMents
(Million TEU)
Outbound voyage
Inbound voyage
Source: Piers/JoC etc.,
excluding Canada cargo
asIa-eurOpe
cOntaIner trade
carGO
MOveMents
(Million TEU)
Outbound voyage
Inbound voyage
Source: Drewry, including
Mediterranean cargo
15
10
5
0
15
10
5
0
2008
2009
2010
2011
2012
2008
2009
2010
2011
2012
Ltd. and other group companies involved in
logistics, the MOL Group as a whole is
actively working to raise service quality while
promoting development of business in
emerging countries. We intend to accelerate
these activities and translate achievements
into profit growth.
Looking ahead
With growing uncertainty in the global
economy, management of the container-
ship business has become increasingly
difficult. However, we will work to provide
high-quality marine transport services while
bolstering cost competitiveness. To
accomplish this, we moved headquarters’
functions of MOL’s Liner Division to Hong
Kong in July 2012 due to the location’s
long history as a base for the shipping
business, its proximity to growth regions,
and its strong established infrastructure.
As was said before, the division is cur-
rently executing its own three-year plan,
Operation CORE, which covers from fiscal
2012 to fiscal 2014. The ordinary loss in
the containership division was ¥29.9 billion
in fiscal 2011 when the plan was con-
ceived, and even if market conditions have
not improved since that time, the plan is
targeting improvement in profits of ¥40
billion to ¥50 billion over the 3 years of the
plan so that ordinary income in the range of
Glossary
1. the new world alliance (tnwa) is an alliance of
three companies, MOL, APL (Singapore) and Hyundai
Merchant Marine (South Korea). It has conducted joint
operations on Asia–North America and Asia–Europe
routes since the 1990s.
2. the G6 alliance is an alliance of six companies and
represents the integration of TNWA and the Grand
Alliance (Nippon Yusen Kaisha (Japan), Hapag-Lloyd
AG (Germany) and Orient Overseas Container Line
(Hong Kong)). The alliance began operating jointly in
Asia–Europe (Northern Europe and Mediterranean)
routes in March 2012 and expanded its framework to
include North American East Coast routes in May 2013.
*3 2012 calendar basis. Source: Drewry
*4 GrI (General rate Increase): Increasing prices
across the board to boost rates that have fallen.
*5 pss (peak season surcharge): Charging premium
rates during peak seasons when cargo movement
increases.
*6 bcO (beneficial cargo Owner): A cargo owner that
contracts directly with containership companies
without going through an NVOCC or other intermedi-
ary. Cargo control is handled internally by the cargo
owner’s logistics divisions. Most BCOs are multina-
tional corporations that regularly import and export
certain amounts of cargo.
*7 nvOcc (non-vessel Operating common carrier):
Also called Freight Forwarders. These companies
handle freight transport operations using existing
shipping companies but do not possess their own
modes of transport.
43
¥10 billion to ¥20 billion can be earned
continuously. To meet these targets we
intend to improve cost competitiveness by
reducing slot costs and lowering organiza-
tional costs per unit by putting large ves-
sels into operation, and acquiring volume
discounts from terminals, railways and
other companies against a backdrop of
increasing cargo volume.
In addition, under the slogan “Count on
MOL,” we will continue disclosing key
performance indicators for transport qual-
ity (on-time performance percentages),
environmental protection (reduction ratios
for CO2, NOx and SOx emissions from
containerships) and safe operations (the
number of long-time operational stop-
pages per year for 3 or more consecutive
days) to promote MOL’s safety and service
quality and continue working to differenti-
ate ourselves from competitors.
Global economic development is cur-
rently supported by an international division
of labor, so economic growth in different
regions is connected and causes transport
to increase between them. Maritime ship-
ping is the key mode of inter-region trans-
port, and the containership business in
particular helps spread prosperity brought
about by international specialization to
more countries, industries and people in
that it handles cargo for innumerable cus-
tomers. In this growth market, we have
continually provided stable, sophisticated
transport quality to earn widespread trust.
We intend to continue working to achieve
sustainable growth and establish contain-
erships as a truly CORE business of MOL.
share by MaJOr
carrIer aLLIance
Of the eurOpe
rOutes
(As of March 2012)
Others
MSC*
13%
15%
11%
18%
Maersk*
CMA-CGM*
*The “P3 Network,” a new alliance, is scheduled to be launced in April–June 2014.
Source: MDS
revenue
breakdOwn by
trade
(Results of FY2012)
capacIty
breakdOwn by
trade
(Results of FY2012)
Intra-Asia Trade
19%
South America/
Africa Trade
15%
32%
Europe Trade
Intra-Asia Trade
31%
South America/
Africa Trade
14%
44
CKYH + Evergreen
25%
TNWA
GA
G6
18%
North America
Trade
34%
North America
Trade
29%
Europe Trade
26%
ContaIneRshIPs
the Containership
MOL MiSSiON
(san Francisco, u.s.)
MOL’s containership division is working to protect the environment as part of the “Count on MOL” initiative.
Besides its low fuel consumption and outstanding capacity, mOL miSSiON has pre-empted new regulations
regarding safety and the environment. This containership boasts double-hull fuel tanks to reduce the risk of
fuel oil leaks. In addition, it is equipped with low sulfur fuel tanks, electronically controlled main engines and an
onshore power supply system, among other features that give consideration for the environment.
45
FeRRy &
DoMestIC tRansPoRt
vessels
12/3
45
13/3
44
thousand deadweight tons
12/3
158
13/3
159
Note: Figures include spot-chartered ships and those
owned by joint ventures.
in revenues caused by route rationalization
and other factors, and allow the division to
achieve profit growth.
Looking ahead
Although it is difficult to imagine the
domestic marine transport business fading
in the foreseeable future, it is no longer a
business segment which offers the pros-
pect of steady or dramatic earnings
growth. Over the past 20 years, this indus-
try has gradually consolidated and the
number of ferry operators in Japan has
declined significantly. Domestic marine
transport has become a mature industry in
Japan, but conversely, it is also difficult for
new players to enter the business. While
existing companies formerly were able to
achieve growth through consolidation and
rationalization, the industry has now
entered an era in which knowledge and
ingenuity must be used to create opportu-
nities for growth.
One example of a potential growth
opportunity in the ferry business is the
development of ships that function as a
sort of “moving hotel,” such as the popular
“Dangan Ferry *2.” By developing other
ways to make services both time- and
cost-effective for tourists, we are striving to
attract tourism-related demand. In addition,
the introduction of tighter regulations on
domestic, long-distance trucking services
opens up business opportunities for night-
time ferry services, which can be more
cost-effective and safer while reducing
environmental impact. Many truck opera-
tors are becoming increasingly aware of
these advantages and shifting from road to
ferry transport. This has the potential to
drive growth in ferry operations.
hIrOkaZu hatta
Managing Executive Officer
fiscal 2012 in review
In fiscal 2012, we returned to profitability
for the first time in 5 years on an ordinary
income basis, generating growth in reve-
nues and contributing ¥1.2 billion to ordi-
nary income. We have been pursuing this
immediate goal ever since this business
slipped into the red in fiscal 2008, steadily
pursuing profitability with cumulative efforts
to cut costs and rationalize operations.
However, the Great East Japan Earthquake
in 2011 had a major impact on the Eastern
Japan ferry route. The mother port for
vessels running the Kita-Kanto–Hokkaido
route, Oarai Port, was completely out of
service for around three months. Ships had
to be diverted to the Port of Tokyo, and the
effort to rebuild operations and profitability
was extremely difficult.
In fiscal 2012, the effects of the earth-
quake began to decline, with total cargo
volume and revenues returning to pre-
disaster levels. The ferry business also felt
the beneficial impact of a business integra-
tion, conducted in fiscal 2011, to rationalize
ferry operations in Western Japan *1. This
contributed directly to the earnings recov-
ery, as did the restart of thermal power
generation facilities operated by the electric
power companies, which increased
demand for fuel oil and coal transported by
MOL’s domestic coastal shipping business.
As a result, this business division returned
to the black.
fiscal 2013 earnings Growth
scenario
We expect to see benefits from streamlin-
ing and further cost reductions in this busi-
ness division during fiscal 2013. This
should offset an anticipated modest decline
46
Glossary
*1 The two ferry companies serving the Osaka/
Kobe–Kyushu route—The Diamond Ferry Co., Ltd.
and Kansai Kisen Kaisha—were integrated to form
Ferry Sunflower Ltd.
*2 “dangan ferry” is an overnight round-trip service
which arrives at the destination port in the morning
and departs there the same evening. Travelers
spend two nights aboard ship, and thus do not
require lodging on land.
FeRRy & DoMestIC tRansPoRt
the Ferry
SuNFLOwER FuRaNO
(oarai District, Ibaraki Port, Ibaraki)
Tractors haul trailers into ferries. Once inside, the tractor is detached
from the trailer and only the person-less trailer is transported to the
destination port. Ferries help ease the burden on truck drivers and
reduce the risk of traffic accidents. They are also an environmentally
friendly mode of transport.
47
assoCIateD busInesses
hIrOkaZu hatta
Managing Executive Officer
fiscal 2012 in review
This division comprises MOL’s real estate,
tugboat, cruise ship and other businesses.
More than half of the profits in this division
are accounted for by the real estate busi-
ness, particularly Daibiru Corporation. In
this company’s main operating regions—
the business districts of Tokyo and
Osaka—office building vacancy rates
remain at high levels, and this continues to
constrain rent income. However, Daibiru’s
properties are located in excellent locations
and provide a high level of service, which
has allowed the company to maintain high
occupancy rates relative to the overall
market average, supporting solid results.
Losses in the cruise ship business were
reduced, while tugboat and other associ-
ated businesses remained generally solid.
As a result, ordinary income in the division
increased compared with fiscal 2011, to
¥10.7 billion.
fiscal 2013 earnings Growth
scenario
In fiscal 2013, we expect ordinary income
to remain essentially unchanged, at ¥10.5
billion. Daibiru continues to generate a
stable flow of income, and we expect profit
contributions from the tugboat business to
roughly match fiscal 2012’s levels. Although
the cruise ship business will remain in the
red, we will pursue deeper reforms in line
with the single-year management plan
“RISE 2013,” so that it can make a contri-
bution to profit growth of this division.
Looking ahead
Due to depressed conditions in the marine
transport industry, MOL posted a consoli-
dated ordinary loss in fiscal 2012 of ¥28.5
billion. However, associated businesses
contributed ordinary income of ¥10.7 bil-
lion, thus greatly moderating the scale of
the overall loss. In fiscal 2013, as MOL is
taking steps to reform the cruise ship busi-
ness, it is more likely that all business
segments and all group companies will
return to profitability. In the real estate
business, Daibiru completed construction
of the Daibiru Honkan in March 2013, and
expects to finish construction of another
building (provisional name: New Shin
Daibiru) in March 2015. In fiscal 2013,
Daibiru embarked on a new medium-term
management plan entitled “Design 100”
Project Phase-I. This 5-year plan, which
continues through the end of fiscal 2017,
aims to expand revenues and profits by
approximately 20%, thus allowing the
company to continue making steady con-
tributions to MOL group earnings.
In the tugboat business, we will use
high-performance “Japan Brand” tugboats
and try to appeal to customers based on
sophisticated skill at maneuvering vessels.
As our entry to the Vietnamese market in
2010 demonstrates, the tugboat business
will leverage new port development in the
Asian region to capture new demand.
Under this strategy, we have ordered addi-
tional tugboats, focusing mainly on high-
powered tugboats, as we reshape the
tugboat fleet, which was composed of 39
boats in Japan and 16 boats overseas (as
of the end of fiscal 2012).
The cruise ship business, along with
ferry operations, is a rare example of a
business in which MOL has direct access
to individual consumers. Although the
company operates a fleet of over 900
vessels, the only people who might know
one of these vessels by name are the
cargo owners who contract them. On the
other hand, the name of our leading cruise
ship, the NiPPON maru, is known by a
large number of people. It contributes
disproportionately to public recognition of
MOL and helps the company draw atten-
tion from the market. As the cruise ship
business has an influential role to play in
this way, we will strive to attract more
passengers and increase earnings in an
effort to stabilize this business.
assoCIateD busInesses
the tugboat
KaMiYa
(Cai Mep Port, vietnam)
Vessels in the Asian region are becoming larger, reflecting
buoyant marine transport in the region. To accommodate
these larger vessels, new ports are being opened and
existing ports are expanding in Asian countries. The
opening of these new ports will create new demand for
tugboats. MOL plans to expand its overseas tugboat
operations with high-quality tugboats and the expertise it
has built up in Japan.
48
key systems underpinning MoL:
Corporate Governance and Corporate social Responsibility
Contents
50 boaRD oF DIReCtoRs, CoRPoRate auDItoRs anD exeCutIve oFFICeRs
52 MessaGe FRoM an exteRnaL DIReCtoR
54 CoRPoRate GoveRnanCe
54 MoL’s PhILosoPhy anD Past ManaGeMent ReFoRMs/
CoRPoRate GoveRnanCe oRGanIzatIon
56 DIReCtoR anD CoRPoRate auDItoR CoMPensatIon/CoMPLIanCe
57
InteRnaL ContRoL systeM/InDePenDent DIReCtoRs anD CoRPoRate auDItoRs/
annuaL GeneRaL shaRehoLDeRs’ MeetInG/aCCountabILIty
58 RIsk ManaGeMent
60 saFe oPeRatIon
62 CoRPoRate soCIaL ResPonsIbILIty (CsR)
62 MoL’s aPPRoaCh to CsR/the MoL GRouP basIC PRoCuReMent PoLICy/
PaRtICIPatInG In the un GLobaL CoMPaCt
63 huMan RIGhts/envIRonMentaL PRoteCtIon
65 soCIaL ContRIbutIon aCtIvItIes
66 thIRD-PaRty evaLuatIons/MoL’s envIRonMentaL teChnoLoGIes SENPaKu iSHiN
49
boaRD oF DIReCtoRs, CoRPoRate auDItoRs anD exeCutIve oFFICeRs
(As of June 21, 2013)
akIMItsu ashIda
Representative Director
Chairman of the Board
Born 1943
kaZuhIrO satO
Representative Director
Born 1953
Apr. 1967 Joined Mitsui O.S.K. Lines, Ltd.
Apr. 1995 General Manager of Liner Division
Jun. 1996 Director, General Manager of
Planning Division
Jun. 1998 Managing Director
Jun. 2000 Senior Managing Director, Senior
Managing Executive Officer
Jun. 2003 Representative Director, Executive
Vice President, Executive Officer
Jun. 2004 Representative Director, President
Executive Officer
Jun. 2010 Representative Director, Chairman
of the Board, Chairman Executive
Officer (current)
Apr. 1975 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2001 General Manager of LNG Carrier
Division (A)
Jun. 2004 General Manager of LNG Carrier
Division
Jun. 2005 Executive Officer
General Manager of LNG Carrier
Division
Jun. 2008 Managing Executive Officer
Jun. 2010 Senior Managing Executive Officer
Jun. 2013 Representative Director, Executive
Vice President
Executive Officer (current)
Apr. 1979 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2004 General Manager of Human
Resources Division
Jun. 2007 General Manager of Liner Division
Jun. 2008 Executive Officer
Jun. 2010 Managing Executive Officer
Jun. 2013 Director, Senior Managing
Executive Officer (current)
Apr. 1976 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2002 General Manager of Bulk Carrier
Division
Jan. 2003 General Manager of Corporate
Planning Division
Jun. 2004 Executive Officer, General
Manager of Corporate Planning
Division
Jun. 2006 Managing Executive Officer
Jun. 2007 Director, Managing Executive
Officer
kOIchI MutO
Representative Director
Born 1953
Jun. 2008 Director, Senior Managing
Executive Officer
Jun. 2010 Representative Director, President
Executive Officer (current)
tsuneO watanabe
Director
Born 1955
Apr. 1978 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2004 General Manager of Tanker
Division
Jun. 2006 Executive Officer
Jun. 2008 Managing Executive Officer
Jun. 2010 Director, Managing Executive
Officer
Jun. 2011 Director, Senior Managing
Executive Officer (current)
Apr. 1979 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2003 General Manager of Logistics
Business Division
Jun. 2008 Executive Officer, MOL Europe
B.V. Managing Director
Jun. 2011 Managing Executive Officer
Jun. 2013 Director, Managing Executive
Officer (current)
JunIchIrO Ikeda
Director
Born 1956
MasahIrO tanabe
Director
Born 1957
Apr. 2008 President of The Salt Science
Research Foundation (current)
Jun. 2008 Director of Mitsui O.S.K. Lines,
Ltd. (current)
Jun. 2010 Chairman of the Board and
Representative Member of the
Board of Toray Industries, Inc.
(current), Director of Mitsui O.S.K.
Lines, Ltd. (current)
takeshI kOMura
Director
Born 1939
sadayukI sakakIbara
Director
Born 1943
May 2011 Senior Advisor of The Boston
Consulting Group K.K. (current)
Jun. 2011 Director of Mitsui O.S.K. Lines,
Ltd. (current)
corporate auditors
MasaakI tsuda
corporate auditor
Born 1959
takehIkO Ota
corporate auditor
Born 1960
Apr. 1981 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2006 General Manager of General
Affairs Division
Jun. 2011 Corporate Auditor of Mitsui
O.S.K. Lines, Ltd. (current)
Apr. 1984 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2008 General Manager of Investor
Relations Office
Jun. 2013 Corporate Auditor of Mitsui
O.S.K. Lines, Ltd. (current)
suMIO IIJIMa
corporate auditor
Born 1941
hIrOyukI ItaMI
corporate auditor
Born 1945
Apr. 1966 Attorney at law, Tokyo
Toranomon Law office (current)
Jun. 2006 Corporate Auditor of Mitsui
O.S.K. Lines, Ltd. (current)
Oct. 2008 Professor and Dean of Tokyo
University of Science, Graduate
School of Innovation Studies
(current)
Jun. 2011 Corporate Auditor of Mitsui
O.S.K. Lines, Ltd. (current)
MasayukI MatsushIMa
Director
Born 1945
50
12
9
8
7
3
1
2
4
5
6
10
11
23
21
19
17
15
13
14
16
18
20
22
24
executive Officers
1
2
3
4
5
6
7
8
akIMItsu ashIda
Chairman
kOIchI MutO
President
kaZuhIrO satO
Executive Vice President Executive Officer
(Assistant to President)
tsuneO watanabe
Senior Managing Executive Officer
(Tanker Division, Tanker Safety
Management Office)
takashI kurauchI
Senior Managing Executive Officer
(Car Carrier Division)
kenIchI naGata
Senior Managing Executive Officer
(Coal and Iron Ore Carrier Division,
Bulk Carrier Office, Dry Bulk Carrier
Supervising Office)
JunIchIrO Ikeda
Senior Managing Executive Officer
(Liner Division, Human Resources Division,
Research Office)
MasahIrO tanabe
Managing Executive Officer
(Finance Division, Accounting Division,
Investor Relations Office)
9
10
11
12
13
14
shIZuO takahashI
Managing Executive Officer
(Internal Audit Office, Secretaries Office,
Corporate Planning Division, Public
Relations Office, MOL Information
Systems, Ltd.)
kIyOtaka yOshIda
Managing Executive Officer
(Technical Division)
hIrOkaZu hatta
Managing Executive Officer
(General Affairs Division, Group Business
Division, Kansai Area)
takeshI hashIMOtO
Managing Executive Officer
(LNG Carrier Division, MOL LNG
Transport Co., Ltd., Offshore Business)
tetsurO nIshIO
Managing Executive Officer
(Dedicated Bulk Carrier Division)
MasaakI neMOtO
Managing Executive Officer
(Human Resources Division, Marine
Safety Division, Tanker Safety
Management Office, MOL Ship
Management Co., Ltd., MOL LNG
Transport Co., Ltd., Safe Operation)
15
16
17
18
19
20
tOshIya kOnIshI
Managing Executive Officer
(Liner Division)
tsuyOshI yOshIda
Executive Officer
(President/Chief Executive Officer of MOL
(America) Inc.)
takashI MaruyaMa
Executive Officer
(General Manager of Finance Division)
akIhIkO OnO
Executive Officer
(General Manager of Corporate Planning
Division)
takaakI InOue
Executive Officer
(Marine Safety Division, Tanker Safety
Management Office, MOL Ship
Management Co., Ltd., MOL LNG
Transport Co., Ltd.)
tOshIyukI sOnObe
Executive Officer
(Managing Director of Mitsui O.S.K. Bulk
Shipping (Asia Oceania) Pte. Ltd.,
Southeast Asia)
21
22
23
24
yOshIkaZu kawaGOe
Executive Officer
(General Manager of Technical Division)
hIdeO hOrIGuchI
Executive Officer
(General Manager of Accounting Division)
akIO MItsuta
Executive Officer
(General Manager of Tanker Division)
kOIchI yashIMa
Executive Officer
(Human Resources Division)
51
MessaGe FRoM an exteRnaL DIReCtoR
MasayukI
MatsushIMa
External Director
Two years have now elapsed since I assumed the
While it is critical, of course, that MOL determine
position of external director for MOL. Before my
how best to operate in the current market, I believe
appointment, I had the image of MOL as “an organi-
this is also an ideal opportunity for shipping compa-
zation that leads the world shipping industry." This
nies to reassess how they should proceed going
image has not changed. Indeed, in many respects
forward. They have endured hard times in the past,
my expectations have been surpassed, in terms of
such as the oil shock of the 1970s, and the yen’s
strong leadership under successive management
sharp appreciation after the Plaza Accord of 1985.
teams, daring action geared toward providing best-
Every time it faced these challenges, MOL made
fit solutions to customers, an extremely open corpo-
serious efforts to survive by adopting a broad range
rate culture, and employees’ earnest approach to
of policies from various cost-cutting measures and
their work.
adjusting its fleet to large-scale restructuring,
In the midst of the worst shipping recession in
including two rounds of industry consolidation. The
recent years, MOL now finds itself enduring a very
future will remain challenging and undoubtedly
rough passage. When freight rates for dry bulkers,
present every kind of risk. In this highly volatile
tankers, and containerships all slump at once, the
business climate, I believe MOL must learn and
situation is akin to a violent hurricane and a tornado
think about how to identify and contain ever-pres-
striking simultaneously. Even from my standpoint as
ent risks. Without the benefit of accumulated
an external director, I am struck by the uphill battle
wisdom, MOL could not remain afloat in conditions
faced by those on the front line, in the face of this
that are worse than expected. It is no exaggeration
protracted industry downturn. As a leader within the
to say that the heart of company management lies
marine transport industry, however, MOL has boldly
in its ability to prepare for potential risks.
changed tack and is forging ahead.
52
After MOL returns to profitability following its
Business Structural Reforms, I would like to see it
become a true global company in terms of both qual-
ity and quantity. I believe the company has made good
progress in expanding its overseas operations, but still
see scope for further globalization. In particular, I think
MOL must take advantage of Asia’s rapid growth.
MOL already uses Hong Kong as the base of its con-
tainership business and Singapore as the hub for most
tankers. With this latest round of reforms, the com-
pany has continued this shift to Asia by transferring
the operation of dry bulker free vessels to Singapore
as well. MOL employs people from many countries,
and not just in sales activities on land; many seafarers,
to me, management does not mean avoid-
ing the winds of risk, but rather facing into
those winds and seeing them as your allies.
Currently, MOL is planning to reduce its free
for example, hail from the Philippines. Going forward, I
vessels. Some might think it sufficient only to
would like to see the company focusing not so much
reduce the number of free vessels and increase the
on setting up and expanding individual operating
ratio of medium- and long-term contracts, but I
bases, but rather on building a united and organic
don’t think so. It is far more important for MOL to
trading sphere across Asia. To this end, MOL would
establish a long-lasting business model that strikes
do well to explore every possible means, including a
the right balance between stable revenue and
stepped-up alliance strategy, personnel exchanges,
opportunity cost. In the process of building this
enhanced sales partnerships among organizations
model, the first job is to identify the risk profiles of
around the world, and even video conferencing for
vessel types and correlations of risk variables. And
exchanging and sharing information.
I would like to see it become a true global
company in terms of both quality and quantity.
then MOL must explore the best mix of vessel type
in its portfolio with reference to the global supply-
demand outlook, taking into account the risk toler-
ance of the company.
Hedging against every possible risk to eliminate
the influence of all risk is not what I would call man-
agement. To me, management does not mean
avoiding the winds of risk, but rather facing into
those winds and seeing them as your allies. In the
shipping industry, the winds can fluctuate greatly. It
is very important that employees across the entire
company accept this reality, and maintain a sharp
sense of the line between earnings optimization and
risk tolerance, in both good times and bad.
While it is only natural that the pursuit of profit is a
MOL has bled huge red ink. I believe the com-
major objective for companies, I believe that profit is
pany must retain the lessons learned this time
not everything. It is also extremely important to find
about how to deal with market risk and incorporate
the optimal balance between the interests of various
it into management.
stakeholders, and to maintain accurate disclosure.
Also, companies need to envision the roles and
responsibilities expected of them by society, 5 and
even 10 years down the track. Based on these con-
siderations above, I would like to contribute to MOL’s
ongoing evolution.
53
CoRPoRate GoveRnanCe
MoL’s Philosophy and Past Management
Reforms
The MOL Group established the MOL Group Corporate Principles
in March 2001. One of the pledges in our Corporate Principles
states, “We will strive to maximize corporate value by always being
creative, continually pursuing higher operating efficiency and pro-
moting an open and visible management style that is guided by
the highest ethical and social standards.”
In order to realize the ideals set forth in the principles, MOL
reformed its corporate governance structure, instituting manage-
ment reforms that brought outside directors onto the board, sepa-
rated management and executive functions, and set standards for
accountability, risk management and compliance. These reforms
were implemented as follows:
1997
1998
Outside auditors increased from one to two out of a total of four auditors
George Hayashi (former APL chairman) invited to join the Board of
Directors (became Director and Vice President in 1999, following
revision of the Shipping Act)
2000 Management organization reform
1. Introduced a system of executive officers
2. Abolished the Managing Directors Committee and established an
Executive Committee (reduced the membership from 21 to 10)
2001
2002
3. Reformed the Board of Directors (redefined its duties as the
highest-ranking decision-making body and the supervision of
business activities) and reduced membership from 28 to 12
4. Elected two outside directors
5. Established the Corporate Visionary Meeting
Established the IR Office
Started holding the Annual General Shareholders’ Meeting on a day
relatively free of other shareholders’ meetings
Established the MOL Group Corporate Principles
Added one more outside director, increasing the number of outside
directors to three
Established Compliance Policy and a Compliance Committee
Second stage of management reforms
Reforms reinforced roles of the Board of Directors concerning deter-
mination of basic strategies and monitoring risk management while
providing for faster decision-making at the business execution level
1. Board of Directors was reorganized to carry out three important
functions: (1) deliberation on issues requiring approval by the
directors; (2) receipt of reports on business operations; and (3)
deliberation on corporate strategy and vision
2. Review and consolidation of issues submitted to the Board of
Directors
3. Expanded jurisdiction of the Executive Committee regarding
execution of business activities
2006
Decided basic policy on the establishment of internal control systems
in response to enforcement of the new Japanese Companies Act
In response to the enforcement of the Financial Instruments and
Exchange Act, the Internal Control Planning Office was established
in the Corporate Planning Division.
2007
The Internal Control Planning Office enhanced internal control
systems for the purpose of ensuring the accuracy of financial report-
ing, in accordance with the Financial Instruments and Exchange Act.
2008 We have been using management evaluations of internal controls
relating to financial reporting required by the Financial Instruments
and Exchange Law since fiscal 2008, audits by the Internal Audit
Office and advice based on the results of those audits, to improve
internal controls throughout the Group.
2009 We submitted an internal control report to the Kanto Local Finance
Bureau in Japan containing an assessment by management that
internal controls over financial reporting at MOL were effective.
2011
Revised the Mitsui O.S.K. Lines’ Compliance Policy and Rules of
Conduct
Corporate Governance organization
The chart on the next page shows the structure of our corporate
governance organization.
At MOL, we believe that the essence of corporate governance
lies not in its structure or organization, but in whether or not it
functions effectively. We have put in place frameworks and organi-
zations for this.
54
n the board of directors
The Board of Directors, as the company’s highest-ranking
decision-making body, discusses and decides on basic policy and
the most important matters connected with MOL Group manage-
ment. It consists of nine directors, including three outside direc-
tors. In principle, the Board of Directors convenes around 10 times
a year, and as necessary.
Major investment projects, such as the construction of new
vessels, are submitted to the Board of Directors at the basic policy
formulation stage. The directors thoroughly evaluate and discuss
the pros and cons of the projects and make decisions on their
feasibility from many perspectives. Transferring the authority to
implement projects within the scope of the basic policy to execu-
tive officers supervised by the president speeds decision-making
on individual projects.
n deliberation on corporate strategy and vision
A major feature of the Board of Directors is deliberation on corporate
strategy and vision. At each meeting, the board focuses on a partic-
ular topic concerning management strategies, MOL’s long-term
vision or other subjects involving management. These discussions
provide an opportunity for lively debates that include the outside
directors and corporate auditors, thus helping to ensure that the
perspective of shareholders is reflected in how MOL is managed.
theMes dIscussed In cOrpOrate strateGy and
vIsIOn deLIberatIOns heLd In fIscaL 2012 (4 tIMes)
May
2012 Strategies for recruiting and training seafarers
October
2012 Management plan formulation policy
december 2012 Structural reforms
february
2013 Shale revolution and energy transportation
n executive committee and committees
MOL established the Executive Committee in 2000 as part of
reforms to its management organization. As the second step of
those reforms, in 2002 the company expanded the jurisdiction of
the Executive Committee regarding execution of business activi-
ties, and also transferred the authority to implement projects within
the scope of the basic policy approved by the Board of Directors
to executive officers supervised by the president to speed up
decision-making on individual projects.
MOL has also established the following committees to study
and discuss important matters that will be submitted to the Execu-
tive Committee for discussion and projects straddling divisions, as
sub-committees of the Executive Committee.
rIse committee
Executes and follows up on management plans for MOL and the
MOL Group, and examines and discusses matters related to the
MOL Group’s management strategy.
budget committee
Formulates basic policy on budget preparation for MOL and the
MOL Group and sets targets; ascertains the status of implementa-
tion at MOL and in the MOL Group of the overall budget; and
studies and discusses results evaluation and other matters.
compliance committee
Studies and discusses the enhancement of the compliance system
and actions for dealing with compliance violations, and matters
related to establishing a structure for protecting and managing
personal information, among other topics.
Investment and finance committee
Studies and discusses items that will be submitted to the
Executive Committee such as matters related to investment and
finance and guarantees of obligations, the fleet control plan for
individual vessels, and important matters relating to Group com-
pany management.
Operational safety committee
Chaired by the President, this committee studies and discusses
basic policies and measures for ensuring safe operation of MOL
Group-operated vessels through rigorous attention to every detail.
As subordinate organizations of this committee, there are
the Safety Assurance Committee, which monitors efforts to
strengthen the safe operation system, confirms progress and
achievements thereof, and discusses advice for making neces-
sary revisions to measures; and the Ship Standard Specification
Committee, which discusses standard specifications for MOL
vessels and MOL Ship Management Standards.
csr and environment committee
Studies and discusses corporate social responsibility (CSR), and
matters related to company systems for reducing global environ-
mental impact.
business reconstruction committee
Studies and discusses matters relating to rehabilitation plans for
depressed businesses.
n functions of Outside directors and reasons for
appointment
As part of efforts to strengthen corporate governance, MOL
appoints outside directors, with the aim of bolstering oversight of
the execution of business operations by bringing in an outside
perspective to management.
MOL has appointed three outside directors: Takeshi Komura,
who is President of The Salt Science Research Foundation;
Sadayuki Sakakibara, who is Chairman of the Board and Represen-
tative Member of the Board of Toray Industries, Inc.; and Masayuki
Matsushima, Senior Advisor of The Boston Consulting Group K.K.
MOL has adjudged that all three individuals are independent and
have neutral positions with no conflicts of interest with the com-
pany. The outside directors draw on their individual experience and
insight to check the appropriateness of management and the
status of execution of business operations from the shareholders’
standpoint. At the same time, they express valuable opinions about
management as a whole. In these ways, the outside directors play
a major role in enhancing the operation of the Board of Directors.
cOrpOrate GOvernance OrGanIZatIOn (as Of June 21, 2013)
GeneraL sharehOLders’ MeetInG
Elect and appoint/dismiss
board of directors [12] Outside directors: 3
Internal directors: 6
Total: 9
Elect and appoint/supervise
Submit basic management policies
and other issues for discussion
executive committee [47]
Internal directors and Executive officers: 10
Business audit
Accounting audit
corporate auditors
Internal auditors: 2
Outside auditors: 2
Total: 4
Elect and appoint/dismiss
Accounting audit
corporate auditor Office
accounting auditors
Elect and
appoint/dismiss
Submit to Executive Committee after preliminary deliberations
Provide direction on
important business issues
committees under the executive committee
RISE Committee [22], Budget Committee [2], Investment and Finance Committee [37],
Operational Safety Committee [3], CSR and Environment Committee [2],
Compliance Committee [1], Business Reconstruction Committee
Submit report on important business and other issues
Provide
direction
Audit plan,
Audit report
Communicate and coordi-
nate with corporate
auditors and independent
public accountant
executive Officers
Director/Executive officers: 6
Executive officers: 18
Total: 24
Divisions/Offices/Branches/Vessels/Group companies
Internal audit Office
Business audit
Accounting audit
Numbers in brackets show the number of meetings of the Board of Directors, Executive Committee and their sub-committees during fiscal 2012.
The RISE Committee, an organization under the Executive Committee, was called the GEAR UP Committee in fiscal 2012 and met 22 times.
55
name
position
reason for appointment
Takeshi
Komura
President of The
Salt Science
Research
Foundation
Sadayuki
Sakakibara
Chairman and
Representative
Member of the
Board of Toray
Industries, Inc.
Masayuki
Matsushima
Senior Advisor of
The Boston
Consulting Group
K.K.
(As of June 21, 2013)
MOL adjudged that he has a neutral
position with no conflicts of interest with the
company, and that he has wide-ranging
experience and knowledge for checking the
appropriateness of management decisions
and supervising the execution of business
operations from the shareholders’ perspec-
tive based on his longtime experience in
and knowledge of economic management
and policy finance of Japan.
MOL adjudged that he has a neutral position
with no conflicts of interest with the company,
and that he has wide-ranging experience and
knowledge for checking the appropriateness
of management decisions and supervising
the execution of business operations from the
shareholders’ perspective, with an objective
view independent from that of internal
executive management, based on his
abundant experience and extensive knowl-
edge as a corporate executive.
MOL adjudged that he has a neutral
position with no conflicts of interest with the
company, and that he has wide-ranging
experience and knowledge for checking the
appropriateness of management decisions
and supervising the execution of business
operations from the shareholders’ perspec-
tive based on his long-time experience in
and knowledge of the financial sector.
n functions of Outside corporate auditors and reasons for
appointment
The Board of Directors has nine members, including three outside
directors who are completely independent and have no conflicts of
interest with MOL. Likewise, there are four corporate auditors, who
are responsible for performing statutory auditing functions, includ-
ing two outside corporate auditors who are completely indepen-
dent and have no conflicts of interest with MOL. At a time when
the auditing systems of corporations are taking on added impor-
tance, it goes without saying that the independence of auditors
from management and policy execution is assured. Our corporate
auditors work closely with the Internal Audit Office and indepen-
dent public accountants to assure effective corporate governance.
They also work on strengthening corporate governance and com-
pliance throughout the group.
name
position
reason for appointment
Sumio Iijima
Attorney at law, Tokyo
Toranomon Law office
Hiroyuki Itami Professor and Dean of
Tokyo University of
Science, Graduate
School of Innovation
Studies
MOL adjudged that he has a neutral
position with no conflicts of interest
with the company, and that he has
wide-ranging experience and
knowledge for checking the appro-
priateness of management deci-
sions and supervising the execution
of business operations from the
shareholders’ perspective based on
his specialist knowledge as an
attorney at law.
MOL adjudged that he has a neutral
position with no conflicts of interest
with the company, and that he has
wide-ranging experience and
knowledge for checking the appro-
priateness of management deci-
sions and supervising the execution
of business operations from the
shareholders’ perspective based on
his specialist knowledge as a
scholar of business administration.
(As of June 21, 2013)
56
Director and Corporate auditor
Compensation
The Board of Directors, including the outside directors, determines
compensation for the directors and corporate auditors. Compen-
sation paid to directors and corporate auditors in fiscal 2012 is
shown in the following table.
The company has granted stock options to all directors, exec-
utive officers, general managers of divisions and branch offices
and managers in similar positions, as well as to presidents of con-
solidated subsidiaries, to motivate them to carry out operations for
the benefit of shareholders.
n compensation for directors and corporate auditors
no. of
people
remuner-
ated
total
remunera-
tion
(¥ millions)
(thousands
of u.s.$)
7
2
5
¥350
$3,721
68
51
723
542
Directors
(Excluding outside directors)
Corporate auditors
(Excluding outside
corporate auditors)
Outside directors and
outside corporate auditors
n compensation for Independent public accountants
(¥ millions)
(thousands
of u.s.$)
Compensation for auditing services
¥106
$1,127
Compensation for
auditing-related services
Total
16
170
¥122
$1,297
Compliance
The company is aware of the crucial role that compliance plays in
living up to its broad corporate social responsibilities, and that
compliance with the letter of the law is at the core of this role.
We have established a Compliance Committee, which is
headed by a corporate officer appointed by the Executive Commit-
tee, and formulated the Compliance Policy to assure strict adher-
ence to rules and regulations. General managers of divisions and
offices are appointed as Compliance Officers. They are responsible
for enforcing compliance regulations and are also required to
report to the Compliance Committee Secretariat Office in the event
of a compliance breach. The Internal Audit Office, a body that
operates independently of the company’s divisions and offices,
provides a counseling service. The Internal Audit Office undertakes
investigations of breaches and reports the results to the Compli-
ance Committee. In addition to the existing counseling service, in
fiscal 2011 we established an external compliance advisory service
desk, which we entrusted an attorney to run.
The company works to assure a proper relationship with its
independent public accountants. Compensation paid to indepen-
dent public accountants in fiscal 2012 is shown in the table above.
Internal Control system
Since the fiscal year ended March 2009, the Financial Instruments
and Exchange Act has obligated publicly listed companies to
prepare a report evaluating their internal controls over financial
reporting by management (Internal Control Reporting System) and
to have this evaluation audited by auditors outside the company.
This internal control reporting system involves management them-
selves confirming the effectiveness of the framework for disclosing
information such as appropriate and proper financial reporting
through methods that visualize and evaluate operations, and an
audit by auditors from outside the company.
Using the occasion of this system reform, MOL went beyond
the scope required of it by law, and is promoting activities to fur-
ther enhance MOL Group management effectiveness, efficiency
and transparency, namely ensuring the appropriateness of busi-
ness operations and the trustworthiness of financial reporting.
In fiscal 2012, MOL again assessed the status of the internal
controls over financial reporting and the operation thereof, confirm-
ing that there were no major flaws in the MOL Group’s internal
controls over financial reporting. Going forward, the MOL Group
will continue working to enhance its internal control system.
Independent Directors/
Corporate auditors
Due to partial amendments to the Securities Listing Regulations
that came into force in December 2009, publicly listed companies
are required to secure independent director(s)/corporate auditor(s)
from the standpoint of protecting general investors (Rule 436-2 of
the Securities Listing Regulations). An independent director/corpo-
rate auditor means an outside director or outside corporate auditor
who is unlikely to have a conflict of interest with general investors.
Independent directors/corporate auditors are expected to act to
protect the interests of general investors. For instance, they are
expected to state necessary opinions to ensure the interests of
general shareholders are taken into consideration in a situation
where a decision is made concerning business operations in the
Board of Directors or other decision-making body of a publicly
listed company.
MOL has designated its three outside directors and two outside
corporate auditors as independent directors/corporate auditors,
respectively, because there is no concern about a conflict of inter-
est with general investors in conformity with the criteria for indepen-
dent directors/corporate auditors of listed securities exchanges.
Each of these individuals plays a major role in corporate gover-
nance by checking the appropriateness of management decisions
and supervising the execution of business operations from the
shareholders’ perspective based on their experience and insight.
annual General shareholders’ Meeting
MOL aims to hold open General Shareholders’ Meetings. In addi-
tion to sending the notice of the general meeting of shareholders
out about three weeks before the meeting, MOL avoids dates
when many Japanese companies hold their annual meetings so
that as many shareholders as possible can attend.
MOL has also enabled shareholders to exercise their voting
rights by mobile phone and the Internet since the June 2006
annual meeting, in addition to postal voting, so that shareholders
who cannot attend the annual meeting can vote on proposals.
Furthermore, since the June 2006 annual meeting, MOL has used
the electronic voting platform for institutional investors so that
proxy voting rights holders can exercise voting rights. Moreover, a
summary of questions received about matters reported and pro-
posed at the annual meeting is posted on MOL’s website after the
conclusion of the meeting in the interest of fair disclosure.
accountability
MOL believes that timely, full and fair disclosure of corporate and
financial information is an important aspect of corporate gover-
nance. In addition to being accountable to shareholders and inves-
tors by providing information, the company makes every effort
possible to reflect their opinions in management.
The distinguishing feature of our investor relations activities is
that the president takes the lead in their implementation. In fiscal
2012, the president participated in the company’s presentations of
quarterly results and attended meetings with domestic and foreign
investors. This reflects his conviction that it is the chief executive
officer’s responsibility to explain future corporate strategies to
investors. The company is also aware of the need for full and fair
disclosure to all investors, whether in Japan or overseas. At the
same time its quarterly financial results in Japanese are released
over the Tokyo Stock Exchange’s TDnet, the company posts them
to its website with an accompanying English translation. The Japa-
nese and English drafts of presentation materials are also posted
on the website. This information is e-mailed on the same day to
foreign investors registered with the company.
MOL actively disseminates information about management
strategy, investment plans, market conditions and other informa-
tion through its website. In fiscal 2012, MOL revamped its website
to enhance accessibility to necessary information. The company
received the 2012 Internet IR Commendation Award from Daiwa
Investor Relations Co., Ltd.
The responsibility to provide information is not limited to
management and financial issues. MOL’s basic stance is to
quickly disclose information, even if it is negative such as infor-
mation on accidents, to all stakeholders. Furthermore, we hold
regular drills for responding to the media in emergencies and are
working to strengthen our ability to be able to quickly and prop-
erly disclose information.
MOL will continue working to raise confidence in its business
policies and management through close communication with
various stakeholders.
57
RIsk ManaGeMent
Fluctuations of Cargo volume,
Fleet supply and Freight Rates
The global shipping business, like many other industries, is greatly
affected by trends in the global economic cycle, and is thus sub-
ject to both macroeconomic risk, as well as business risk associ-
ated with trends in specific industries. There are a multitude of
factors that are subject to change, such as fluctuations in the
economies of individual countries, changes in the trade structure,
demand for freight space, market conditions, and cargo volumes.
Achieving the best performance hinges on coolly analyzing infor-
mation so as to continually increase the probability, even if only
low, of generating even higher earnings. With this in mind, MOL
has adopted a strategy of “diversifying operations to reduce risk”
and “raising highly stable profits” by aligning its fleet to match
international marine transport demand in the transport of both raw
materials and finished goods. In this way, we strive to maximize
returns and sustain profit growth.
n diversifying Operations to reduce risk
MOL operates a “full-line marine transport group.” As of the end of
March 2013, our fleet consisted of 958 vessels ranging from dry
bulkers and tankers to car carriers and containerships, capable of
transporting a diverse range of raw materials and finished goods.
Supply and demand trends fluctuate for each type of ship and
each type of cargo. While there are some factors that are closely
fLeet cOMpOsItIOn (AS OF MARCH 31, 2013)
Number of
Vessels
Deadweight
(1,000 DWT)
Dry Bulkers
404
42%
Tankers
194
20%
Dry Bulkers
34,928
51%
Tankers
19,037
28%
Others
49
5%
Containerships
115
12%
Car Carriers
127
13%
LNG Carriers
69
7%
Others
188
0%
Containerships
6,370
9%
Car Carriers
2,063
3%
LNG Carriers
5,310
8%
58
related and affect all of these segments in the same way, there are
also many factors which affect demand in each sector differently,
so the impact in one sector offsets the impact in another in many
cases. By maintaining a diverse, well-balanced assortment of
ships, MOL can take advantage of this relationship to minimize risk
and maximize return.
n raising highly stable profits through the use of Medium-
and Long-term contracts and Other Means
The company pursues medium- and long-term contracts won
based on long-standing relationships of trust with customers.
These contracts ensure a stable future cash flow that will help
reduce the risk that market fluctuations could have on its results.
International marine transportation is increasing even amid
lower exports from emerging markets to industrialized nations
because of European economic sluggishness. The company aims
to conclude contracts that are not largely affected by changes in
the external business environment and constitute a stable source
of profit. By expanding these contracts from a long-term perspec-
tive, MOL will create an even steadier earnings structure. To
achieve this objective, one of the options we will look closely at as
a matter of priority is M&As in growing sectors which enjoy a rela-
tively stable cash flow.
exchange Rate Fluctuations
Apart from some Japanese clients, with whom MOL has con-
cluded transport contracts on a yen-denominated basis, most
transactions in the international marine transport business are
concluded on a U.S. dollar-denominated basis. Since U.S. dollar-
denominated revenue exceeds U.S. dollar-denominated expenses,
when the yen strengthens against the U.S. dollar this can have a
negative impact on Group earnings. In fiscal 2013, we project that
each ¥1-per-dollar change in the yen-U.S. dollar exchange rate will
have an impact of approximately ¥2.0 billion on consolidated ordi-
nary income.
As for changes in the value of the euro, MOL’s euro-denominated
income and expenditures are roughly equivalent, as are
euro-denominated receivables and payables. Therefore, changes
in the euro-yen exchange rate have a limited impact on consoli-
dated earnings.
Interest Rate Fluctuations
MOL depends mainly on the issuance of corporate bonds and
funds borrowed from banks and other financial institutions to meet
working capital and capital expenditure requirements. Loans are
denominated in either yen or U.S. dollars, with funds procured at
variable interest rates affected by interest rate fluctuations. As of
March 31, 2013, interest-bearing debt totaled ¥1,046.8 billion, and
between 50% and 60% of that loan principal is locked in at a fixed
interest rate. As a result, an increase of 1 percentage point in inter-
est rates on both yen-denominated and U.S. dollar-denominated
interest-bearing liabilities would impact annual consolidated ordi-
nary income by approximately ¥4.5 billion. Although MOL has
benefited from ultra-low interest rates in the aftermath of the
Lehman Brothers collapse, the company is taking steps to mitigate
the risk of a future interest rate rise. It plans to flexibly adjust the
ratio of variable-rate and fixed-rate loans through interest swaps
and other means according to changes in financial conditions,
taking into consideration the balance between variable- and fixed-
rate interest.
bunker Price Fluctuations
The market price of bunker is generally linked to the price of
crude oil, and any increase in bunker prices has a negative impact
on earnings for the MOL Group. The Group operates a fleet of
approximately 960 vessels, whose annual fuel consumption
amounts to around 6 million tons of bunker. The company is able
to pass on about 50% of the risk to customers. Therefore, an
increase of US$1 per metric ton in the average annual price of
bunker would lower earnings by approximately ¥0.18 billion (net
of hedging).
The International Maritime Organization (IMO) has been con-
sidering possible measures to address the problem of sulfur oxide
and nitrogen oxide emissions generated by ships. The IMO has
already introduced restrictions up to Phase 2 mainly on the sulfur
content of bunker used by ships, and the type of electrical genera-
tors and shipboard engines that vessels use, in order to reduce
nitrogen oxide emissions. It is presently discussing the details of
Phase 3 regulations. The introduction of Phase 3 restrictions could
have an impact on fuel costs and ship costs. The company
intends to take steps over time to pass on these higher costs via
freight rate increases and higher charter fees, while watching
developments with discussions at the IMO.
averaGe bunker prIce
(US$/MT)
800
600
400
200
0
99/3
00/3
01/3
02/3
03/3
04/3
05/3
06/3
07/3
08/3
09/3
10/3
11/3
12/3
13/3
sensitivity of earnings to exchange rate/Interest rate/
bunker price fluctuations
Exchange Rate
(¥/US$)
Interest Rate (%)
A ¥1 appreciation reduces ordinary income by
approximately ¥2.0 billion
A 1 point rise in both yen- and U.S. dollar-
denominated interest-bearing debt reduces
ordinary income by approximately ¥4.5 billion
Bunker Price
(US$/MT)
A US$1/MT increase reduces ordinary income
by approximately ¥0.18 billion
vessel operations
MOL operates a fleet of approximately 960 vessels and it is there-
fore impossible to ignore the risks related to various incidents that
may occur on the high seas. In order to prevent accidents, the
company has introduced a variety of measures such as safety
standards, a safety management system, comprehensive crew
education and training, and new organizations to support safe
operations.
Furthermore, MOL has arranged sufficient insurance coverage
so that its financial results will not be materially impacted, should
the company or a third party suffer damages in the unlikely event
of an MOL-operated vessel being involved in a collision, sinking,
fire or other marine incident.
natural Disaster Risk
An earthquake or other natural disaster, or an outbreak of an infec-
tious disease (hereinafter “disaster or such like”) could affect MOL-
operated vessels, offices and facilities, as well as employees,
hampering business operations.
MOL puts the highest priority on an ensuring the safety of its
vessels and company personnel in the event of a disaster or such
like. The company has formulated a business continuity plan doc-
umenting procedures to enable it to continue providing its core
ocean transport services and quickly restore operations in the
unlikely event that they are suspended. This business continuity
plan establishes organizations and delegates authority for duties
relating to maintaining the safe operation of vessels, execution of
transportation contracts and charter agreements, financial prepa-
ration, securing required personnel and other matters. Further-
more, for some years MOL has been conducting regular
disaster-preparedness drills at Head Office and outside of the
company and other measures. By addressing issues arising from
these drills, MOL believes that it has a high state of readiness.
Nevertheless, in the event of a disaster or such like in which MOL
cannot completely avoid damage, the company’s business perfor-
mance may be affected.
59
saFe oPeRatIon
Please allow MOL to offer its sincere apologies to customers and other parties concerned for the inconvenience and anxiety caused by the
marine incident involving the MOL-operated containership mOL cOmFOrT in June 2013.
MOL has been aiming to become the world leader in safe operation and has until now implemented various measures for reinforcing
safe operation in terms of ship facilities, seafarers, ship management and our safety culture. Rigorously ensuring safe operation is of the
utmost importance for MOL. Aware that this is the starting point for earning the trust and patronage of stakeholders, MOL is working cohe-
sively as a group on safe operation as a primary management imperative.
n emergency response system
MOL continues to strengthen its systems
so that it can provide an accurate response
in the unlikely event of an emergency.
safety Operation supporting center
(sOsc)
The SOSC is staffed at all times by two
marine technical specialists, including an
experienced MOL captain, and supports
the safe navigation of MOL-operated ves-
sels around the clock 365 days a year. The
center monitors the position and move-
ment of more than 900 MOL Group-affili-
ated vessels, providing assistance from the
captain’s perspective by supplying informa-
tion on abnormal weather and tsunamis
and on piracy and terrorism incidents to
relevant personnel on the ship and land. At
the same time as serving as an information
portal supporting the safe operation of
MOL ships, the center also functions as a
help desk for urgent inquiries from ships
regarding safe operation. Since its estab-
lishment, the center has helped to steadily
reduce the number of incidents involving
adverse weather or emergency entry.
safe operation
Management
n safe Operation Management
structure
MOL has an Operational Safety Commit-
tee, which is chaired by the president of
MOL. Under this committee are the Safety
Assurance Committee and the Ship Stan-
dard Specification Committee. The Opera-
tional Safety Committee discusses and
determines basic policies and measures
for ensuring safe operation of vessels
through rigorous attention to every detail.
The Safety Operations Headquarters,
which consists of marine technical and
ship management divisions, is responsible
for implementing specific measures, with
progress overseen by the Safety Assur-
ance Committee. The Ship Standard
Specification Committee discusses and
determines MOL Safety Standards and
owned ship maintenance standards from
a fail-safe *1 perspective.
OrGanIZatIOnaL structure
suppOrtInG safe OperatIOn
executive committee
Operational safety committee
safety assurance
committee
ship standard
specification
committee
safety Operations headquarters
Safety Operation Supporting Center (SOSC)
• Marine Safety Division
• MOL Ship Management Co., Ltd.
• Tanker Safety Management Office
• MOL LNG Transport Co., Ltd.
• Dry Bulk Carrier Supervising Office
• Car Carrier Division, Marine Technical
Group
• MOL Liner Ltd., Liner Fleet Supervising
and Marine Operation
accident response drills
MOL regularly conducts accident
response drills that simulate various situa-
tions such as an on-board fire or water
immersion, or act of piracy or terrorism,
so that seafarers can respond swiftly and
appropriately in an emergency. Head
Office conducts accident response drills
twice a year with the cooperation of the
Regional Coast Guard Headquarters. The
drills involve MOL’s president, other cor-
porate officers, representatives of relevant
60
Evacuation drill
departments and ship management com-
panies, and vessels. Furthermore, MOL
Group companies that operate ferries and
cruise ships conduct emergency response
drills, including evacuation guidance, on a
regular basis, as they put the highest prior-
ity on ensuring customer safety in an emer-
gency. In July 2013, MOL Ferry Co., Ltd.
held an evacuation drill on-board a ferry
berthed at Oarai Port. This marked the first
time in Japan that ordinary customers
participated in an evacuation drill.
safe operation Measures
Efforts to ensure safe operation will never
end. True to this statement, MOL continues
to implement measures in fiscal 2013.
n Making processes for realizing safe
Operation visible
MOL has introduced
objective numerical
indicators for mea-
suring safety levels,
and also set the
following numerical
targets, including the
Four Zeroes.
1. Four Zeroes (an unblemished record
in terms of serious marine incidents,
oil pollution, fatal accidents and
cargo damage)
2. LTIF *2 (Lost Time Injury Frequency):
0.25 or below
3. Operational stoppage time *3:
24 hours/ship or below
4. Operational stoppage accident rate *4:
1.0/ship or below
n breaking the chain of errors
We continue to make improvements
related to both seafarer training and ship
facilities to break the chain of errors in
which minor factors combine and ulti-
mately lead to major maritime accidents.
In terms of seafarer training, we are
reinforcing our OJT Instructor System *5
on-board ships, and enhancing land-based
education and training curriculums and
programs such as “Hazard experience”
training sessions. These measures are
geared towards enhancing the ability of
seafarers to perceive danger. In addition,
we are working to raise safety awareness
among seafarers by collecting information
from each vessel in operation on examples
of incidents and problems as well as close
calls *6 and by using videos, photos and
illustrations to appeal to the visual sense of
seafarers. In terms of ship facilities, we are
working to equip ships with error-resistant
equipment. This involves promoting the
fail-safe design concept by providing
shipyards and equipment manufacturers
with feedback from vessels in operation on
areas of non- conformance and areas in
need of improvement.
LOst tIMe InJury frequency
(LtIf)
1.8
1.5
1.2
0.9
0.6
0.3
0
2012 average for all
industries: 1.59
MOL target:
0.25 or below
0.39
0.42
0.38
0.31
0.24
2008
2009
2010
2011
2012
OperatIOnaL stOppaGe
accIdents averaGe tIMe and
frequency
(Hour/ship)
(Number of accidents/ship)
40
30
20
10
0
35.35
22.96
1.04
22.59
19.82
19.04
0.83
0.64
0.66
Operational stoppage
accident rate target:
1.00 or below
0.40
2008
2009
2010
2011
2012
2.0
1.5
1.0
0.5
0
Average operational stoppage time (hour/ship)
(left scale)
Operational stoppage accident rate (accidents/ship)
(right scale)
In fiscal 2013, MOL will work on three
important targets: (1) eradicate work-
related accidents causing injury or death,
(2) eradicate collisions and groundings,
and (3) eradicate machinery trouble result-
ing in a dead ship condition (a ship being
unable to move under its own power).
On-the-job Training (OJT) Instructor System
From the standpoint of protecting
seafarers, it is the MOL Group’s ultimate
goal to eradicate work-related accidents
causing death. MOL analyzes the factors
and causes behind accidents from various
angles and uses the results to make
improvements in ship facilities. It also asks
employees on land and at sea to discuss
examples of serious incidents and prob-
lems “as if they are their problem” and to
propose preventive measures as part of
efforts to prevent accidents.
n cooperation for safe Operation
The MOL Group works together with ves-
sels, shipowners, and ship management
companies to ensure the safe operation of
all owned and chartered vessels by sharing
safety-related information. MOL conducts
“Safety Operation Meetings” and “Safety
Campaigns” involving vessels, shipowners
and ship management companies to
deepen understanding of its safety stan-
dards and to discuss safety improvements.
MOL also inspects vessels to check
whether its safety standards are under-
stood well and put into effect. If there is a
need to make improvements, MOL will
take corrective actions, communicating
with the vessel, shipowner and ship man-
agement company in the process.
Glossary
*1 fail-safe: Equipment and systems are designed to
operate safely at all times, even when trouble occurs
due to operator error or malfunction.
*2 LtIf: Number of work-related accidents per one
million hours worked that resulted in time lost from
work of one day or more. Average for all industries
(2012) was 1.59; for shipping industry, 1.39; for
shipbuilding and repair, 0.77. (Source: 2012 Survey on
Industrial Accidents issued by the Ministry of Health,
Labour and Welfare)
*3 Operational stoppage time: Expresses the amount
of ship operational stoppage time due to an accident
per ship per year.
*4 Operational stoppage accident rate: Expresses
the number of accidents that result in ship operational
stoppage per ship per year.
*5 OJt instructor system: This system involves
experienced captains and chief engineers who
understand MOL standards of safe operations
travelling onboard ships to identify unsafe practices
and latent risks only discoverable on the ships in
service and order immediate improvements.
*6 close calls: Risky incidents that came very close to
causing a more serious accident.
MOL COMFORT Marine Incident
On June 17, 2013, mOL cOmFOrT (an 8000-TEU type containership built in 2008) suffered a crack amidships during inclement weather while
under way from Singapore to Jeddah, Saudi Arabia, in the Indian Ocean. This made it impossible for the vessel to continue on under its own
power. Subsequently, the vessel fractured into two parts and MOL organized to tow the vessel to rescue the cargo and hull. On June 27, how-
ever, the aft part of the containership sank. On July 6, a fire broke out on the fore part while being towed and this section later sank on July 11
with firefighting efforts hampered by adverse weather. As of the end of July 2013, no large-volume leakage of fuel oil and other oil due to this
incident had been confirmed. All crew members were safely rescued.
Since directly after the incident, MOL has been continuing a thorough investigation to find the cause with the cooperation of the shipbuilder,
the classification society and other parties. Because it may take some time to identify the cause of the incident, the company decided to take
extra preventive measures for six sister vessels operated by MOL, including strengthening hull structures.
61
CoRPoRate soCIaL ResPonsIbILIty (CsR)
MoL’s approach to CsR
In our view, CSR means conducting
business management that adequately
takes into account laws and regulations,
social norms, safety and environmental
issues, human rights and other consider-
ations, and developing together with
society sustainably and harmoniously
while earning the support and trust of
stakeholders, including shareholders,
customers, business partners, employees
and local communities.
csr OvervIew
Raise corporate value, contribute to
stakeholders, help solve social issues and
contribute to society’s sustainable growth
trust of
stakeholders
support of
stakeholders
business activities
csr activities
Safe operation; environmental measures;
compliance; corporate governance; risk
management; accountability; fair trading;
respect for human rights; employment,
labor, occupational health and safety,
health management and employee
satisfaction; social contribution activities
MOL Group corporate principles
The CSR and Environment Committee
was established in June 2004 by reorga-
nizing the former Environment Committee.
This committee works to promote CSR
throughout the MOL Group by setting and
reviewing annual targets for initiatives
related to compliance, corporate gover-
nance, accountability, risk management,
safe operation, human rights, care for
employees and seafarers, social contribu-
tions and the environment.
the MoL Group basic
Procurement Policy
As a company that handles part of the
supply chain of customers and in order
to fulfill the social responsibility of the
MOL Group itself, we formulated the
MOL Group Basic Procurement Policy in
2012. This clearly documents our CSR
activity policy regarding the Group’s
procurement activities. To embed this
policy in the MOL Group, we work to
observe laws and regulations in supply
chains and social norms, incorporate
consideration for environmental protec-
tion in our activities, pursue safety,
engage in fair trading and build trust,
with the understanding and cooperation
of business partners. In this way, we aim
to contribute towards the realization of
sustainable societies together.
In order to fulfill these responsibilities,
MOL deliberates on CSR-related policies
and measures, primarily through the three
committees under the Executive
Committee.
OrGanIZatIOnaL fraMewOrk fOr csr InItIatIves
CSR and Environment Committee
Chief Executive Officer
(President)
Executive Committee
Operational Safety Committee
Compliance Committee
the MOL GrOup basIc
prOcureMent pOLIcy
the MoL Group procures goods and/or
services in accordance with the following
basic policy:
1. We comply with applicable laws, regula-
tions and social norms, and pay due con-
sideration to the protection of the
environment.
2. We procure goods and/or services, includ-
ing the delivery or execution of such goods
and/or services, that meet high safety
standards.
3. We conduct fair trade, and endeavor to
establish trusting relationships with
contractors.
We work to make sure that our contractors
understand our basic Procurement Policy,
with the aim of contributing towards the
realization of sustainable societies together.
Participating in the un
Global Compact
CSR activities are
broad and, from
time to time, the
strength and priority
of those activities
change depending
on the operating
environment, global
circumstances and
region where business is being developed.
With business activities spread across the
globe, MOL believes that building good
relationships with various stakeholders
worldwide and contributing to the realization
of sustainable growth of society are vital as
it seeks to realize the ideas set forth in the
MOL Group Corporate Principles. In order
to contribute to an international framework
for realizing these goals, MOL became the
first Japanese shipping company to partici-
pate in the United Nations (UN) Global Com-
pact in 2005. Since then, MOL has worked
to support and practice the 10 principles in
4 areas of the UN Global Compact, which
shares the same values as MOL’s Rules of
Conduct, which were established as a set of
guidelines for executives and employees.
62
n 10 principles of the Global compact
human Rights
PRInCIPLe 1. business should support and
respect the protection of interna-
tionally proclaimed human rights;
and
PRInCIPLe 2. Make sure that they are not
complicit in human rights abuses.
Labour
PRInCIPLe 3. businesses should uphold the
freedom of association and the
effective recognition of the right
to collective bargaining;
PRInCIPLe 4. the elimination of all forms of
forced and compulsory labour;
PRInCIPLe 5. the effective abolition of child
labour; and
PRInCIPLe 6. the elimination of discrimination
in respect of employment and
occupation.
environment
PRInCIPLe 7. businesses should support a
precautionary approach to envi-
ronmental challenges;
PRInCIPLe 8. undertake initiatives to promote
greater environmental responsi-
bility; and
PRInCIPLe 9. encourage the development and
diffusion of environmentally
friendly technologies.
anti-Corruption
PRInCIPLe 10. businesses should work against
corruption in all its forms,
including extortion and bribery.
human Rights
MOL aims to be an organization that
respects human rights and is rich in diver-
sity. To this end, MOL sees human rights
education as a core and important activity.
While there are many issues surrounding
the subject of human rights, MOL aims to
foster a workplace environment where all
corporate officers and employees share an
understanding of the need for mutual
respect and can carry out their work with
a positive frame of mind. These efforts are
designed to eliminate human rights
breaches or discrimination caused by
mistaken beliefs founded on baseless
biases or delusions.
n basic stance
MOL works to raise and entrench human
rights awareness throughout the whole
Group by ensuring awareness of the prin-
ciples of important international human
rights regulations such as the International
Covenants on Human Rights. As one
effort, MOL is participating in the UN
Global Compact and is supporting and
practicing universal principles regarding
human rights and labor. Furthermore,
MOL’s Rules of Conduct state that the
company will respect human rights and
will not engage in discrimination and
harassment.
n educational activities
Every year, MOL conducts training based
on various human rights themes by posi-
tion, including new employees. In addi-
tion, the company disseminates
information about human rights through
its intranet to increase employee familiarity
with the subject.
MOL is also an active member of a
human rights awareness group. Insights
obtained about human rights are reflected
in internal training, and MOL collects
“Human Rights Slogans” from MOL and
MOL Group employees and their families
and gives internal awards to the best
entries.
environmental Protection
n environmental Management
systems and certifications
MOL has two unique environmental man-
agement systems—MOL EMS21 and the
MOL Group Environmental Target System.
Through these systems we have taken
steps to reduce our environmental burden.
MOL EMS21: We introduced our environ-
mental management system—MOL
EMS21—in April 2001. In January 2003,
we expanded its scope to all our operated
vessels (except charter vessels on con-
tracts of one year or less), and acquired
internationally recognized ISO 14001
certification.
Certificate of ISO 14001, an international standard
for environmental management (Certified by DET
NORSKE VERITAS (DNV))
MOL Group Environmental Target
System: This system applies to MOL’s 53
main Group companies in Japan and 17
overseas affiliates and subsidiaries. It
serves as a framework for Group-wide
environmental protection activities. MOL
Group companies in Japan are working
hard on complying with the “green man-
agement” environmental certification
system promoted by the Japanese Minis-
try of Land, Infrastructure, Transport and
Tourism. A total of 14 MOL Group compa-
nies have earned this certification.
n prevention of Global warming and
air pollution
Although shipping is a more energy effi-
cient mode than other modes of transport,
vessels burn fossil fuels and inevitably emit
carbon dioxide (CO2), which is a cause of
global warming, as well as nitrogen oxide
(NOx), sulfur oxide (SOx), soot and other
emissions, which are linked to acid rain
and atmospheric pollution. The MOL
Group is fully aware of the effects on air
quality associated with its business activi-
ties and thus proactively works to reduce
the impact on an ongoing basis.
Environmental Technologies: MOL is
engaged in various research, development
and innovation of technologies for ships.
(Please refer to our website at the follow-
ing URL: http://www.mol.co.jp/ishin/en/)
63
roofs of the gate building, where trailer
trucks enter and exit the terminal, and the
vehicle wash building.
In fiscal 2012, this system generated
approximately 236,000 kWh of power,
which covered about 37% of the power
needs for the control building. In addition,
Utoc Corporation and Shosen Koun Co.,
Ltd. have also introduced hybrid transfer
cranes at their container terminals in Tokyo
and Kobe, respectively. These cranes
consume approximately 40% less fuel
than conventional ones.
n approaches to Marine environmen-
tal and biodiversity protection
By rigorously ensuring safe operation,
MOL is working to prevent marine pollu-
tion caused by marine accidents. At the
same time, MOL is taking into consider-
ation biodiversity and actively pushing
ahead with measures to protect the seas
and oceans, which are not only our place
of business, but also the shared heritage
of everyone on Earth.
Double-hull Tankers: We have been
adopting double-hull vessels in our tanker
fleet to prevent spills of crude oil, petro-
leum products and chemicals caused by a
grounding or collision of vessels. As a
result, our fleet of tankers is 100%
double-hulled.
Reducing NOx/SOx/Soot/Smoke and
Dust: MOL controls NOx emissions
through the installation of electronically
controlled engines. Regarding SOx, MOL
has set a standard of using bunker oil with
a maximum sulfur content below the cur-
rent 3.5% for general sea areas in the
MARPOL Convention. In respect of soot
contained in ship exhaust gases, MOL
teamed up with Akasaka Diesels Limited
to develop a diesel particulate filter (DPF).
This DPF has been trialed aboard an MOL
Group-operated coastal ferry, where it was
shown to remove more than 80% of par-
ticulate matter from diesel emissions.
Modal Shift: Approximately 20% of
Japan’s CO2 emissions are accounted for
by the transportation sector. In order to
reduce these emissions, the Japanese
Ministry of Land, Infrastructure, Transport
and Tourism and other concerned agen-
cies have set up programs to establish a
transportation system with a low environ-
mental burden and have promoted the
so-called “modal shift” of using rail trans-
port, shipping and other low-impact modes
of transport. The MOL Group stands ready
to do its utmost to facilitate this modal shift
by providing Japan’s largest lineup of ferry
and coastal shipping services.
Eco Terminal: MOL and MOL Group
company Utoc Corporation installed one
of the largest solar power generation
systems in Tokyo at the Tokyo Interna-
tional Container Terminal. The system
generates 200 kW of power. In 2007,
1,200 solar panels were installed on the
Double-hull structure
Tokyo International Container Terminal
Increasing Transportation Efficiency
with Larger Ships and Improved
Propulsion: MOL believes that the intro-
duction of larger vessels and improve-
ment of propulsion are effective measures
to fulfill the social responsibility of the
shipping industry to meet burgeoning
international demand for ocean shipping
and, at the same time, to prevent global
warming. With this in mind, MOL is con-
ducting research and applying those
results to vessels.
The iron ore carrier BraSiL maru
ECO SAILING Thoroughly Adopted:
MOL practices an approach we call ECO
SAILING to save fuel and reduce environ-
mental impact. We rigorously apply the
principles of ECO SAILING whenever we
operate vessels. Specifically, we 1) decel-
erate to the most economical navigation
speeds, 2) take advantage of weather
and sea condition forecasts, 3) take the
optimum trim, 4) select optimum routes,
5) reduce vessels’ wetted surfaces, 6) opti-
mize operation and maintenance of main
engines, auxiliary equipment and other
machinery, 7) develop energy efficient ship
designs, and 8) equip vessels with Propel-
ler Boss Cap Fins (PBCF*).
* PBCF: PBCF
efficiently recovers
energy loss from the
hub vortex generated
behind a ship’s
propeller. This is an
MOL proprietary
technology that uses
the same number of
fins attached to the
rear end of the
propeller shaft.
64
Caring for the Environment When
Scrapping Vessels: Aging vessels must
often be scrapped in the interest of safe
operation and protection of the marine
environment. However, measures for
workers’ safety and the environment have
been insufficient when scrapping ships in
some Asian countries. MOL is working to
create inventory lists of hazardous materi-
als on ships, ahead of the enforcement of
the Hong Kong International Convention
for the Safe and Environmentally Sound
Recycling of Ships which was adopted in
May 2009. Efforts are led by a task force
made up of related divisions in the com-
pany that was established in 2010. At the
same time, when selling a ship on the
assumption that it will be scrapped, we
check that the scrapping yard has
acquired ISO 14001 certification (or the
environmental management equivalent),
and uses scrapping methods and proce-
dures that are sufficiently safe for the
environment and personnel.
Responding to Ballast Water
Management Convention: Ballast water
is discharged when cargo is loaded. It
may have an impact on local ecosystems
by introducing foreign marine organisms
from another location as well as the pres-
ervation and sustainable use of biodiver-
sity. This potential cross-border
transportation of foreign marine organisms
in ballast water has been highlighted as an
international issue since the late 1980s. As
a result, the Ballast Water Management
Convention was adopted by the IMO in
2004, and work is proceeding on ratifica-
tion ahead of enforcement. We have
developed a ballast water purification
system and conducted on-board demon-
strations in cooperation with manufactur-
ers and other concerned parties.
In addition, care is exercised to
reduce the impact of normal operation of
our vessels on the oceans. MOL strictly
adheres to all marine pollution treaties,
including the International Convention for
the Prevention of Pollution from Ships
(MARPOL Convention), as well as applica-
ble laws and regulations around the
world. The company has stringent internal
rules to prevent oil discharges and to
ensure the proper disposal of lubricating
oil and bilge water (which includes oil and
other pollutants) to protect the marine
environment. Regarding anti-fouling ship
bottom paints, MOL has switched to
tin-free paints. These are just part of our
efforts to help protect biodiversity.
social Contribution
activities
MOL aims to be a company that grows
sustainably and harmoniously with society.
We therefore carefully consider social
issues to tackle, and work to help solve
them based on the following three princi-
ples. Guided by these principles, we pro-
actively undertake social contribution
activities that only a shipping company
with a global network can.
I.
Contribute to the UN Millennium
Development Goals* as a company
growing in step with the global econ-
omy and social development.
Contribute to protecting biodiversity
and preserving nature as a company
that impacts the environment to an
extent and as a company that does
business on the ocean, a rich reposi-
tory of living organisms.
II.
III. Contribute to local communities as a
good corporate citizen.
* The Millennium Development Goals consist of
specific numerical targets to be achieved by 2015
in eight fields, including “achieve universal primary
education” and “reduce child mortality.”
n somalia support project
Frequent incidents of piracy in the Indian
Ocean off Somalia pose a serious threat to
global shipping. MOL and six other com-
panies* reached an agreement to jointly
address the need to stabilize Somalia.
They announced plans to provide US$1
million in funding to the Somalia Support
Project, run by the United Nations
Development Programme (UNDP).
Saudi
Arabia
Persian Gulf
Gulf of
Aden
Arabian Sea
Somalia
Piracy-prone Area
Indian Ocean
This industry contribution will support
long-term job creation and skill develop-
ment for the younger generation in
Somalia. By creating opportunities for
stable employment, the program will
contribute to safe operation in the seas
off Somalia.
* Shell, BP, Maersk, Stena, Nippon Yusen Kabushiki
Kaisha (NYK), Kawasaki Kisen Kaisha, Ltd. (K Line)
and MOL
n daycare center Opened in the
philippines
In November 2012, MOL opened a day-
care center in Navotas in the Philippines.
This facility will provide education for
pre-school children, health checkups,
meals for underprivileged people, and
other services. This program was
launched based on a proposal from
Philippines-based company Magsaysay
MOL Marine, Inc., following the collection
of “Social Contribution Activity Proposals”
from MOL Group companies in fiscal
2010. More than half of MOL’s seafarers
come from the Philippines, and we believe
that this daycare center will deepen ties
with the country.
65
third-Party evaluations
n MOL selected for continuing Inclu-
sion in dow Jones sustainability
Indexes (dJsI)
Since 2003, MOL has been included in the
DJSI, a designation reserved for compa-
nies capable of sustaining growth over the
long term while maintaining excellence in
environmental, social, and investor rela-
tions programs. In September 2012, MOL
was selected for continuing inclusion in
the DJSI.
n MOL selected for continuing Inclu-
sion in the ftse4Good Global Index
FTSE is a global index company owned by
the London Stock Exchange. Since 2003,
FTSE has included MOL in one of its major
indices, the FTSE4Good Global Index,
which is a socially responsible investment
index. In April 2013, MOL was selected for
continuing inclusion in the index.
n MOL selected for continuing
Inclusion in the Morningstar socially
responsible Investment Index
(Ms-srI)
The MS-SRI, Japan’s first socially responsible
investment index, is based on the stock
prices of 150 of Japan’s listed companies
that have been selected by Morningstar
Japan K.K. for superior social responsibility.
MOL has been included in the MS-SRI since
2003. In January 2013, MOL was selected
for continuing inclusion in the index.
environmental and social Report
MOL’s approach to CSR and environmental issues is discussed in detail in our
Environmental and Social Report.
urL: http://www.mol.co.jp/csr-e/
MoL’s environmental technologies
Senpaku iSHiN
With business activities spread across the globe, protecting the
global environment is included as one of MOL’s top priorities, along-
side safe operation, in the MOL Group Corporate Principles. The
Senpaku iSHiN project, our concept for next-generation vessels
launched in September 2009, is a ground-breaking initiative that
helps protect the environment in a substantive way by reducing
carbon dioxide emissions using feasible technologies. Previously,
MOL announced concepts for iSHiN-i, iSHiN-ii and iSHiN-iii as a
series of next-generation vessels.
In June 2012, MOL took delivery of the emeraLd ace, a new car
carrier equipped with a hybrid electric power supply system, taking a
major step toward realizing the company’s iSHiN-i image of future
car carriers. MOL will continue to work actively to develop technolo-
gies for reducing the environmental burden of ships and operations.
Other next-Generation vessels
ISHIN-II
ferry that uses LnG as fuel
features
• Use of LNG as fuel: By using
liquefied natural gas (LNG) as fuel,
the vessel has cleaner exhaust
gases and greatly reduces CO2
emissions.
• Use of shore power supply
system: While in port and at berth,
the ship uses electricity supplied
from shore and rechargeable
batteries to achieve zero emissions
• Emphasis on comfort
• CO2 reduction: 50%
ISHIN-I
hybrid car carrier EMERALD ACE was delivered
ISHIN-III
very Large Ore carrier with high-efficiency waste heat
energy recovery system
features
• Waste heat energy recovery to
assist propulsion
• Employs technologies to reduce
CO2 emissions even at low
speeds, as well as during normal
operation
• CO2 reduction: 30%
details of the component technologies can be found on the Senpaku ISHIN section of MOL’s website
http://www.mol.co.jp/ishin/en/
66
Financial section
Contents
68 ManaGeMent’s DIsCussIon anD anaLysIs
72 11-yeaR suMMaRy
74 ConsoLIDateD baLanCe sheets
76 ConsoLIDateD stateMents oF oPeRatIons anD
ConsoLIDateD stateMents oF CoMPRehensIve InCoMe
77 ConsoLIDateD stateMents oF ChanGes In net assets
78 ConsoLIDateD stateMents oF Cash FLoWs
79 notes to ConsoLIDateD FInanCIaL stateMents
105 InDePenDent auDItoR’s RePoRt
67
ManaGeMent’s DIsCussIon anD anaLysIs
MasahIrO tanabe
Managing Executive Officer
Continuing to Invest in Promising Projects While strengthening
our Financial base in a Difficult business environment
In fiscal 2011, MOL had to contend with a drop in cargo demand caused by the Great East Japan Earth-
quake, the flooding in Thailand and other factors. In fiscal 2012, the operating environment remained just
as difficult as ever for the maritime transport industry but for different reasons. While there were no acts
of nature that severely impacted cargo demand in fiscal 2012, the industry faced macroeconomic head-
winds in the form of the persistent European sovereign debt problem, and the strong yen, which hit ¥75
to the U.S. dollar at one point. In addition, a supply glut of vessels depressed market conditions further.
Compared to other Japanese marine transport companies, MOL has a high free vessel *1 ratio in its
*1 free vessel: So-called free
dry bulker and tanker fleets. As a result, MOL was hit hard by the slump in market conditions in fiscal
2012, posting a consolidated ordinary loss of ¥28.5 billion, even larger than the ¥24.3 billion loss in fiscal
2011, which had been the largest ever loss since the company’s founding.
Under these circumstances, MOL moved to overhaul the dry bulkers business, one of the main rea-
sons for the loss. MOL executed Business Structural Reforms (BSR) that entailed moving the sales and
operations bases of free vessels to Singapore, a hub for the dry bulker business and for cargo owners
and marine transport-related companies. This caused MOL to record ¥101.5 billion in extraordinary
losses, mainly for losses on the assignment of charter contracts to Singapore subsidiaries. As a result of
reversing deferred tax assets simultaneously, MOL recorded a large consolidated net loss of ¥178.8
billion for fiscal 2012.
To our regret, MOL recorded huge losses in fiscal 2011 and 2012, causing considerable concern to
shareholders. However, free dry bulker vessels, which were the main cause of these losses and for which
we executed the BSR, were also a main driving force for the company’s rapid growth in the past, con-
tributing handsomely to the build-up of shareholders’ equity, the robust financial base which made the
reforms possible.
Even amid the difficult operating environment, MOL chalked up some noteworthy achievements, which
will contribute steadily to highly stable profits going forward. For instance, MOL secured new long-term
contracts regarding six LNG carriers for China Petroleum & Chemical Corporation, known as “SINOPEC”
following the fixture of four LNG carriers for the Papua New Guinea/Australia–China LNG Project (PNG/
Australia LNG Project) *2 led by ExxonMobil. And MOL successively secured long-term contracts for five
vessels with Japanese electricity and gas utilities, including for two vessels signed in fiscal 2013. Another
highlight concerns FPSO *3 in offshore businesses, which MOL entered for the first time in 2010; MOL was
chosen to take part in its third FPSO project in fiscal 2012. Importantly, MOL has clear prospects on fundrais-
ing for these projects, using project finance *4 or corporate finance *5 depending on the nature of the project.
Although correction of the yen’s excessive appreciation has brightened the operating environment for
the Japanese marine transport industry, MOL expects the recent challenging conditions to linger in fiscal
2013, with the supply glut of vessels looking set to weigh on the industry for the time being. Even under
such circumstances, we expect the dry bulker fleet, which has now regained its cost competitiveness
thanks to the BSR, to contribute to our earnings. With these and other earnings, MOL is determined to
work to improve its financial position, which was hurt in fiscal 2011 and fiscal 2012, while surmounting
the difficult conditions without neglecting to make investments for the future.
68
vessels comprise ships contracted
at spot rates or on contracts of
less than one year. As a result,
these vessels are exposed to
changing market conditions.
*2 pnG/australia LnG project:
This project is a joint venture
between MOL and Chinese
partners, to transport LNG from
Papua New Guinea and Australia
to China under long-term con-
tracts. MOL has ordered four new
LNG carriers from Hudong to be
used in this project, and the first
completed vessel is due to be
delivered in early 2015.
*3 fpsO: Floating Production,
Storage and Offloading System
*4 project finance: A method of
raising funds, based on projected
cash flows from a project, and
using a ship as collateral, without
the necessity for MOL as a
shareholder to guarantee the
obligation. This type of financial
arrangement does not affect the
company’s fundraising capability.
*5 corporate finance: A method of
raising funds where the funds for
repaying borrowings are based on
the business profits of MOL as a
shareholder, and MOL guarantees
the obligation.
Cash Flows and Financial Indicators
MOL generated only ¥5.0 billion in operating cash flows in fiscal 2011, but these recovered to ¥78.9 billion
in fiscal 2012, partly reflecting a decrease in income tax payments. On the other hand, investing activities
used net cash of ¥104.2 billion, ¥30.0 billion less than in fiscal 2011. This meant that free cash flows *6 in
fiscal 2012 were negative ¥25.2 billion. During fiscal 2012, MOL actively raised funds, including issuing
domestic straight bonds totaling ¥55.0 billion *7, in order to intentionally build up cash on hand to be
prepared for any unexpected difficulties in the market for raising funds due to the protracted slump in
shipping market conditions and the drawn-out European sovereign debt problem. As a result, as of March
31, 2013, interest-bearing debt totaled ¥1,046.8 billion, ¥177.2 billion more than at March 31, 2012.
On the other hand, shareholders’ equity dropped sharply because of the ¥178.8 billion net loss,
which dragged the equity ratio, once an indicator where MOL surpassed other Japanese shipping com-
panies, down to 25%. Additionally, the gearing ratio *8 worsened to 196%. As was mentioned earlier,
this partly reflected MOL’s intentional raising of more funds than needed in fiscal 2012. Net interest-
bearing debt, interest-bearing debt less cash and cash equivalents, rose by ¥59.4 billion to ¥846.2
billion, meaning the net gearing ratio *9 only increased to 158%.
In terms of investing cash flows in fiscal 2013, MOL expects investments in traditional types of ves-
sels, such as dry bulkers, tankers, car carriers, and containerships, to be limited to around half the
amount invested at the peak. However, MOL still projects that investing activities in fiscal 2013 will use
net cash of ¥165.0 billion, ¥60.0 billion more than in fiscal 2012, due to the demand for funds while
FPSO and LNG carriers to be delivered from fiscal 2015 are built, as well as due to instantaneous invest-
ments not seen in normal years, namely, investments by our subsidiary Daibiru in the construction of new
buildings, and investments in overseas container terminals. The funds for these investments will be
raised through off-balance sheet techniques where possible, as MOL works to prevent an unnecessary
increase in interest-bearing debt.
*6 free cash flows: Operating cash
flows – Investing cash flows
*7 domestic straight bonds
totaling ¥55.0 billion: MOL ¥45.0
billion and Daibiru Corporation
¥10.0 billion
*8 Gearing ratio: Interest-bearing
debt / Shareholders’ equity
*9 net gearing ratio: (Interest-
bearing debt – cash and cash
equivalents) / Shareholders’ equity
Cash Management, Financial Ratings and Fund-Raising
MOL’s financial indicators, namely the gear-
credIt ratInGs (As of July 2013)
ing ratio and equity ratio, worsened as a
result of the company’s lackluster perfor-
mance and it was downgraded by credit
rating agencies, losing its much-prized
JCR
R&I
status as having the highest ratings within
Moody’s
the marine transport industry.
Credit Ratings
A
A–
Baa3
MOL has for many years exchanged information with credit rating agencies. In order to prevent fur-
ther ratings downgrades, in addition to using off-balance sheet financing and project finance, MOL
intends to divest some idle assets and investment securities, something it has not actively done in the
past, considering the ongoing recovery in real estate and stock markets, while also focusing on improv-
ing its financial position by building up earnings. That said, MOL is also determined to conduct financial
management so there are no restrictions in terms of its financial position on making investments that are
necessary for expanding highly stable profits derived from medium- to long-term contracts. These invest-
ments will not be limited to the offshore businesses and the LNG carrier business. Because MOL holds
much more cash and cash equivalents than it would have in a typical year, in fiscal 2013, the company
plans to use this cash on hand in combination with normal borrowing and bond issuance to cover fund-
ing needs, rather than use capital fund-raising, as long as there is no large demand for funds for large-
scale M&As or investments in new fields.
MOL will also continue enhancing its cash management system in Japan and overseas in fiscal
2013. MOL is striving for even greater capital efficiency so that surplus funds do not accumulate at local
subsidiaries, including in Singapore where MOL transferred the bulk carrier business, and the
Netherlands where finance subsidiaries are headquartered.
69
MOL straIGht bOnd Issuance (As of the end of March 2013)
Straight bonds No. 10
Straight bonds No. 11
Straight bonds No. 12
Straight bonds No. 13
Straight bonds No. 14
Straight bonds No. 15
Straight bonds No. 16
Straight bonds No. 17
Straight bonds No. 18
Date of Issue
Years
Interest Rate
Total Amount of Issue
Outstanding
2008.12.19
2009.5.27
2009.5.27
2009.12.17
2011.6.21
2011.6.21
2012.7.12
2012.7.12
2012.7.12
5
5
10
7
5
10
3
5
10
1.43%
1.28%
2.00%
1.11%
0.57%
1.36%
0.30%
0.46%
1.14%
¥15.0 billion
¥15.0 billion
¥30.0 billion
¥30.0 billion
¥20.0 billion
¥18.5 billion
¥20.0 billion
¥20.0 billion
¥10.0 billion
¥10.0 billion
¥20.0 billion
¥20.0 billion
¥15.0 billion
¥15.0 billion
¥20.0 billion
¥20.0 billion
¥10.0 billion
¥10.0 billion
Pension Management Policy and Response to new Pension
accounting
In fiscal 2010, MOL shifted to a defined benefit corporate pension plan and lowered the assumed rate of
interest to 2.0%. Along with this move, MOL changed its policy from investing in four traditional asset
classes to investing mainly in bonds which pay comparatively stable returns.
Regarding pension accounting changes, from fiscal 2013, MOL will be required to immediately rec-
ognize on the balance sheet unrecognized actuarial differences *10 that have been off the balance sheet
until now, due to revisions to accounting standards for retirement benefits. The MOL Group’s unrecog-
nized actuarial differences at the end of fiscal 2012 were ¥0.7 billion on a consolidated basis, so this
would have had only a negligible impact on shareholders’ equity. Furthermore, the ratio of plan assets to
pension liabilities on a consolidated basis at the end of fiscal 2012 saw a ¥3.4 billion excess, meaning
MOL has a sound position.
tonnage tax system
The “tonnage tax” system is a standardized tax system that is utilized in the global marine transport
industry. Japanese companies were able to apply the system from fiscal 2009, which MOL has duly
done. However, because the system applies only to Japanese-flagged vessels, meaning there are
restrictions, MOL and other Japanese shipping companies have urged the government through the
Japanese Shipowners’ Association to create a more flexible system similar to foreign countries. As a
result, from fiscal 2013, the system will be extended to include some foreign-flagged vessels. MOL has
obtained certification for applying this new system and will do so from fiscal 2013. As of March 31, 2013,
MOL had 36 ships to which the system applied and plans to progressively increase the number of eligi-
ble vessels going forward.
MOL will work to improve cash flows by applying this tax system and at the same time continue to
urge the government on a number of fronts to make the system even more flexible.
*10 unrecognized actuarial
differences: The difference
between the expected return on
plan assets and the actual
return, and the difference arising
from divergence between
actuarial assumptions and
actual results when calculating
retirement benefit obligations,
are defined as actuarial differ-
ences. These differences are
amortized over a certain number
of years and recognized as
expenses (or income). The
portion still to be recognized as
an expense (or income) of these
actuarial differences is what is
called unrecognized actuarial
differences. Until now, these
have not been recognized on
the balance sheet.
70
OrdInary IncOMe (LOss)/net IncOMe (LOss)
(¥ billions)
cash fLOws
(¥ billions)
300
200
100
0
–100
–200
08/3
09/3
10/3
11/3
12/3
13/3
300
150
0
–150
–300
08/3
09/3
10/3
11/3
12/3
13/3
Ordinary Income (Loss)
Net Income (Loss)
Cash flows from operating activities
Cash flows from investing activities
Free cash flows
Interest-bearInG debt/sharehOLders’ equIty
(¥ billions)
GearInG ratIO/equIty ratIO
(%)
1,200
1,000
800
600
400
200
0
08/3
09/3
10/3
11/3
12/3
13/3
200
150
100
50
0
08/3
09/3
10/3
11/3
12/3
13/3
Interest-bearing Debt
Shareholders’ Equity*
* “Shareholders’ equity” in this section com-
prises the total of owners’ equity and accu-
mulated other comprehensive income (loss).
Gearing ratio (left scale)
Equity ratio (right scale)
capItaL expendIture*
(¥ billions)
300
200
100
0
08/3
09/3
10/3
11/3
12/3
13/3
* Capital expenditure is the actual amount calculated by deducting proceeds from the sale
of vessels when delivered from “Tangible/intangible fixed assets increased” contained in
the annual securities report.
40
35
30
25
20
71
11-year Summary
Mitsui O.S.K. Lines, Ltd. Years ended March 31
For the year:
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
Millions of yen
Shipping and other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,509,194
¥1,435,221
¥1,543,661
¥1,347,965
¥1,865,802
¥1,945,697
¥1,568,435
¥1,366,725
¥1,173,332
¥ 997,260
¥ 910,288
$16,046,720
Shipping and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,432,014
1,368,795
1,328,960
1,228,479
1,564,486
1,544,109
1,300,038
1,101,459
917,149
824,902
787,540
15,226,093
Selling, general and administrative expenses . . . . . . . . . . . . . . .
92,946
90,886
91,300
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(15,766)
(24,460)
123,401
Equity in earnings (losses) of unconsolidated subsidiaries
and affiliated companies, net . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,936)
3,300
8,174
Ordinary income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(28,568)
(24,320)
121,622
Income (Loss) before income taxes and minority interests . . . . . .
(137,939)
(33,516)
95,367
Income taxes, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes, deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11,325)
(24,799)
(4,784)
(9,546)
(36,431)
20,814
(3,761)
2,797
(3,456)
98,547
20,939
5,363
24,235
27,776
(8,078)
(3,764)
(3,212)
104,105
110,303
100,324
92,273
84,388
197,211
291,285
168,073
172,993
171,795
16,000
18,199
16,171
16,817
11,764
204,511
302,219
182,488
176,503
174,979
197,732
318,202
197,854
188,290
155,057
80,232
92,126
6,613
90,556
89,776
77,392
45,356
3,387
33,405
25,114
(65,074)
(115,183)
(63,042)
(61,200)
(52,587)
(35,346)
(10,872)
(638)
(5,032)
(5,694)
(7,004)
(7,468)
(6,404)
(7,570)
(5,788)
(1,205)
(3,004)
2,152
(1,191)
1,435
(967)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(178,847)
(26,009)
58,277
12,722
126,988
190,321
120,940
113,732
98,261
55,391
14,710
(1,901,616)
At year-end:
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
514,246
425,725
386,936
344,444
352,030
428,598
506,078
405,474
340,355
299,835
299,544
289,645
322,851
374,269
355,185
440,910
528,390
482,810
433,023
429,695
398,091
423,838
Net vessels, property and equipment . . . . . . . . . . . . . . . . . . . . .
1,303,967
1,293,803
1,257,823
1,209,176
1,106,746
1,047,825
847,660
769,902
665,320
477,621
569,234
13,864,615
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,164,611
1,946,162
1,868,741
1,861,312
1,807,080
1,900,551
1,639,940
1,470,824
1,232,252
1,000,206
1,046,612
23,015,534
Long-term debt due after one year . . . . . . . . . . . . . . . . . . . . . . .
Net assets/Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
861,728
619,493
447,830
739,188
559,541
594,711
499,193
459,280
398,534
399,617
340,598
311,021
395,589
717,909
740,247
735,702
695,022
751,652
620,989
424,461
298,258
221,535
164,790
629,667
664,645
616,736
623,626
536,096
375,443
275,689
182,143
101,991
56,469
Amounts per share of common stock:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(149.57)
¥ (21.76)
¥ 48.75
¥ 10.63
¥106.13
¥159.14
¥101.20
¥ 94.98
¥ 81.99
¥ 46.14
¥ 12.16
$(1.590)
Net assets/Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . .
447.76
533.27
Cash dividends applicable to the year . . . . . . . . . . . . . . . . . . . . .
–
5.00
552.83
10.00
551.70
3.00
567.74
31.00
459.55
20.00
354.01
18.00
248.40
16.00
185.06
11.00
137.44
5.00
4.761
–
Yen
521.23
31.00
Thousands of
U.S. dollars
2013
988,261
(167,634)
(52,483)
(303,753)
(1,466,656)
(120,415)
(263,679)
(50,866)
5,467,793
4,526,582
9,162,446
6,586,847
4,761,616
U.S. dollars
(Translation of foreign currencies)
The Japanese yen amounts for 2013 have been translated into U.S. dollars using the prevailing exchange rate at March 31, 2013, which was ¥94.05 to U.S. $1.00, solely
for the convenience of readers. (The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or
could in the future be, converted into U.S. dollars at this or any other rate of exchange.)
(Presentation of net assets in the balance sheet)
Effective from the year ended March 31, 2007, the Company adopted the new accounting standard for presentation of net assets in the balance sheet and related guidance
(ASBJ Statement No. 5, “Accounting Standard for Presentation of Net Assets in the Balance Sheet” issued by the Accounting Standards Board of Japan on December 9,
2005) and Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet (ASBJ Guidance No. 8 issued by the Accounting Standards Board of
Japan on December 9, 2005). Net assets are comprised of shareholders’ equity as defined up to the year ended March 31, 2006, minority interests, share subscription
rights and unrealized gains (losses) on hedging derivatives, net of tax.
(Ordinary income (loss))
Ordinary income (loss) is calculated by adjusting operating income for gains on management of surplus funds (interest income, etc.) and the cost of raising funds
(interest expense, etc.).
72
2013
2012
2011
2010
Millions of yen
2009
2008
2007
2006
2005
2004
2003
Thousands of
U.S. dollars
2013
Shipping and other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,509,194
¥1,435,221
¥1,543,661
¥1,347,965
¥1,865,802
¥1,945,697
¥1,568,435
¥1,366,725
¥1,173,332
¥ 997,260
¥ 910,288
$16,046,720
Shipping and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,432,014
1,368,795
1,328,960
1,228,479
1,564,486
1,544,109
1,300,038
1,101,459
917,149
824,902
787,540
15,226,093
Selling, general and administrative expenses . . . . . . . . . . . . . . .
92,946
90,886
91,300
104,105
110,303
100,324
92,273
84,388
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(15,766)
(24,460)
123,401
197,211
291,285
168,073
172,993
171,795
Equity in earnings (losses) of unconsolidated subsidiaries
and affiliated companies, net . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,936)
3,300
8,174
16,000
18,199
16,171
16,817
11,764
Ordinary income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(28,568)
(24,320)
121,622
204,511
302,219
182,488
176,503
174,979
Income (Loss) before income taxes and minority interests . . . . . .
(137,939)
(33,516)
95,367
197,732
318,202
197,854
188,290
155,057
80,232
92,126
6,613
90,556
89,776
77,392
45,356
3,387
33,405
25,114
Income taxes, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9,546)
(36,431)
(65,074)
(115,183)
(63,042)
(61,200)
(52,587)
(35,346)
(10,872)
Income taxes, deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,814
(3,761)
2,797
(3,456)
(638)
(5,032)
(5,694)
(7,004)
(7,468)
(6,404)
(7,570)
(5,788)
(1,205)
(3,004)
2,152
(1,191)
1,435
(967)
98,547
20,939
5,363
24,235
27,776
(8,078)
(3,764)
(3,212)
988,261
(167,634)
(52,483)
(303,753)
(1,466,656)
(120,415)
(263,679)
(50,866)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(178,847)
(26,009)
58,277
12,722
126,988
190,321
120,940
113,732
98,261
55,391
14,710
(1,901,616)
For the year:
At year-end:
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
386,936
344,444
352,030
428,598
506,078
405,474
340,355
299,835
299,544
289,645
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
322,851
374,269
355,185
440,910
528,390
482,810
433,023
429,695
398,091
423,838
5,467,793
4,526,582
Net vessels, property and equipment . . . . . . . . . . . . . . . . . . . . .
1,303,967
1,293,803
1,257,823
1,209,176
1,106,746
1,047,825
847,660
769,902
665,320
477,621
569,234
13,864,615
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,164,611
1,946,162
1,868,741
1,861,312
1,807,080
1,900,551
1,639,940
1,470,824
1,232,252
1,000,206
1,046,612
23,015,534
Long-term debt due after one year . . . . . . . . . . . . . . . . . . . . . . .
739,188
559,541
594,711
499,193
459,280
398,534
399,617
340,598
311,021
395,589
Net assets/Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . .
717,909
740,247
735,702
695,022
751,652
620,989
424,461
298,258
221,535
164,790
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
629,667
664,645
616,736
623,626
536,096
375,443
275,689
182,143
101,991
56,469
Amounts per share of common stock:
Yen
9,162,446
6,586,847
4,761,616
U.S. dollars
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(149.57)
¥ (21.76)
¥ 48.75
¥ 10.63
¥106.13
¥159.14
¥101.20
¥ 94.98
¥ 81.99
¥ 46.14
¥ 12.16
$(1.590)
Net assets/Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . .
447.76
533.27
Cash dividends applicable to the year . . . . . . . . . . . . . . . . . . . . .
–
5.00
552.83
10.00
551.70
3.00
521.23
31.00
567.74
31.00
459.55
20.00
354.01
18.00
248.40
16.00
185.06
11.00
137.44
5.00
4.761
–
(11,325)
(24,799)
(4,784)
514,246
425,725
861,728
619,493
447,830
(Translation of foreign currencies)
The Japanese yen amounts for 2013 have been translated into U.S. dollars using the prevailing exchange rate at March 31, 2013, which was ¥94.05 to U.S. $1.00, solely
for the convenience of readers. (The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or
could in the future be, converted into U.S. dollars at this or any other rate of exchange.)
(Presentation of net assets in the balance sheet)
Effective from the year ended March 31, 2007, the Company adopted the new accounting standard for presentation of net assets in the balance sheet and related guidance
(ASBJ Statement No. 5, “Accounting Standard for Presentation of Net Assets in the Balance Sheet” issued by the Accounting Standards Board of Japan on December 9,
2005) and Guidance on Accounting Standard for Presentation of Net Assets in the Balance Sheet (ASBJ Guidance No. 8 issued by the Accounting Standards Board of
Japan on December 9, 2005). Net assets are comprised of shareholders’ equity as defined up to the year ended March 31, 2006, minority interests, share subscription
rights and unrealized gains (losses) on hedging derivatives, net of tax.
(Ordinary income (loss))
(interest expense, etc.).
Ordinary income (loss) is calculated by adjusting operating income for gains on management of surplus funds (interest income, etc.) and the cost of raising funds
73
ConSolidated BalanCe SheetS
Mitsui O.S.K. Lines, Ltd. March 31, 2013 and 2012
ASSETS
Current assets:
Millions of yen
2013
2012
Thousands of
U.S. dollars (Note 1)
2013
Cash and cash equivalents (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketable securities (Notes 3 and 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred and prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets (Note 15). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 200,636
2,938
145,408
(590)
59,437
56,274
1,908
48,235
514,246
¥ 82,837
23
130,922
(401)
54,336
53,744
4,595
60,880
386,936
$ 2,133,291
31,239
1,546,071
(6,273)
631,972
598,341
20,287
512,865
5,467,793
Vessels, property and equipment (Notes 7 and 13):
Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and structures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment, mainly containers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vessels and other property under construction. . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net vessels, property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,386,355
273,946
65,544
214,615
109,917
2,050,377
(746,410)
1,303,967
1,354,315
252,043
61,315
215,959
116,724
2,000,356
(706,553)
1,293,803
14,740,617
2,912,770
696,905
2,281,925
1,168,708
21,800,925
(7,936,310)
13,864,615
Investments and other assets:
Investment securities (Notes 3, 4 and 7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in and advances to unconsolidated subsidiaries and
affiliated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term loans receivable (Note 3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets (Note 15). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103,756
93,806
1,103,200
91,093
23,117
22,929
4,034
101,469
79,877
19,166
16,194
11,692
44,688
968,559
245,795
243,796
42,892
1,078,884
3,683,126
$23,015,534
Total investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
346,398
¥2,164,611
265,423
¥1,946,162
See accompanying notes.
74
Millions of yen
2013
2012
Thousands of
U.S. dollars (Note 1)
2013
LIABILITIES AND NET ASSETS
Current liabilities:
Short-term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total short-term debt (Notes 3 and 7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term bank loans due within one year. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds due within one year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term debt due within one year (Notes 3 and 7). . . . . . . . . . . . . . . . .
Trade payables (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advances received. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities:
Long-term bank loans due after one year. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds due after one year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term debt due after one year (Notes 3 and 7). . . . . . . . . . . . . . . . . .
Employees’ severance and retirement benefits (Note 16) . . . . . . . . . . . . . . . . .
Directors’ and corporate auditors’ retirement benefits . . . . . . . . . . . . . . . . . . .
Reserve for periodic drydocking. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingent liabilities (Note 8)
Net assets (Note 9):
Owners’ equity
Common stock;
¥ 49,250
2,000
51,250
88,296
25,000
113,296
142,585
26,661
7,048
1,118
83,767
425,725
648,228
213,500
861,728
13,472
2,028
14,758
71,132
156,275
1,119,393
1,545,118
¥ 38,751
5,000
43,751
62,261
4,191
66,452
133,600
19,809
6,112
902
52,225
322,851
552,157
187,031
739,188
13,766
2,160
14,058
18,733
117,497
905,402
1,228,253
Authorized —3,154,000,000 shares
Issued —1,206,286,115 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total owners’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss
Unrealized holding gains on available-for-sale securities, net of tax. . . . . . . . . .
Unrealized losses on hedging derivatives, net of tax . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Share subscription rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,400
44,483
447,830
(6,998)
550,715
24,753
(196)
(39,849)
(15,292)
2,115
81,955
619,493
¥2,164,611
65,400
44,487
629,667
(7,152)
732,402
16,888
(54,936)
(56,932)
(94,980)
2,006
78,481
717,909
¥1,946,162
$ 523,658
21,265
544,923
938,820
265,816
1,204,636
1,516,055
283,477
74,939
11,887
890,665
4,526,582
6,892,377
2,270,069
9,162,446
143,243
21,563
156,917
756,321
1,661,615
11,902,105
16,428,687
695,375
472,972
4,761,616
(74,407)
5,855,556
263,190
(2,084)
(423,700)
(162,594)
22,488
871,397
6,586,847
$23,015,534
75
ConSolidated StatementS of operationS and
ConSolidated StatementS of ComprehenSive inCome
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2013 and 2012
(Consolidated Statements of Operations)
Shipping and other revenues (Note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shipping and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . .
Operating loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expenses):
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings (losses) of affiliated companies, net . . . . . . . . . . . . . . . . . . .
Others, net (Notes 10 and 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss before income taxes and minority interests . . . . . . . . . . . . . . . . . . . . .
Income taxes (Note 15):
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss before minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
2013
¥1,509,194
1,432,014
77,180
92,946
(15,766)
2012
¥1,435,221
1,368,795
66,426
90,886
(24,460)
5,166
(13,021)
(4,936)
(109,382)
(122,173)
(137,939)
(11,325)
(24,799)
(174,063)
(4,784)
7,959
(11,511)
3,300
(8,804)
(9,056)
(33,516)
(9,546)
20,814
(22,248)
(3,761)
Thousands of
U.S. dollars (Note 1)
2013
$16,046,720
15,226,093
820,627
988,261
(167,634)
54,928
(138,447)
(52,483)
(1,163,020)
(1,299,022)
(1,466,656)
(120,415)
(263,679)
(1,850,750)
(50,866)
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (178,847)
¥ (26,009)
$ (1,901,616)
(Consolidated Statements of Comprehensive Income)
Loss before minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (Note 20):
Unrealized holding gains on available-for-sale securities, net of tax. . . . . . . . . .
Unrealized gains on hedging derivatives, net of tax. . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share of other comprehensive income (loss) of associates accounted for
using equity method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
2013
¥(174,063)
2012
¥(22,248)
Thousands of
U.S. dollars (Note 1)
2013
$(1,850,750)
9,093
56,413
14,909
1,104
81,519
¥ (92,544)
2,504
18,731
(1,303)
(10,051)
9,881
¥(12,367)
96,683
599,820
158,522
11,738
866,763
$ (983,987)
Comprehensive income (loss)
Comprehensive loss attributable to owners of the parent. . . . . . . . . . . . . . . . . . .
Comprehensive income attributable to minority interests . . . . . . . . . . . . . . . . . . .
¥ (99,159)
6,615
¥(14,404)
2,037
$(1,054,321)
70,334
(Amounts per share of common stock)
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted net income (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends applicable to the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
See accompanying notes.
Yen
¥(149.57)
–
–
¥(21.76)
–
5.00
U.S. dollars (Note 1)
$(1.590)
–
–
76
Consolidated statements of Changes in net assets
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2013 and 2012
Common
stock
Capital
surplus
Retained
earnings
Treasury
stock, at
cost
Millions of yen
Unrealized
holding gains
on available-
for-sale
securities, net
of tax
Unrealized
losses on
hedging
derivatives,
net of tax
Foreign
currency
translation
adjustments
Share
subscription
rights
Minority
interests
Total
net assets
Balance at April 1, 2011
¥65,400
¥44,516
¥ 664,645
¥(7,181)
¥14,489
¥(68,355)
¥(52,719)
¥1,871
¥77,581
¥ 740,247
Due to change in
consolidated subsidiaries
Due to change in affiliated
companies accounted for by
the equity method
Due to change in accounting period
of consolidated subsidiaries
Net loss
Purchases of treasury stock
Disposal of treasury stock
Dividends paid
Net changes during the year
Balance at
March 31 and April 1, 2012
Due to change in
consolidated subsidiaries
Net loss
Purchases of treasury stock
Disposal of treasury stock
Dividends paid
Net changes during the year
Balance at March 31, 2013
–
–
–
–
–
–
–
–
–
–
–
–
–
(29)
–
–
12
159
(170)
(26,009)
–
–
(8,970)
–
–
–
–
–
(28)
57
–
–
–
–
–
–
–
–
–
2,399
–
–
–
–
–
–
–
13,419
–
–
–
–
–
–
–
(4,213)
–
–
–
–
–
–
–
135
–
–
–
–
–
–
–
900
12
159
(170)
(26,009)
(28)
28
(8,970)
12,640
¥65,400
¥44,487
¥ 629,667
¥(7,152)
¥16,888
¥(54,936)
¥(56,932)
¥2,006
¥78,481
¥ 717,909
–
–
–
–
–
–
¥65,400
–
–
–
(4)
–
–
¥44,483
(0)
(178,847)
–
–
(2,990)
–
¥ 447,830
–
–
(21)
175
–
–
¥(6,998)
–
–
–
–
–
7,865
¥24,753
–
–
–
–
–
54,740
¥ (196)
–
–
–
–
–
17,083
¥(39,849)
–
–
–
–
–
109
¥2,115
–
–
–
–
–
3,474
¥81,955
(0)
(178,847)
(21)
171
(2,990)
83,271
¥ 619,493
Common
stock
Capital
surplus
Retained
earnings
Thousands of US dollars (Note 1)
Unrealized
holding gains
on available-
for-sale
securities,
net of tax
Unrealized
losses on
hedging
derivatives,
net of tax
Treasury
stock, at
cost
Foreign
currency
translation
adjustments
Share
subscription
rights
Minority
interests
Total net
assets
Balance at April 1, 2012 $695,375
$473,014 $ 6,695,024
$(76,045)
$179,564
$(584,115)
$(605,338) $21,329
$834,460
$ 7,633,268
Due to change in
consolidated subsidiaries
Net loss
Purchases of treasury stock
Disposal of treasury stock
Dividends paid
Net changes during the year
–
–
–
–
–
–
Balance at March 31, 2013 $695,375
See accompanying notes
–
–
–
(42)
–
–
(0)
(1,901,616)
–
–
(31,792)
–
$472,972 $ 4,761,616
–
–
(223)
1,861
–
–
$(74,407)
–
–
–
–
–
83,626
$263,190
–
–
–
–
–
–
–
–
–
–
582,031
1,159
$ (2,084) $(423,700) $22,488
–
–
–
–
–
181,638
–
–
–
–
–
36,937
$871,397
(0)
(1,901,616)
(223)
1,819
(31,792)
885,391
$ 6,586,847
77
Consolidated statements of Cash flows
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2013 and 2012
Cash flows from operating activities:
Loss before income taxes and minority interests
Adjustments to reconcile loss before income taxes and minority interests to
net cash provided by operating activities
Depreciation and amortization
Impairment loss
Cost of business structural reforms
Equity in earnings (losses) of affiliated companies, net
Loss on write-down of investment securities
Various provisions (reversals)
Interest and dividend income
Interest expense
Loss (Gain) on sale of investment securities
Gain on sale and disposal of vessels, property and equipment
Exchange loss, net
Changes in operating assets and liabilities:
Trade receivables
Inventories
Trade payables
Others, net
Sub total
Cash received for interest and dividend
Cash paid for interest
Cash refunded (paid) for corporate income tax, resident tax and enterprise tax
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of investment securities
Proceeds from sale of investment securities
Payments for purchase of vessels and other tangible and intangible
fixed assets
Proceeds from sale of vessels and other tangible and intangible fixed assets
Net decrease (increase) in short-term loans receivables
Disbursements for long-term loans receivables
Collections of long-term loans receivables
Others, net
Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term bonds
Net increase (decrease) in short-term loans
Net increase (decrease) in commercial paper
Proceeds from long-term bank loans
Repayments of long-term bank loans
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury stock
Sale of treasury stock
Cash dividends paid by the Company
Cash dividends paid to minority interests
Others, net
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Net cash increase from new consolidation/
de-consolidation of subsidiaries
Increase in cash and cash equivalents due to change in accounting
periods for consolidated subsidiaries
Cash and cash equivalents at end of year
See accompanying notes
78
Millions of yen
2013
2012
Thousands of
US dollars (Note 1)
2013
¥(137,939)
¥ (33,516)
$(1,466,656)
94,685
10,978
101,463
4,936
2,653
529
(5,166)
13,021
99
(8,375)
2,842
(11,661)
(5,001)
6,878
11,719
81,661
9,233
(12,695)
757
78,956
(16,853)
1,126
(165,544)
80,198
(197)
(5,152)
2,863
(682)
(104,241)
–
9,661
(3,000)
216,407
(117,417)
55,000
(7,337)
(21)
25
(3,047)
(2,999)
(8,504)
138,768
4,316
117,799
82,837
85,624
5,468
–
(3,300)
9,163
(4,004)
(7,959)
11,511
(224)
(9,729)
4,172
(3,971)
(7,932)
3,805
(6,843)
42,265
17,368
(10,478)
(44,141)
5,014
(1,158)
699
(175,036)
44,879
127
(4,528)
8,384
(7,680)
(134,313)
56
(2,958)
(16,500)
270,357
(115,662)
30,000
(7,890)
(28)
28
(9,041)
(1,306)
1,217
148,273
(1,940)
17,034
65,477
1,006,751
116,725
1,078,820
52,483
28,208
5,625
(54,928)
138,447
1,053
(89,048)
30,218
(123,987)
(53,174)
73,131
124,604
868,272
98,171
(134,981)
8,049
839,511
(179,192)
11,972
(1,760,170)
852,717
(2,095)
(54,779)
30,441
(7,251)
(1,108,357)
–
102,722
(31,898)
2,300,979
(1,248,453)
584,795
(78,012)
(223)
266
(32,398)
(31,887)
(90,421)
1,475,470
45,891
1,252,515
880,776
–
115
–
–
¥ 200,636
211
¥ 82,837
–
$ 2,133,291
notes to Consolidated finanCial statements
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2013 and 2012
1. BAsIs of PrEsENtINg CoNsolIdAtEd fINANCIAl stAtEMENts
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Act and its related accounting regulations, and in conformity with accounting principles generally
accepted in Japan (together “Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of
International Financial Reporting Standards
The accounts of overseas subsidiaries are made revisions according to ASBJ PITF No 18 The accompanying consolidated financial
statements have been restructured and translated into English (with some expanded descriptions) from the consolidated financial state-
ments of Mitsui OSK Lines, Ltd (the “Company”) prepared in accordance with Japanese GAAP and filed with the appropriate Local
Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act Some supplementary information
included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in
the accompanying consolidated financial statements
The translations of the Japanese yen amounts into US dollars are included solely for the convenience of readers outside Japan, using
the prevailing exchange rate at March 31, 2013, which was ¥9405 to US $100 The convenience translations should not be construed
as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into US dollars at
this or any other rate of exchange
2. suMMAry of sIgNIfICANt ACCouNtINg PolICIEs
(1) PrINCIPlEs of CoNsolIdAtIoN
All companies are required to consolidate all significant investees which are controlled through substantial ownership of majority voting
rights or existence of certain conditions
The consolidated financial statements include the accounts of the Company and 349 subsidiaries for the year ended March 31, 2013
(335 subsidiaries for the year ended March 31, 2012) All significant inter-company balances, transactions and all material unrealized profit
within the consolidated group have been eliminated in consolidation
Investments in unconsolidated subsidiaries and affiliated companies (20% to 50% owned and certain others 15% to 20% owned) are
accounted for by the equity method Companies accounted for using the equity method include 65 affiliated companies for the year
ended March 31, 2013, and 63 affiliated companies for the year ended March 31, 2012 Investments in other subsidiaries (107 for the
year ended March 31, 2013 and 113 for the year ended March 31, 2012) and affiliated companies (68 and 71 for the respective years)
were stated at cost since total revenues, total assets, the Company’s equity in net income and retained earnings and others in such com-
panies were not material
In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to minor-
ity shareholders, are recorded based on the fair value at the time the Company acquired control of the respective subsidiaries
The difference between acquisition cost and net assets acquired is treated as goodwill and negative goodwill and is amortized princi-
pally over 5 years on a straight-line basis
Net amortized amount is included in “Selling, general and administrative expenses” or “Other income” of the consolidated statements of
operations
Meanwhile, the negative goodwill incurred after April 1, 2010 is recognized as “Other income” at the time of occurrence in accordance
with the revised Japanese GAAP
(2) trANslAtIoN of forEIgN CurrENCy
Revenues earned and expenses incurred in currencies other than Japanese yen of the Company and its subsidiaries keeping their books in
Japanese yen are translated into Japanese yen either at a monthly exchange rate or at the rate prevailing on the date of the transaction
Monetary assets and liabilities denominated in currencies other than Japanese yen are translated into yen at the exchange rate prevailing at
the balance sheet date
Subsidiaries keeping their books in a currency other than Japanese yen translate the revenues and expenses and assets and liabilities in
foreign currencies into the currency used for financial reporting in accordance with accounting principles generally accepted in their respec-
tive countries
All the items in financial statements of subsidiaries, which are stated in currencies other than Japanese yen, were translated into
Japanese yen at the year-end exchange rate, except for owners’ equity which is translated at historical rates Translation differences
arising from the application of more than one exchange rate are presented as foreign currency translation adjustments in the net assets
section of the consolidated balance sheets
(3) CAsH ANd CAsH EQuIVAlENts
In preparing the consolidated statements of cash flows, cash on hand, readily-available deposits and short-term highly liquid investments
with maturities not exceeding three months at the time of purchase are considered to be cash and cash equivalents
79
(4) frEIgHt rEVENuEs ANd rElAtEd EXPENsEs
1. Containerships
Freight revenues and the related voyage expenses are recognized by the multiple transportation progress method
2. Vessels other than containerships
Freight revenues and the related voyage expenses are recognized mainly by the completed-voyage method
(5) sECurItIEs
Securities are classified into (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended to be held
to maturity (hereafter, “held-to-maturity debt securities”), (c) equity securities issued by subsidiaries and affiliated companies, or (d) for all
other securities that are not classified in any of the above categories (hereafter, “available-for-sale securities”)
Trading securities are stated at fair market value Unrealized gains and losses from market value fluctuations are recognized as gains or
losses in the period of the change Held-to-maturity debt securities are stated at amortized cost, net of the amount considered not col-
lectible Equity securities issued by subsidiaries and affiliated companies which are not consolidated or accounted for using the equity
method are stated at moving-average cost Available-for-sale securities with fair market values are stated at fair market values, and the
corresponding unrealized holding gains or losses, net of applicable income taxes, are reported as separate component of net assets
Other securities with no available fair market value are stated at moving-average cost
If the market value of held-to-maturity debt securities, equity securities issued by unconsolidated subsidiaries and affiliated companies
not on the equity method, and available-for-sale securities, declines significantly, such securities are stated at fair market value and the
difference between fair market value and the carrying amount is recognized as loss in the period of the decline If the fair market value of
held-to-maturity debt securities, equity securities issued by unconsolidated subsidiaries and affiliated companies not on the equity
method, and available-for-sale securities is not readily available, such securities should be written down to net assets value with a cor-
responding charge in the statements of operations in the event net assets value declines significantly In these cases, such fair market
value or the net assets value will be the carrying amount of the securities at the beginning of the next year
(6)
INVENtorIEs
Inventories are stated principally at cost determined by the moving-average method (with regard to the book value of inventories on the
balance sheet, by writing the inventories down based on their decrease in profitability of assets)
(7) dEPrECIAtIoN of VEssEls, ProPErty ANd EQuIPMENt
Depreciation of vessels and buildings is computed mainly by the straight-line method Depreciation of other property and equipment is
computed mainly by the declining-balance method
Depreciation of finance lease that transfer ownership to lessees is computed mainly by the identical to depreciation method applied to
self-owned noncurrent assets Depreciation of finance lease that do not transfer ownership to lessees is computed mainly by straight-line
method on the assumption that the lease term is the useful life and an estimated residual is zero With regard to finance lease that do not
transfer ownership for which the starting date for the lease transaction is prior to March 31, 2008, they will continue to be accounted for by
a method corresponding to that used for ordinary operating lease contracts
(8) AMortIZAtIoN of BoNd IssuE EXPENsE ANd stoCK IssuE EXPENsE
Bond issue expense and stock issue expense are charged to income as incurred
(9)
INtErEst CAPItAlIZAtIoN
In cases where a vessel’s construction period is long and the amount of interest accruing during this period is significant, such interest
expenses are capitalized as a part of the acquisition cost which amounted to ¥1,228 million ($13,057 thousand) for the year ended March
31, 2013 and ¥1,156 million for the year ended March 31, 2012
(10) AlloWANCE for douBtful ACCouNts
Allowance for doubtful accounts is provided in an amount sufficient to cover probable losses on collection It consists of the estimated
uncollectible amount with respect to certain identified doubtful receivables and an amount calculated using the actual percentage of
the Company’s collection losses
(11) EMPloyEEs’ sEVErANCE ANd rEtIrEMENt BENEfIts
The Company has the defined benefit pension plans for employees engaged in shore and sea services Employees engaged in sea ser-
vice who retire prior to a certain age are also entitled to a lump-sum payment Some subsidiaries have the defined benefit pension plans
which cover all or a part of the retirement benefits and some other subsidiaries have established reserves for a lump-sum payment for
retirement benefits The Company has a retirement benefit trust scheme
Under the accounting standards for employees’ severance and retirement benefits, liabilities and expenses for employees’ severance
and retirement benefits are determined based on the amounts actuarially calculated using certain assumptions
The Company and its consolidated subsidiaries (the “Group”) provided allowance for employees’ severance and retirement benefits
at March 31, 2013 and 2012 based on the estimated amounts of projected benefit obligation and the fair value of the plan assets at
those dates
80
Actuarial gains and losses are recognized in the statements of operations using the straight-line method over the average of the esti-
mated remaining service lives of mainly 10 years commencing with the following period Past service liability is chiefly accounted for as
expenses in lump-sum at the time of occurrence
(12) dIrECtors’ ANd CorPorAtE AudItors’ rEtIrEMENt BENEfIts
The Company and its domestic subsidiaries recognize liabilities for retirement benefits for directors and corporate auditors at an amount
required in accordance with the internal regulations
Effective from the shareholders’ meeting of the Company, held on June 23, 2005, the Company abolished the retirement benefits plan
for directors and corporate auditors Accordingly, the Company recognizes liabilities for retirement benefit for directors and corporate
auditors till the completion of the shareholders’ meeting on June 23, 2005, which will be paid upon their retirement
(13) INCoME tAXEs
The Group recognizes tax effects of temporary differences between the financial statement basis and the tax basis of assets and liabilities The
provision for income taxes is computed based on the pretax income included in the consolidated statements of operations The asset and
liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences
(14) AMouNts PEr sHArE of CoMMoN stoCK
Net loss per share of common stock is computed based upon the weighted-average number of shares outstanding during the year
Fully diluted net income per share of common stock assumes exercise of the outstanding stock options at the beginning of the year or
at the date of issuance For the years ended March 31, 2013 and 2012 fully diluted net income per share is not disclosed because of the
Company’s net loss position
Cash dividends per share have been presented on an accrual basis and include dividends to be approved after the balance sheet
date, but applicable to the year then ended
(15) dErIVAtIVEs ANd HEdgE ACCouNtINg
Companies are required to state derivative financial instruments at fair value and to recognize changes in the fair value as gains or losses
unless derivative financial instruments are used for hedging purposes
If derivative financial instruments are used as hedging instruments and meet certain hedging criteria, the Group defers recognition of
gains or losses resulting from changes in fair value of derivative financial instruments until the related losses or gains on the hedged items
are recognized
If interest rate swap contracts are used as hedging instruments and meet certain hedging criteria, the net amount to be paid or
received under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap
contract was executed (“special treatment”)
If foreign exchange forward contracts are used as hedging instruments and meet certain hedging criteria, hedged foreign currency
assets and liabilities are translated at the rate of these contracts (“allocation method”)
The following summarizes hedging derivative financial instruments used by the Group and items hedged:
Hedging instruments:
Hedged items:
Loans payable in foreign currencies
Foreign currency future transactions
Forward foreign exchange contracts
Foreign currency future transactions
Currency option contracts
Currency swap contracts
Foreign currency future transactions
Foreign currency loans payable
Interest rate swap contracts
Interest on loans and bonds payable
Crude oil swap contracts
Commodities futures
Freight futures
Fuel oil
Fuel oil
Freight
The derivative transactions are executed and managed by the Company in accordance with the established policies in order to hedge
the Group’s exposure to interest rate increases, fuel oil increases, freight decreases, and foreign currency exchange rate risk
The Company evaluates hedge effectiveness semi-annually by comparing the cumulative changes in cash flows from or the changes
in fair value of hedged items and the cumulative changes in cash flows from or the changes in fair value of hedging instruments
(16) rEClAssIfICAtIoNs
Certain prior year amounts have been reclassified to conform to the 2013 presentation These changes had no impact on previously
reported results of operations or cash flows or net assets
(17) ACCouNtINg stANdArds IssuEd But Not yEt APPlIEd
Accounting standard for retirement Benefits (AsBJ statement No. 26, May 17, 2012) and guidance on Accounting stan-
dard for retirement Benefits (AsBJ guidance No. 25, May 17, 2012)
81
1 Summary
Under the amended rule, actuarial gains and losses and past service costs would be recognized within the net asset section, after adjust-
ing for tax effects, and the deficit or surplus would be recognized as a liability or asset without any adjustments For determining method
of attributing expected benefit to periods, the Standard now allows to choose benefit formula basis, as well as straight-line basis Method
for determination of discount rate has also been amended
2 Effective dates
Effective for the end of annual periods ending on or after March 31, 2014 Amendments relating to determination of retirement benefit
obligations and current service costs are effective from the beginning of annual periods ending on or after March 31, 2015
3 Effect of application of the standard
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new standards
on the consolidated financial statements
(18) CHANgE IN ACCouNtINg PolICIEs WItH AMENdMENt of rEsPECtIVE lAW or rEgulAtIoN tHAt ArE Not
dIstINguIsHABlE froM CHANgE IN ACCouNtINg EstIMAtEs
(Change in depreciation method)
From the year ended March 31, 2013, in accordance with the amendment in corporate tax law, the Company and its domestic subsidiar-
ies have changed its depreciation method for property and equipment Assets acquired on or after April 1, 2012 are depreciated using the
method prescribed in amended corporate tax law The effect on the consolidated financial statements of the change is not material
(19) AddItIoNAl INforMAtIoN
1. Application of accounting standards for accounting changes and error corrections
For accounting changes and corrections of past errors which are implemented from the year beginning on April 1, 2011, the Company
adopts the Accounting Standard for Accounting Changes and Error Corrections (ASBJ Statement No 24, December 4, 2009) and Guid-
ance on Accounting Standard for Accounting Changes and Error Corrections (ASBJ Guidance No 24, December 4, 2009)
2. underwriting of capital increase of shares of an affiliated company accounted for by the equity method
The Company resolved at its meeting of the Board of Directors on March 29, 2013 to underwrite capital increase through a third-party
allotment of new shares of Daiichi Chuo Kisen Kaisha, an affiliated company accounted for by the equity method The details and sub-
scription amount of the capital increase through third-party allotment are as follows:
(1) Profile of the affiliated company accounted for by the equity method
(i) Name
(ii) Date of establishment
(iii) Main Business
(iv) Capital
(v) Number of issued shares
Common stock
Class A stock
(Number of issued shares after capital increase
Common stock
Class A stock
(2) Outline of subscription
(i) Total amount of subscription
(ii) Subscription price
Daiichi Chuo Kisen Kaisha
October 1, 1960
Marine transportation
¥20,758 million ($220,712 thousand)
(Capital after capital increase ¥28,958 million ($307,900 thousand))
263,549,171 shares
15,000,000 shares
263,549,171 shares
31,400,000 shares)
¥15,000 million ($159,490 thousand)
¥1,000 per share ($1063 per share)
(iii) Number of shares to be subscribed Class A stock 15,000,000 shares
(iv) Purpose of subscription
Stabilization of the financial base
(3) Shareholding before and after subscription
Number of shares held before capital increase
Common stock
Class A stock
Number of shares held after capital increase
Common stock
Class A stock
68,774,960 shares
15,000,000 shares
68,774,960 shares
30,000,000 shares
82
(4) Schedule
March 29, 2013
Resolution at the meeting of the Board of Directors
June 27, 2013 (scheduled)
Annual shareholders’ meeting of Daiichi Chuo Kisen Kaisha, class shareholders’
meeting by common shareholders and class shareholders’ meeting by class A
shareholders
June 28, 2013 (scheduled)
Application and payment date
3. fINANCIAl INstruMENts
(1) QuAlItAtIVE INforMAtIoN oN fINANCIAl INstruMENts
I. Policies for using financial instruments
We raise capital investment funds to acquire vessels and other fixed assets primarily through bank loans and corporate bonds In addi-
tion, we secure short-term operating funds through commercial papers and bank loans Furthermore, we have established commitment
line with Japanese banks in preparation for supplementing liquidity in emergency situations Derivatives are utilized to hedge risks as
discussed below and are executed within the scope of real requirements Our policy is not to use derivatives for speculative purposes
II. details of financial instruments/risk and its management
Trade receivables are exposed to the credit risks of customers We strive to mitigate such risks in accordance with internal regulations
Besides, trade receivables denominated in foreign currencies are exposed to the foreign currency exchange rate risk We avoid the risk
mainly by, in principle, utilizing forward exchange contracts which cover the net position (The difference between trade receivables and
trade payables dominated in foreign currencies) Investment securities are mainly stocks of companies with which we have business
relationships These investment securities are exposed to the price fluctuation risk We identify the market value of listed stocks on a
quarterly basis
Trade payables are due within a year
Short-term loans and commercial papers are primarily used for raising short-term operating funds, while long-term loans and bonds
are mainly for capital investments Although several items with variable interest rates are exposed to the interest rate risk, a certain portion
of such variable interest rates is fixed with the use of interest rate swaps
Long-term loans and bonds denominated in foreign currencies are exposed to the foreign currency exchange rate risk, a part of which
is avoided by using currency swaps
Our major derivative transactions and hedged risks are as follows
* Forward foreign exchange contracts/Currency swap contracts
: To cover exchange volatility of foreign-currency-denominated trade receivables, trade payables, long-term loans, and corporate bonds
* Interest rate swap contracts
: To avoid interest rate risk arising out of interest payment of long-term loans and corporate bonds
* Crude oil swap contracts/Commodities futures
: To hedge fluctuation of fuel oil price
With regard to the detail of hedge accounting (hedging instruments, hedged items, the way of evaluating hedge effectiveness), see Note
2 (15) to the consolidated financial statements
Derivative transactions are executed and managed in accordance with our internal regulations and dealt only with highly rated financial
institutions to mitigate credit risks
On the other hand, as trade payables, loan payables, bonds, and commercial papers are exposed to the risk of financing for repay-
ment, we manage the risk by planning cash management program monthly, having established commitment line with several financial
institutions, and adjusting funding period (balancing short-term/long-term combination), in consideration of market circumstances
III. supplemental information on fair value
Fair value of financial instruments that are actively traded in organized financial markets is determined by market value
For those where there are no active markets, it is determined by reasonable estimation Reasonably estimated value might vary
depending on condition of calculation as several variation factors are included in the calculation On the other hand, derivative transac-
tions mentioned in following (2) do not indicate the market risk of such derivatives
83
(2) fAIr VAluEs of fINANCIAl INstruMENts
Book values and fair values of the financial instruments on the consolidated balance sheet at March 31, 2013 are the following;
Assets
Cash and cash equivalents
Time deposits with a maturity of more than three months
Trade receivables
Marketable securities
Available-for-sale securities
Short-term loans receivable
Investment securities
Available-for-sale securities
Long-term loans receivable (*1)
Total
Liabilities
Trade payables
Short-term loans
Commercial paper
Bonds (*2)
Long-term bank loans (*3)
Total
Derivative financial instruments (*4)
Book Value
¥ 200,636
1,139
145,408
2,938
1,188
92,785
24,759
¥ 468,853
¥ 142,585
49,250
2,000
238,500
736,524
¥1,168,859
¥ 36,966
Millions of yen
Fair Value
¥ 200,636
1,139
145,408
2,938
1,188
92,785
30,955
¥ 475,049
¥ 142,585
49,250
2,000
242,650
739,244
¥1,175,729
¥ 36,518
Difference
¥
–
–
–
–
–
–
6,196
¥6,196
¥
–
–
–
4,150
2,720
¥6,870
¥ (448)
Book Value
Thousands of US dollars (Note 1)
Fair Value
Difference
$ 2,133,291
12,110
1,546,071
$ 2,133,291
12,110
1,546,071
$
Assets
Cash and cash equivalents
Time deposits with a maturity of more than three months
Trade receivables
Marketable securities
Available-for-sale securities
Short-term loans receivable
Investment securities
Available-for-sale securities
Long-term loans receivable (*1)
Total
Liabilities
Trade payables
Short-term loans
Commercial paper
Bonds (*2)
Long-term bank loans (*3)
Total
Derivative financial instruments (*4)
31,239
12,631
31,239
12,631
986,550
263,254
$ 4,985,146
$ 1,516,055
523,658
21,265
2,535,885
7,831,197
$12,428,060
$ 393,046
986,550
329,134
$ 5,051,026
$ 1,516,055
523,658
21,265
2,580,011
7,860,117
$12,501,106
$ 388,283
–
–
–
–
–
–
65,880
$65,880
$
–
–
–
44,126
28,920
$73,046
$ (4,763)
*1 The book value of long-term loans receivable includes current portion amounting to ¥1,642 million ($17,459 thousand)
*2 The book value of bonds includes current portion amounting to ¥25,000 million ($265,816 thousand)
*3 The book value of long-term bank loans includes current portion amounting to ¥88,296 million ($938,820 thousand)
*4 Amounts of derivative financial instruments are net of asset and liability Negative amount stated with ( ) means that the net amount is liability
84
Book values and fair values of the financial instruments on the consolidated balance sheet at March 31, 2012 are the following;
Book Value
Millions of yen
Fair Value
Assets
Cash and cash equivalents
Time deposits with a maturity of more than three months
Trade receivables
Marketable securities
Available-for-sale securities
Short-term loans receivable
Investment securities
Available-for-sale securities
Long-term loans receivable (*1)
Allowance for doubtful accounts (*2)
Total
Liabilities
Trade payables
Short-term loans
Commercial paper
Bonds (*3)
Long-term bank loans (*4)
Total
Derivative financial instruments (*5)
¥ 82,837
1,005
130,922
23
1,534
82,897
19,598
(185)
19,413
¥318,631
¥133,600
38,751
5,000
191,222
614,418
¥982,991
¥ (52,523)
¥ 82,837
1,005
130,922
23
1,534
82,897
26,031
¥325,249
¥133,600
38,751
5,000
197,269
616,014
¥990,634
¥ (54,374)
*1 The book value of long-term loans receivable includes current portion amounting to ¥432 million
*2 Allowance identified for long-term loans receivable is deducted
*3 The book value of bonds includes current portion amounting to ¥4,191 million
*4 The book value of long-term bank loans includes current portion amounting to ¥62,261 million
*5 Amounts of derivative financial instruments are net of asset and liability Negative amount stated with ( ) means that the net amount is liability
Difference
¥
–
–
–
–
–
–
6,618
¥ 6,618
¥
–
–
–
6,047
1,596
¥ 7,643
¥(1,851)
The following is a description of the valuation methodologies used for the assets and liabilities measured at the fair value
Cash and cash equivalents, Time deposits with a maturity of more than three months, Trade receivables and Short-term loans receivable
Since these assets are settled in a short term and their fair value is almost equal to the book value, the fair value is evaluated at the
book value
Marketable securities and Investment securities
The fair value of stocks is evaluated at market prices at stock exchange as of the end of the year and the fair value of bonds is evaluated
at market prices at stock exchange or provided by financial institutions as of the end of the years
Long-term loans receivable
The fair value of long-term loans receivable with variable interests rate is evaluated at the book value because the interest rate reflects the
market rate in a short term and their fair value is almost equal to the book value, unless the creditworthiness of the borrower has changed
significantly since the loan origination The fair value of long-term loans receivable with fixed interest rates, for each category of loans based
on types of loans, and maturity length, is evaluated by discounting the total amount of principal and interest using the rate which would apply
if similar loans were newly made
Trade payables, Short-term loans and Commercial paper
Since these liabilities are settled in a short term and their fair value is almost equal to the book value, the fair value is evaluated at the
book value
Bonds
The fair value of corporate bonds with market price is evaluated based on their market price The fair value of variable interest rates cor-
porate bonds without market price is evaluated at the book value because the interest rate reflects the market rate in a short term and
there has been no significant change in the creditworthiness of us before and after the issue
85
Long-term bank loans
The fair value of long-term bank loans with variable interest rates is evaluated at the book value because the interest rate reflects the
market rate in a short term and there has been no significant change in the creditworthiness of us before and after such bank loans were
made The fair value of long-term bank loans with fixed interest rates, for each category of bank loans based on types of bank loans, and
maturity length, is evaluated by discounting the total amount of principal and interest using the rate which would apply if similar bank
loans were newly made The fair value of long-term bank loans qualifying for allocation method of interest and currency swap is evaluated
at the book value because such bank loans were deemed as the variable interest rates bank loans and the interest rate reflects the
market rate in a short term
Derivative financial instruments
Please refer to Note 6 to the consolidated financial statements
The following table summarizes financial instruments whose fair value is extremely difficult to estimate
Unlisted stocks
Unlisted foreign securities
Others
Total
Millions of yen
Book Value
2013
¥ 7,764
3,200
7
¥10,971
Book Value
2012
¥ 7,667
3,200
42
¥10,909
Thousands of US
dollars (Note 1)
Book Value
2013
$ 82,552
34,024
74
$116,650
The above items are not included in the amount presented under the line “Investments securities” in the table summarizing fair value of
financial instruments, because the fair value is extremely difficult to estimates as they have no quoted market price and the future cash flow
cannot be estimated
At March 31, 2013, the aggregate annual maturity of monetary claims and securities was as follows;
Cash and cash equivalents
Time deposits with a maturity of more than three months
Trade receivables
Short-term loans receivable
Marketable securities and investments securities
Held-to-maturity debt securities (Other)
Available-for-sale securities
(Governmental/municipal bonds)
Available-for-sale securities (Corporate bonds)
Long-term loans receivable
Total
Millions of yen
After one year
through five
years
¥
–
–
–
–
After five years
through ten
years
¥
–
–
–
–
Within a year
¥200,636
1,139
145,408
1,188
–
–
–
3,000
1,642
¥353,013
10
200
16,099
¥16,309
–
–
–
2,321
¥2,321
Thousands of US dollars (Note 1)
After ten years
–
¥
–
–
–
3,200
–
–
4,697
¥7,897
$
After ten years
–
–
–
–
After one year
through five
years
$
–
–
–
–
–
After five years
through ten
years
$
–
–
–
–
–
34,024
106
2,127
171,175
$173,408
–
–
24,678
$24,678
–
–
49,942
$83,966
Cash and cash equivalents
Time deposits with a maturity of more than three months
Trade receivables
Short-term loans receivable
Marketable securities and investments securities
Held-to-maturity debt securities (Other)
Available-for-sale securities
(Governmental/municipal bonds)
Available-for-sale securities (Corporate bonds)
Long-term loans receivable
Total
Within a year
$2,133,291
12,110
1,546,071
12,631
–
–
31,898
17,459
$3,753,460
86
At March 31, 2012, the aggregate annual maturity of monetary claims and securities was as follows;
Cash and cash equivalents
Time deposits with a maturity of more than three months
Trade receivables
Short-term loans receivable
Marketable securities and investments securities
Held-to-maturity debt securities (Other)
Available-for-sale securities
(Governmental bonds/Corporate bonds)
Long-term loans receivable
Total
Millions of yen
Within a year
¥ 82,837
1,005
130,922
1,534
After one year
through five
years
¥
–
–
–
–
–
–
–
432
¥216,730
10
12,420
¥12,430
After five years
through ten
years
¥
–
–
–
–
–
–
2,768
¥2,768
After ten years
–
¥
–
–
–
3,200
–
3,978
¥7,178
4. sECurItIEs
A The following tables summarize acquisition costs, book values and fair values of securities with available fair values at March 31, 2013
and 2012
Available-for-sale securities:
Securities with book values exceeding acquisition costs at March 31, 2013
Type
Equity securities
Bonds
Others
Total
Acquisition cost
¥33,088
3,060
–
¥36,148
Millions of yen
Book value
¥73,550
3,166
–
¥76,716
Difference
¥40,462
106
–
¥40,568
Type
Equity securities
Bonds
Others
Total
Acquisition cost
$351,813
32,536
–
$384,349
Thousands of US dollars (Note 1)
Book value
$782,031
33,663
–
$815,694
Difference
$430,218
1,127
–
$431,345
Securities with book values exceeding acquisition costs at March 31, 2012
Type
Equity securities
Bonds
Others
Total
Acquisition cost
¥24,930
210
–
¥25,140
Millions of yen
Book value
¥56,798
224
–
¥57,022
Difference
¥31,868
14
–
¥31,882
87
Securities with book values not exceeding acquisition costs at March 31, 2013
Type
Equity securities
Bonds
Others
Total
Acquisition cost
¥22,581
–
–
¥22,581
Millions of yen
Book value
¥19,007
–
–
¥19,007
Difference
¥(3,574)
–
–
¥(3,574)
Type
Equity securities
Bonds
Others
Total
Acquisition cost
$240,096
–
–
$240,096
Thousands of US dollars (Note 1)
Book value
$202,095
–
–
$202,095
Difference
$(38,001)
–
–
$(38,001)
Securities with book values not exceeding acquisition costs at March 31, 2012
Type
Equity securities
Bonds
Others
Total
Acquisition cost
¥34,171
–
23
¥34,194
Millions of yen
Book value
¥25,875
–
23
¥25,898
Difference
¥(8,296)
–
–
¥(8,296)
B Total sales of available-for-sale securities sold in the years ended March 31, 2013 and 2012 and the related gains and losses were
as follows:
Proceeds from sales
Gross realized gains
Gross realized losses
¥932
309
369
¥522
225
1
Millions of yen
2013
2012
Thousands of US
dollars (Note 1)
2013
$9,910
3,285
3,923
C Impairment losses of securities
For the years ended March 31, 2013 and 2012, the Company reduced the book value on the securities and booked the reductions as
impairment losses of ¥2,892 million ($30,750 thousand) and ¥9,163 million, respectively
With regard to the impairment losses, the Company principally reduces the book value on the securities to the amount which is con-
sidered the recoverability etc in the event the fair market value declines more than 50% in comparison with the acquisition cost
88
5. INVENtorIEs
Inventories as of March 31, 2013 and 2012 consisted of the following:
Fuel and supplies
Others
Total
Millions of yen
2013
¥58,326
1,111
¥59,437
2012
¥52,848
1,488
¥54,336
Thousands of US
dollars (Note 1)
2013
$620,159
11,813
$631,972
6. dErIVAtIVE trANsACtIoNs
The Group enters into derivative transactions to hedge the Group’s exposure to interest rate increases, fuel oil increases, freight
decreases, and currency exchange fluctuations, in accordance with the guidance determined by the management of the Company
I. HEdgE ACCouNtINg Not APPlIEd
The following tables summarize the outstanding contract amounts and fair values of financial derivatives of the Group at March 31, 2013
and 2012, for which hedge accounting has not been applied
Millions of yen
2013
2012
Thousands of US
dollars (Note 1)
2013
(1) Currency related:
Forward currency exchange contracts
Sell (US dollar):
Contracts outstanding
Fair values
¥11,286
(2,046)
¥ 468
(9)
Buy (US dollar):
Contracts outstanding
Fair values
Buy (Others):
Contracts outstanding
Fair values
¥
¥
13
0
2
0
¥
¥
29
(0)
5
0
Currency swaps contracts
Buy (US dollar):
Contracts outstanding
Fair values
¥ 5,102
(651)
¥ 7,882
(1,777)
Millions of yen
2013
2012
$120,000
(21,754)
$
$
138
0
21
0
$ 54,248
(6,922)
Thousands of US
dollars (Note 1)
2013
(2) Interest related
Interest rate swaps
Receive floating, pay fixed
Contracts outstanding
Fair values
Receive fixed, pay floating
Contracts outstanding
Fair values
¥46,899
(2,769)
¥ 291
2
¥51,276
(2,966)
¥ –
–
$498,660
(29,442)
$ 3,094
21
Note: Fair values are measured based on forward exchange rates prevailing at the end of the year and information provided by financial institutions, etc
89
II. HEdgE ACCouNtINg APPlIEd
The following tables summarize the outstanding contract amounts and fair values of financial derivatives of the Group at March 31, 2013
and 2012, for which hedge accounting has been applied
Millions of yen
2013
2012
Thousands of US
dollars (Note 1)
2013
(1) deferral hedge accounting
a Forward currency exchange contracts to hedge the risk for the
foreign currency transactions
Sell (US dollar):
Contracts outstanding
Fair values
¥ 26,969
(1,947)
¥ 25,479
(1,333)
Buy (US dollar):
Contracts outstanding
Fair values
¥ 62,906
9,189
¥ 98,802
(6,360)
b Currency swaps contracts to hedge the risk for charterages
Sell (US dollar):
Contracts outstanding
Fair values
¥ 1,686
(162)
¥ 1,863
131
Buy (US dollar):
Contracts outstanding
Fair values
¥491,628
50,309
¥609,265
(29,780)
c Interest rate swaps to hedge the risk for the long-term bank loans
$ 286,752
(20,702)
$ 668,857
97,703
$ 17,927
(1,722)
$5,227,305
534,918
and charterages
Receive floating, pay fixed
Contracts outstanding
Fair values
¥197,060
(16,246)
¥174,262
(13,955)
$2,095,268
(172,738)
Receive fixed, pay floating
Contracts outstanding
Fair values
d Commodities futures to hedge the risk for the fuel oil
Contracts outstanding
Fair values
¥ 10,698
289
¥ 40,680
997
¥ 14,336
452
¥ 25,371
3,074
Millions of yen
2013
2012
(2) special treatment
Interest rate swaps to hedge the risk for the long-term bank loans
Receive floating, pay fixed
Contracts outstanding
Fair values
¥3,719
(447)
¥15,090
(1,851)
Millions of yen
2013
2012
$ 113,748
3,073
$ 432,536
10,601
Thousands of US
dollars (Note 1)
2013
$39,543
(4,753)
Thousands of US
dollars (Note 1)
2013
(3) Allocation method
Currency swaps to hedge the risk for the foreign bonds and long-term
bank loans
Contracts outstanding
Fair values
¥27,827
–
¥30,354
–
$295,875
–
Notes: 1 Fair values are measured based on forward exchange rates prevailing at the end of the year and information provided by financial institutions, etc
2 Currency swaps which allocation method are applied to are recorded as the combined amount of such currency swaps and their hedge items Therefore, their fair
values are included in fair values of such hedge items
90
7. sHort-tErM dEBt ANd loNg-tErM dEBt
(1) sHort-tErM dEBt
Short-term debt amounting to ¥51,250 million ($544,923 thousand) and ¥43,751 million at March 31, 2013 and 2012, respectively, were
principally unsecured The interest rates on short-term debt were mainly set on a floating rate basis
(2) loNg-tErM dEBt
Long-term debt at March 31, 2013 and 2012 consisted of the following:
Millions of yen
2013
2012
Thousands of US
dollars (Note 1)
2013
Bonds:
Floating/fixed rate Euro medium term notes due 2012–2013
1428% yen bonds due 2013
1760% yen bonds due 2014
1278% yen bonds due 2014
1590% yen bonds due 2015
0296% yen bonds due 2015
0573% yen bonds due 2016
2070% yen bonds due 2016
1106% yen bonds due 2016
0461% yen bonds due 2017
1999% yen bonds due 2019
1670% yen bonds due 2019
1400% yen bonds due 2020
1361% yen bonds due 2021
1650% yen bonds due 2022
1139% yen bonds due 2022
1070% yen bonds due 2023
secured loans from:
¥
–
15,000
10,000
30,000
15,000
15,000
10,000
15,000
20,000
20,000
18,500
10,000
15,000
20,000
5,000
10,000
10,000
¥ 6,222
15,000
10,000
30,000
15,000
–
10,000
15,000
20,000
–
20,000
10,000
15,000
20,000
5,000
–
–
Japan Development Bank due through 2027 at interest rates of
021% to 470%
Other financial institutions due through 2031 at interest rates of
039% to 670%
59,453
66,084
55,649
14,581
$
–
159,490
106,326
318,979
159,490
159,490
106,326
159,490
212,653
212,653
196,704
106,326
159,490
212,653
53,163
106,326
106,326
632,143
591,696
unsecured loans from:
Other financial institutions due through 2031 at interest rates of
016% to 463%
Amount due within one year
621,422
975,024
113,296
¥861,728
533,753
805,640
66,452
¥739,188
6,607,358
10,367,082
1,204,636
$ 9,162,446
At March 31, 2013, the aggregate annual maturity of long-term debt was as follows:
Year ending March 31
2014
2015
2016
2017
2018
2019 and thereafter
Millions of yen
¥113,296
119,000
100,493
109,966
80,671
451,598
¥975,024
Thousands of US
dollars (Note 1)
$ 1,204,636
1,265,284
1,068,506
1,169,229
857,746
4,801,681
$10,367,082
91
(3) AssEts PlEdgEd ANd sECurEd dEBt
At March 31, 2013, the following assets were pledged as collateral for short-term debt and long-term debt
Assets pledged
Vessels
Buildings and structures
Vessels and other property under construction
Investment securities
Secured debt
Short-term debt
Long-term debt due within one year
Long-term debt due after one year
Millions of yen
¥195,173
139
32,012
75,344
¥302,668
Millions of yen
¥ 520
14,630
100,472
¥115,622
Thousands of US
dollars (Note 1)
$2,075,205
1,478
340,372
801,106
$3,218,161
Thousands of US
dollars (Note 1)
$ 5,529
155,556
1,068,283
$1,229,368
8. CoMMItMENts ANd CoNtINgENt lIABIlItIEs
(A) CoMMItMENt
At March 31, 2013, the Company had loan commitment agreements with certain affiliated companies The nonexercised portion of loan
commitments was as follows:
Total loan limits
Loan executions
The nonexercised portion of loan commitments
Millions of yen
¥14,107
–
¥14,107
Thousands of US
dollars (Note 1)
$149,995
–
$149,995
(B) CoNtINgENt lIABIlItIEs
At March 31, 2013, the Company and its consolidated subsidiaries were contingently liable mainly as guarantors or co-guarantors of
indebtedness of related and other companies in the aggregate amount of ¥80,458 million ($855,481 thousand)
9. NEt AssEts
Net assets comprises four sections, which are the owners’ equity, accumulated other comprehensive income, share subscription rights
and minority interests
Under the Japanese Companies Act (“the Act”) and regulations, the entire amount paid for new shares is required to be designated as
common stock However, a company may, by a resolution of the board of directors, designate an amount not exceeding one-half of the
price of the new shares as additional paid-in-capital, which is included in capital surplus
Under the Act, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the
excess, if any, of 25% of common stock over the total of additional paid-in-capital and legal earnings reserve must be set aside as addi-
tional paid-in-capital or legal earnings reserve Legal earnings reserve is included in retained earnings in the accompanying consolidated
balance sheets
Under the Act, appropriations (legal earnings reserve and additional paid-in-capital could be used to eliminate or reduce a deficit or
could be capitalized) generally require a resolution of the shareholders’ meeting
92
(A) sHArEs IssuEd ANd outstANdINg
Changes in number of shares issued and outstanding during the years ended March 31, 2013 and 2012 were as follows:
Balance at April 1, 2011
Increase during the year
Decrease during the year
Balance at March 31 and April 1, 2012
Increase during the year
Decrease during the year
Balance at March 31, 2013
1,206,286
–
–
1,206,286
–
–
1,206,286
10,984
76
(85)
10,975
82
(555)
10,502
Shares of common
stock (Thousands)
Shares of treasury
stock (Thousands)
(B) sHArE suBsCrIPtIoN rIgHts
Share subscription rights at March 31, 2013 and 2012 consisted of the following:
Stock options
Total
(C) dIVIdENds
Dividends paid for the year ended March 31, 2013 were as follows:
Millions of yen
2013
¥2,115
¥2,115
2012
¥2,006
¥2,006
Thousands of US
dollars (Note 1)
2013
$22,488
$22,488
Approved at the shareholders’ meeting held on June 22, 2012
Total
Millions of yen
¥2,990
¥2,990
Thousands of US
dollars (Note 1)
$31,792
$31,792
There were no dividends included in the retained earnings at March 31, 2013 and to be paid in subsequent periods
10. IMPAIrMENt loss
For the year ended March 31, 2013, the Group recorded an impairment loss on the following asset group
Application
Assets to be disposed of by sale
Type
Vessels and Other
Millions of yen
¥10,978
Thousands of US
dollars (Note 1)
$116,725
For the year ended March 31, 2012, the Group recorded an impairment loss on the following asset group
Application
Assets to be disposed of by sale
Type
Vessels and Other
Millions of yen
¥5,468
The Group group operating assets based on management accounting categories, and also group assets to be disposed of by sale
and idle assets by structure For the years ended March 31, 2013 and 2012, with regard to the target price of assets to be disposed of
by sale which fell below book value, the Group reduced the book value on these assets to recoverable amounts and booked the reduc-
tions as impairment losses
The recoverable amount for this asset group is evaluated based on the asset’s net selling price And the asset’s net selling price is
appraised based on the target price of assets to be disposed of by sale
93
11. otHEr INCoME (EXPENsEs): otHErs, NEt—BrEAKdoWN
Millions of yen
2013
2012
Thousands of US
dollars (Note 1)
2013
others, net:
Exchange loss, net
Amortization of goodwill, net
Gain on sale of vessels, investment securities and others
Loss on sale and disposal of vessels, investment securities and others
Loss arising from dissolution of subsidiaries and affiliated companies
Loss on write-down of investment securities and others
Provision for doubtful accounts
Special retirement
Cancellation fee for chartered ships, net
Impairment loss
Cost of business structural reforms
Sundries, net
Total
¥ (3,297)
220
12,521
(4,187)
(152)
(2,892)
(90)
(79)
1,744
(10,978)
(101,463)
(729)
¥(109,382)
¥ (4,440)
288
11,784
(1,831)
(286)
(9,163)
(28)
(361)
(199)
(5,468)
–
900
¥ (8,804)
$
(35,056)
2,339
133,131
(44,519)
(1,616)
(30,750)
(957)
(840)
18,543
(116,725)
(1,078,820)
(7,750)
$(1,163,020)
NotE: BrEAKdoWN of Cost of BusINEss struCturAl rEforMs
Profits and losses associated with the business structural reforms in the dry bulker and tanker businesses such as loss on transfer of time
charter contracts, impairment loss, loss on sale of vessels and gain/loss on cancellation of derivatives were collectively recorded as cost
of business structural reforms Breakdown of the cost was as follows:
Loss on transfer of time charter contracts
Impairment loss
Loss on sale of vessels
Gain on cancellation of derivatives
Others
Total
Millions of yen
¥103,422
7,279
1,341
(10,346)
(233)
¥101,463
Thousands of US
dollars (Note 1)
$1,099,649
77,395
14,258
(110,005)
(2,477)
$1,078,820
(IMPAIrMENt loss)
For the year ended March 31, 2013, the Group recorded an impairment loss on the following asset group:
Application
Assets to be disposed of by sale
Type
Vessels
Millions of yen
¥7,279
Thousands of US
dollars (Note 1)
$77,395
The Group group operating assets based on management accounting categories, and also group assets to be disposed of by sale
and idle assets by structure For the year ended March 31, 2013, with regard to the target price of assets to be disposed of by sale which
fell below book value, the Group reduced the book value on these assets to recoverable amounts and booked the reductions as cost of
business structural reforms
The recoverable amount for this asset group is evaluated based on the asset’s net selling price And the asset’s net selling price is
appraised based on the target price of assets to be disposed of by sale
94
12. lEAsEs
As lEssEE:
(A) INforMAtIoN oN fINANCE lEAsEs ACCouNtEd for As oPErAtINg lEAsEs:
(1) A summary of assumed amounts of acquisition cost, accumulated depreciation and net book value at March 31, 2013 of finance
leases that do not transfer ownership to the lessee was as follows:
Acquisition cost
Accumulated depreciation
Net book value
Acquisition cost
Accumulated depreciation
Net book value
Millions of yen
Equipment,
mainly
containers
¥26,337
25,171
¥ 1,166
Total
¥26,337
25,171
¥ 1,166
Thousands of US dollars (Note 1)
Equipment,
mainly
containers
$280,032
267,634
$ 12,398
Total
$280,032
267,634
$ 12,398
A summary of assumed amounts of acquisition cost, accumulated depreciation and net book value at March 31, 2012 of finance
leases that do not transfer ownership to the lessee was as follows:
Acquisition cost
Accumulated depreciation
Net book value
(2) Future lease payments at March 31, 2013 and 2012
Amount due within one year
Amount due after one year
Total
(3) Lease payments, depreciation equivalent and interest equivalent
Lease payments
Depreciation equivalent
Interest equivalent
Equipment,
mainly
containers
¥34,800
32,316
¥ 2,484
Millions of yen
Others
¥89
85
¥ 4
Total
¥34,889
32,401
¥ 2,488
Millions of yen
2013
¥2,041
1,177
¥3,218
Millions of yen
2013
¥2,713
1,322
79
2012
¥2,631
2,814
¥5,445
2012
¥3,167
1,898
125
Thousands of US
dollars (Note 1)
2013
$21,701
12,515
$34,216
Thousands of US
dollars (Note 1)
2013
$28,846
14,056
840
(4) Calculation of depreciation equivalent
Assumed depreciation amounts are computed using the declining-balance method or the straight-line method over the lease terms
assuming no residual value
(5) Calculation of interest equivalent
The excess of total lease payments over acquisition cost equivalents is regarded as amounts representing interest payable equivalents
and is allocated to each period using the interest method
(6) Impairment loss
There was no impairment loss on finance lease accounted for as operating leases
95
(B) futurE lEAsE PAyMENts uNdEr oPErAtINg lEAsEs for oNly NoN-CANCElABlE CoNtrACts At MArCH 31,
2013 ANd 2012:
Amount due within one year
Amount due after one year
Total
Millions of yen
2013
¥ 43,810
252,281
¥296,091
2012
¥ 38,589
240,143
¥278,732
Thousands of US
dollars (Note 1)
2013
$ 465,816
2,682,414
$3,148,230
As lEssor:
(A) futurE lEAsE INCoME uNdEr oPErAtINg lEAsEs for oNly NoN-CANCElABlE CoNtrACts At MArCH 31,
2013 ANd 2012:
Amount due within one year
Amount due after one year
Total
Millions of yen
2013
¥13,571
47,167
¥60,738
2012
¥13,125
42,020
¥55,145
Thousands of US
dollars (Note 1)
2013
$144,295
501,510
$645,805
13. rENtAl ProPErtIEs
The Company and some of its consolidated subsidiaries own real estate for office lease (including lands) in Tokyo, Osaka and other areas
Information about the book value and the fair value of such rental properties was as follows:
Book value
Fair value
Millions of yen
2013
¥279,130
368,128
2012
¥267,295
356,497
Thousands of US
dollars (Note 1)
2013
$2,967,889
3,914,173
Notes: 1 Book value was calculated as the amount equivalent to the cost for acquisition deducting accumulated depreciation and impairment loss
2 Fair value is mainly based upon the amount appraised by outside independent real estate appraisers
In addition, information about rental revenue and expense from rental properties was as follows:
Rental revenue
Rental expense
Difference
Millions of yen
2013
¥26,193
14,776
¥11,417
2012
¥26,223
14,431
¥11,792
Thousands of US
dollars (Note 1)
2013
$278,501
157,108
$121,393
Note: Rental revenue is mainly recorded as “shipping and other revenues” and rental expense (depreciation expense, repairs and maintenance fee, utilities, personnel cost, tax
and public charge, etc) is mainly recorded as “shipping and other expenses”
96
14. sEgMENt ANd rElAtEd INforMAtIoN
(A) sEgMENt INforMAtIoN:
Reportable segment
Bulkships
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Total
Adjustment
Consolidated
Millions of yen
For the year ended March 31, 2013:
1. revenues:
(1) Revenues from customers,
unconsolidated subsidiaries and
affiliated companies ¥ 731,269
(2) Inter-segment revenues
735
Total revenues ¥ 732,004
Segment income (loss) ¥
(24,800)
Segment assets ¥1,298,682
¥606,589
1,678
¥608,267
¥ (11,291)
¥403,167
2. others
(1) Depreciation and amortization ¥
(2) Amortization of goodwill, net
(3) Interest income
(4) Interest expenses
(5) Equity in earnings (losses) of
66,689
(573)
1,144
10,785
¥ 14,901
34
178
2,501
¥54,285
193
¥54,478
¥ 1,283
¥36,420
¥ 3,530
273
37
331
¥109,650
18,377
¥128,027
¥ 10,746
¥379,969
¥1,501,793
20,983
¥1,522,776
¥ (24,062)
¥2,118,238
¥ 7,401
7,061
¥ 14,462
¥ 2,449
¥303,650
¥1,509,194
28,044
¥1,537,238
¥ (21,613)
¥2,421,888
¥
–
(28,044)
¥ (28,044)
¥
(6,955)
¥(257,277)
¥1,509,194
–
¥1,509,194
¥ (28,568)
¥2,164,611
¥ 7,964
63
97
1,957
¥ 93,084
(203)
1,456
15,574
¥ 410
(17)
1,252
858
¥ 93,494
(220)
2,708
16,432
¥
1,191
–
(1,034)
(3,411)
¥ 94,685
(220)
1,674
13,021
affiliated companies, net
(6,551)
1,258
153
140
(5,000)
64
(4,936)
(6) Cost of business
structural reforms
(7) Investment in affiliates
(8) Tangible/intangible fixed
101,463
66,624
–
6,031
–
1,625
–
1,190
101,463
75,470
–
2,282
101,463
77,752
–
–
–
(4,936)
101,463
77,752
assets increased
128,440
11,463
1,102
20,339
161,344
622
161,966
2,924
164,890
Reportable segment
Bulkships
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Total
Adjustment
Consolidated
Thousands of US dollars (Note 1)
For the year ended March 31, 2013:
1. revenues:
(1) Revenues from customers,
unconsolidated subsidiaries and
affiliated companies $ 7,775,322 $6,449,644
(2) Inter-segment revenues
17,842
Total revenues $ 7,783,137 $6,467,486
Segment income (loss) $
(263,690) $ (120,053)
Segment assets $13,808,421 $4,286,730
7,815
2,052
195,396
$577,193 $1,165,869 $15,968,028 $
– $16,046,720
78,692 $16,046,720 $
–
75,077
$579,245 $1,361,265 $16,191,133 $ 153,769 $16,344,902 $ (298,182) $16,046,720
(73,950) $ (303,753)
$ 13,642 $ 114,258 $
$387,241 $4,040,075 $22,522,467 $3,228,602 $25,751,069 $(2,735,535) $23,015,534
(229,803) $
(255,843) $
26,040 $
(298,182)
223,105
298,182
2. others
(1) Depreciation and amortization $
(2) Amortization of goodwill, net
(3) Interest income
(4) Interest expenses
(5) Equity in earnings (losses) of
709,080 $ 158,437
362
1,893
26,592
(6,093)
12,164
114,673
$ 37,533 $ 84,679 $
2,903
393
3,519
670
1,031
20,809
989,729 $
(2,158)
15,481
165,593
4,359 $
(181)
13,312
9,123
994,088 $
(2,339)
28,793
174,716
12,663 $ 1,006,751
(2,339)
17,799
138,447
–
(10,994)
(36,269)
affiliated companies, net
(69,654)
13,376
1,627
1,488
(53,163)
680
(52,483)
(6) Cost of business
structural reforms
(7) Investment in affiliates
(8) Tangible/intangible fixed
1,078,820
708,389
–
64,125
–
17,278
–
12,654
1,078,820
802,446
–
24,263
1,078,820
826,709
–
–
–
(52,483)
1,078,820
826,709
assets increased
1,365,657
121,882
11,717
216,257
1,715,513
6,614
1,722,127
31,089
1,753,216
Effective from the year ended March 31, 2013, the Company has changed the method of allocating general and administrative expenses
to reflect global expansion of our business locations on segment information appropriately In case of calculating segment information for
the year ended March 31, 2012 in accordance with the new method, segment loss would be decreased by ¥2,260 million ($24,030 thou-
sand) in “Bulkships,” ¥541 million ($5,752 thousand) in “Containerships” and ¥51 million ($542 thousand) in “Ferry & Domestic Transport”
respectively and increased by ¥2,891 million ($30,739 thousand) in “Adjustment” And segment income would be increased by ¥71 mil-
lion ($755 thousand) in “Associated Business” and decreased by ¥33 million ($351 thousand) in “Others”
97
Reportable segment
Bulkships
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Total
Adjustment
Consolidated
Millions of yen
For the year ended March 31, 2012:
1. revenues:
(1) Revenues from customers,
unconsolidated subsidiaries and
affiliated companies ¥ 726,011
(2) Inter-segment revenues
978
Total revenues ¥ 726,989
Segment income (loss) ¥ (6,922)
Segment assets ¥1,194,814
2. others
(1) Depreciation and amortization ¥ 58,371
(558)
(2) Amortization of goodwill, net
798
(3) Interest income
(4) Interest expenses
9,818
(5) Equity in earnings of affiliated
¥542,426
1,700
¥544,126
¥ (29,910)
¥365,975
¥ 13,433
35
170
2,457
¥52,134
206
¥52,340
¥ (534)
¥36,089
¥106,710
17,729
¥124,439
¥ 9,099
¥355,342
¥1,427,281
20,613
¥1,447,894
¥ (28,267)
¥1,952,220
¥ 7,940
7,206
¥ 15,146
¥ 4,304
¥278,061
¥1,435,221
27,819
¥1,463,040
¥ (23,963)
¥2,230,281
¥ –
(27,819)
¥ (27,819)
¥ (357)
¥(284,119)
¥1,435,221
–
¥1,435,221
¥ (24,320)
¥1,946,162
¥ 3,867
241
70
406
¥ 8,254
(12)
42
1,980
¥ 83,925
(294)
1,080
14,661
¥ 1,446
6
1,256
1,056
¥ 85,371
(288)
2,336
15,717
¥ 253
–
(1,163)
(4,206)
¥ 85,624
(288)
1,173
11,511
companies, net
(6) Investment in affiliates
(7) Tangible/intangible fixed
1,883
59,381
984
5,082
93
1,096
124
1,370
3,084
66,929
216
2,228
3,300
69,157
–
–
3,300
69,157
assets increased
158,188
8,210
829
5,442
172,669
2,768
175,437
289
175,726
(Segment income (loss))
Segment income (loss) is calculated by adjusting operating income for gains on management of surplus funds (interest income, etc) and the cost of raising funds (interest
expense, etc)
(B) rElAtEd INforMAtIoN:
(1) Information about geographic areas:
Our service areas are not necessarily consistent with our customer’s location in our core ocean transport business
That’s why the revenues of geographic areas are revenues, wherever they may be earned, of companies registered in countries in the
geographic areas
For the year ended March 31, 2013:
Revenues
Tangible fixed assets
Japan
¥1,400,961
¥1,211,948
North America
¥17,422
¥23,456
Europe
¥35,220
¥ 3,651
Asia
¥55,591
¥64,844
Millions of yen
For the year ended March 31, 2013:
Revenues $14,895,917
Tangible fixed assets $12,886,209
Japan
North America
$185,242
$249,399
Europe
$374,482
$ 38,820
Asia
$591,079
$689,463
Thousands of US dollars (Note 1)
For the year ended March 31, 2012:
Revenues
Tangible fixed assets
Japan
¥1,355,877
¥1,226,211
North America
¥19,150
¥25,194
Europe
¥25,008
¥ 4,013
Asia
¥34,657
¥38,299
Millions of yen
Others
¥ –
¥68
Others
$ –
$724
Others
¥529
¥ 86
Consolidated
¥1,509,194
¥1,303,967
Consolidated
$16,046,720
$13,864,615
Consolidated
¥1,435,221
¥1,293,803
98
(2) Information about impairment loss by reportable segment:
For the year ended March 31, 2013:
Impairment loss
Bulkships
¥8,407
For the year ended March 31, 2013:
Impairment loss
Bulkships
$89,389
Millions of yen
Reportable segment
Container-
ships
¥–
Ferry & Domestic
transport
¥368
Associated
business
¥–
Sub Total
¥8,775
Others
¥278
and elimination Consolidated
¥10,978
¥1,925
Adjustment
Thousands of US dollars (Note 1)
Reportable segment
Container-
ships
$–
Ferry & Domestic
transport
$3,912
Associated
business
$–
Sub Total
$93,301
Others
$2,956
and elimination Consolidated
$116,725
$20,468
Adjustment
Note: Other than the amounts written above, impairment loss associated with bulkships segment (¥7,279 million ($77,395 thousand)) were included in cost of business
structural reforms
For the year ended March 31, 2012:
Impairment loss
Bulkships
¥5,468
Millions of yen
Reportable segment
Container-
ships
¥–
Ferry & Domestic
transport
¥–
Associated
business
¥–
Sub Total
¥5,468
Others
¥–
and elimination Consolidated
¥5,468
¥–
Adjustment
(3) Information about goodwill (negative goodwill) by reportable segment:
Reportable segment
Millions of yen
For the year ended March 31, 2013:
Goodwill (Negative goodwill)
at the end of current year
Bulkships
Container-
ships
Ferry & Domestic
transport
Associated
business
Sub Total
Others
and elimination Consolidated
Adjustment
¥(1,014)
¥16
¥704
¥1,397
¥1,103
¥2
¥–
¥1,105
For the year ended March 31, 2013:
Goodwill (Negative goodwill)
at the end of current year $(10,782)
Bulkships
Thousands of US dollars (Note 1)
Reportable segment
Container-
ships
Ferry & Domestic
transport
Associated
business
Sub Total
Others
and elimination Consolidated
Adjustment
$170
$7,485
$14,855
$11,728
$21
$–
$11,749
For the year ended March 31, 2012:
Goodwill (Negative goodwill)
at the end of current year
Bulkships
Container-
ships
Ferry & Domestic
transport
Associated
business
Sub Total
Others
and elimination Consolidated
Adjustment
¥(1,362)
¥62
¥977
¥1,155
¥832
¥14
¥–
¥846
Reportable segment
Millions of yen
99
15. INCoME tAXEs
The Company is subject to a number of taxes based on income, which, in the aggregate, indicate statutory rates in Japan of approxi-
mately 3425% for the year ended March 31, 2013 and 3725% for the year ended March 31, 2012
(A) Significant components of deferred tax assets and liabilities at March 31, 2013 and 2012 were as follows:
deferred tax assets:
Excess bad debt expenses
Reserve for bonuses expenses
Retirement benefits expenses
Retirement allowances for directors
Write-down of securities and other investments
Accrued business tax
Operating loss carried forward
Unrealized gain on sale of fixed assets
Impairment loss
Unrealized losses on hedging derivatives
Others
Total deferred tax assets
Valuation allowance
Net deferred tax assets
deferred tax liabilities:
Reserve deductible for tax purposes when appropriated for deferred
gain on real properties
Reserve deductible for tax purposes when appropriated for
special depreciation
Unrealized holding gains on available-for-sale securities
Gain on securities contributed to employee retirement benefit trust
Revaluation reserve
Retained earnings of consolidated subsidiaries
Unrealized gains on hedging derivatives
Others
Total deferred tax liabilities
Net deferred tax liabilities
Millions of yen
2013
2012
Thousands of US
dollars (Note 1)
2013
¥ 1,772
1,463
4,287
728
1,576
423
69,292
1,699
1,212
–
3,287
85,739
(77,693)
8,046
¥ 673
1,495
4,198
702
2,404
392
25,491
2,052
613
13,150
3,787
54,957
(11,269)
43,688
$ 18,841
15,556
45,582
7,741
16,757
4,498
736,757
18,065
12,887
–
34,948
911,632
(826,082)
85,550
(1,815)
(1,849)
(19,298)
(889)
(15,200)
(3,698)
(14,811)
(16,489)
(21,127)
(325)
(74,354)
¥(66,308)
(1,173)
(10,931)
(3,698)
(14,787)
(14,228)
–
(370)
(47,036)
¥ (3,348)
(9,452)
(161,616)
(39,320)
(157,480)
(175,322)
(224,636)
(3,455)
(790,579)
$(705,029)
Following the promulgation on December 2, 2011 of the “Act for Partial Revision of the Income Tax Act, etc for the Purpose of Creat-
ing Taxation System Responding to Changes in Economic and Social Structures” (Act No 114 of 2011) and the “Act on Special Mea-
sures for Securing Financial Resources Necessary to Implement Measures for Reconstruction following the Great East Japan Earthquake”
(Act No 117 of 2011), Japanese corporation tax rates will be reduced and the special reconstruction corporation tax, a surtax for recon-
struction funding after the Great East Japan Earthquake, will be imposed for the fiscal years beginning on or after April 1, 2012 In line
with these revisions, the Company changed the statutory tax rate to calculate deferred tax assets and liabilities from 3725% to 3425%
for temporary differences which are expected to reverse during the period from the fiscal year beginning on April 1, 2012 to the fiscal year
beginning on April 1, 2014 Similarly, the Company changed the statutory tax rate to calculate deferred tax assets and liabilities from
3725% to 3175% for temporary differences which are expected to reverse from the fiscal years beginning on or after April 1, 2015
As a result of this change, net deferred tax assets (after netting deferred tax liabilities) decreased by ¥527 million, and income taxes—
deferred, unrealized holding gains on available-for-sale securities, net of tax increased by ¥556 million, ¥1,782 million, respectively and
unrealized losses on hedging derivatives, net of tax decreased by ¥1,752 million
(B) Significant difference between the statutory tax rate and the effective tax rate for the financial statement purpose for the years ended
March 31, 2013 and 2012 are not stated as the Company recorded loss before income taxes and minority interests
100
16. EMPloyEEs’ sEVErANCE ANd rEtIrEMENt BENEfIts
Employees’ severance and retirement benefits included in the liability section of the consolidated balance sheets at March 31, 2013 and
2012 consisted of the following:
Projected benefit obligation
Unrecognized actuarial differences
Prepaid pension expenses
Less fair value of pension assets
Employees’ severance and retirement benefits
Millions of yen
2013
¥ 61,280
(712)
17,576
(64,672)
¥ 13,472
2012
¥ 61,317
(3,887)
17,566
(61,230)
¥ 13,766
Thousands of US
dollars (Note 1)
2013
$ 651,568
(7,570)
186,879
(687,634)
$ 143,243
Included in the consolidated statements of operations for the years ended March 31, 2013 and 2012 were severance and retirement
benefit expenses, which comprised the following:
Service costs—benefits earned during the year
Interest cost on projected benefit obligation
Expected return on plan assets
Amortization of actuarial differences
Others*
Employees’ severance and retirement benefits expenses
Millions of yen
2013
¥ 3,054
873
(1,087)
239
1,102
¥ 4,181
2012
¥ 3,965
874
(1,085)
685
459
¥ 4,898
Thousands of US
dollars (Note 1)
2013
$ 32,472
9,282
(11,558)
2,541
11,718
$ 44,455
* “Others” represents special retirement and expenses related to the defined contribution pension plan of the Group
The discount rate for the years ended March 31, 2013 and 2012 used by the Company is mainly 20% Also, the rate of expected
return on plan assets for the years ended March 31, 2013 and 2012 is mainly 20%
The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to each service year using
the estimated number of total service years
101
17. stoCK oPtIoNs
(A) EXPENsEd AMouNt
Expensed amounts on stock options for the years ended March 31, 2013 and 2012 were as follows:
Selling, general and administrative expenses
Total
Millions of yen
2013
¥110
¥110
2012
¥150
¥150
Thousands of US
dollars (Note 1)
2013
$1,170
$1,170
(B) tErMs ANd CoNdItIoNs
The following table summarizes terms and conditions of stock options for the years when they were granted:
2002
2003
2004
2005
Number of grantees
Directors: 13
Executive officers: 19
Employees: 52
Number of stock options
Grant date
Vesting conditions
Service period
Exercise period
Common stock 1,560,000
September 11, 2002
No provisions
No provisions
From June 26, 2004 to
June 25, 2012
Directors: 11
Executive officers: 16
Employees: 37
Presidents of the
Company’s domestic
consolidated subsidiaries: 34
Common stock 1,590,000
August 8, 2003
No provisions
No provisions
From June 20, 2004 to
June 25, 2013
Directors: 11
Executive officers: 16
Employees: 32
Presidents of the
Company’s domestic
consolidated subsidiaries: 34
Common stock 1,570,000
August 5, 2004
No provisions
No provisions
From June 20, 2005 to
June 24, 2014
Directors: 11
Executive officers: 17
Employees: 38
Presidents of the
Company’s domestic
consolidated subsidiaries: 34
Common stock 1,650,000
August 5, 2005
No provisions
No provisions
From June 20, 2006 to
June 23, 2015
Number of grantees
Number of stock options
Grant date
Vesting conditions
Service period
Exercise period
Number of grantees
Number of stock options
Grant date
Vesting conditions
Service period
Exercise period
2006
2007
2008
2009
Directors: 11
Executive officers: 17
Employees: 34
Presidents of the
Company’s domestic
consolidated subsidiaries: 37
Common stock 1,670,000
August 11, 2006
No provisions
No provisions
From June 20, 2007 to
June 22, 2016
Directors: 11
Executive officers: 20
Employees: 33
Presidents of the
Company’s domestic
consolidated subsidiaries: 36
Common stock 1,710,000
August 10, 2007
No provisions
No provisions
From June 20, 2008 to
June 21, 2017
Directors: 11
Executive officers: 20
Employees: 38
Presidents of the
Company’s domestic
consolidated subsidiaries: 36
Common stock 1,760,000
August 8, 2008
No provisions
No provisions
From July 25, 2009 to
June 24, 2018
Directors: 11
Executive officers: 20
Employees: 33
Presidents of the
Company’s domestic
consolidated subsidiaries: 35
Common stock 1,640,000
August 14, 2009
No provisions
No provisions
From July 31, 2011 to
June 22, 2019
2010
2011
2012
Directors: 10
Executive officers: 21
Employees: 36
Presidents of the
Company’s domestic
consolidated subsidiaries: 33
Common stock 1,710,000
August 16, 2010
No provisions
No provisions
From July 31, 2012 to
June 21, 2020
Directors: 10
Executive officers: 22
Employees: 34
Presidents of the
Company’s domestic
consolidated subsidiaries: 33
Common stock 1,720,000
August 9, 2011
No provisions
No provisions
From July 26, 2013 to
June 22, 2021
Directors: 9
Executive officers: 22
Employees: 33
Presidents of the
Company’s domestic
consolidated subsidiaries: 30
Common stock 1,640,000
August 13, 2012
No provisions
No provisions
From July 28, 2014 to
June 21, 2022
102
(C) CHANgEs IN NuMBEr ANd uNIt PrICEs
The following tables summarize changes in number and unit prices of stock options for the years when they were granted:
(1) Changes in number of stock options
Non-vested stock options
Balance at March 31, 2012
Options granted during the year
Options expired during the year
Options vested during the year
Balance at March 31, 2013
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 1,710,000 1,720,000
–
–
–
–
– 1,710,000
–
–
– 1,640,000
–
–
–
–
– 1,720,000 1,640,000
Vested stock options
Balance at March 31, 2012
Options vested during the year
Options exercised during the year
Options expired during the year
Balance at March 31, 2013
2002
20,000
–
20,000
–
–
2003
14,000
–
–
–
14,000
2004
286,000
–
–
–
286,000
(2) Unit prices of stock options exercised during the year
2008
2009
2005
2006
2007
878,000 1,443,000 1,680,000 1,750,000 1,630,000
–
– 1,710,000
–
–
–
–
878,000 1,443,000 1,680,000 1,750,000 1,630,000 1,710,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2010
2011
2012
Exercise price
Average market price of share
at exercise
Fair value per stock option
at grant date
2002
2003
2004
2005
2006
¥264
¥377
¥644
¥762
¥841
2007
¥1,962
2008
¥1,569
2009
2010
2011
2012
¥639
¥642
¥468
¥277
¥276
–
–
–
–
–
–
–
–
–
–
–
–
–
–
¥219
¥ 352
¥ 217
¥136
¥208
¥ 87
¥ 67
(d) KEy fIgurEs for fAIr VAluE PEr stoCK oPtIoN
The Company utilized the Black Scholes Model for calculating fair value per stock option Key figures of the calculation were as follows:
Stock price volatility
Expected remaining term of the option
Expected dividends
Risk-free interest rate
470%
5 years and 11 months
¥5 per share
029%
2012
18. MAtErIAl NoN-CAsH trANsACtIoNs
Amounts of lease assets and lease obligations recognized for the years ended March 31, 2013 and 2012 were ¥495 million ($5,263
thousand) and ¥3,817 million, respectively
19. BusINEss CoMBINAtIoNs
(1) Name and business description of companies subject to business combination
Surviving company: Utoc Corporation (business: harbor and transport business and other activities)
Absorbed company: International Container Terminal Co, Ltd (business: harbor and transport business and other activities)
(2) Date of business combination (effective date)
April 1, 2011
(3) Legal form of business combination
Merger in which Utoc Corporation is the surviving company
(4) Name of company after business combination
Utoc Corporation
(5) Outline of transaction including its purpose
The merger was conducted between Utoc Corporation, which is engaged in a wide range of business activities including plant con-
struction, warehousing and logistics in addition to harbor and transport business, and International Container Terminal Co, Ltd, which
has made achievements as a high-quality container terminal operator This merger thus promotes effective use of management
resources and expanded service menus in pursuing aggressive business activities not only in the harbor and transport business but
also in the logistics and plant businesses By so doing, the Company will work to enhance the service quality that is well recognized by
customers in various sectors in an aim to grow, expand and maximize corporate value
The transaction underlying the business combination entails allotment of 104 shares of common stock of Utoc Corporation for
every 1 share of common stock of International Container Terminal Co, Ltd
103
(6) Overview of accounting treatment of transaction
The transfer was accounted for as a transaction under common control as per Accounting Standard for Business Combinations (ASBJ
Statement No 21, December 26, 2008) and the Revised Guidance on Accounting Standard for Business Combinations and Account-
ing Standard for Business Divestitures (ASBJ Guidance No 10, December 26, 2008)
20. CoMPrEHENsIVE INCoME
For the years ended March 31, 2013 and 2012, the amounts reclassified to net loss that were recognized in other comprehensive income
and tax effects for each component of other comprehensive income were as follows:
Millions of yen
2013
2012
Thousands of US
dollars (Note 1)
2013
unrealized holding gains on available-for-sale securities, net of tax:
Increase (Decrease) during the year
Reclassification adjustments
Sub-total, before tax
Tax benefit (expense)
unrealized gains on hedging derivatives, net of tax:
Increase during the year
Reclassification adjustments
Adjustments of acquisition cost
Sub-total, before tax
Tax expense
foreign currency translation adjustments:
Increase (Decrease) during the year
Reclassification adjustments
¥ 10,770
2,801
13,571
(4,478)
9,093
70,181
17,796
2,712
90,689
(34,276)
56,413
14,902
7
14,909
¥ (7,682)
8,891
1,209
1,295
2,504
19,784
9,894
6,316
35,994
(17,263)
18,731
(2,569)
1,266
(1,303)
share of other comprehensive income (loss) of associates
accounted for using equity method:
Decrease during the year
Reclassification adjustments
Total other comprehensive income
(3,560)
4,664
1,104
¥ 81,519
(15,672)
5,621
(10,051)
¥ 9,881
$ 114,514
29,782
144,296
(47,613)
96,683
746,209
189,219
28,836
964,264
(364,444)
599,820
158,448
74
158,522
(37,852)
49,590
11,738
$ 866,763
21. rElAtEd PArty trANsACtIoNs
Category
Affiliated
company
Name of
company
Address
Daiichi Chuo
Kisen Kaisha
Chuo-ku,
Tokyo
Millions
of yen
Paid-in
capital
Business
description
Ratio of the Group’s
voting rights
Relation with
related party
¥20,758 Marine
Directly 2696% Interlocking directorate
transportation
Ship chartering
Loans of capital
Millions of yen
Transactions during
the year ended March 31, 2013
Balance at
March 31, 2013
Transacted
Thousands of US dollars (Note 1)
Transactions during
the year ended
March 31, 2013
Balance at
March 31,
2013
Description of transaction
amount Account Amount
Transacted amount
Amount
Underwriting of
capital increase
Loans of capital
¥15,000
38,400
–
–
$159,490
408,293
–
Notes: 1 (1) With regard to underwriting of capital increase, the Company underwrote capital increase through a third-party allotment of new shares of Daiichi Chuo Kisen Kaisha at
¥1,000 per share
(2) With regard to loans of capital, interest rates on loans were decided after considering market interest rates Furthermore, collateral was not accepted
2 Consumption taxes are not included in transacted amount
22. suBsEQuENt EVENt
There are no applicable matters to report
104
independent auditor’s report
105
the mol group
Mitsui O.S.K. Lines, Ltd. March 31, 2013
Consolidated Subsidiaries
▲ Affiliated Companies Accounted for by the Equity Method
Registered
Office
MOL’s Voting
Rights (%)*
Paid-in Capital
(Thousands)
Bulkships
BGT Ltd
BLNG Inc
Chugoku Shipping Agencies Ltd
El Sol Shipping Ltd SA
Euro Marine Carrier BV
Euro Marine Logistics NV
LNG Fukurokuju Shipping Corporation
LNG Jurojin Shipping Corporation
MOL LNG Transport Co, Ltd
MCGC International Ltd
Mitsui OSK Bulk Shipping (Asia Oceania) Pte Ltd
Mitsui OSK Bulk Shipping (Europe) Ltd
Mitsui OSK Bulk Shipping (USA), Inc
Mitsui OSK Kinkai, Ltd
MOG LNG Transport SA
MOL Bridge Finance SA
MOL Bulk Carriers Pte Ltd
MOL-NIC Transport Ltd
MOL Cape (Singapore) Pte Ltd
MOL Netherlands Bulkship BV
Nissan Carrier Europe BV
Nissan Motor Car Carrier Co, Ltd
Phoenix Tankers Pte Ltd
Samba Offshore SA
Shining Shipping SA
Shipowner/Chartering companies (197 companies) in Panama, Cayman Islands,
Liberia, Singapore, Hong Kong, Cyprus, Malta, Isle of Man, Marshall Islands and the UK
Liberia
USA
Japan
Panama
Netherlands
Belgium
Bahamas
Bahamas
Japan
Bahamas
Singapore
UK
USA
Japan
Panama
Panama
Singapore
Liberia
Singapore
Netherlands
Netherlands
Japan
Singapore
Panama
Panama
Tokyo Marine Asia Pte Ltd
Tokyo Marine Co, Ltd
Unix Line Pte Ltd
World Logistics Service (USA), Inc
Others (3 companies)
▲ Act Maritime Co, Ltd
▲ Aramo Shipping (Singapore) Pte Ltd
▲ Asahi Tanker Co, Ltd
▲ Cernambi Norte MV26 BV
▲ Cernambi Sul MV24 BV
▲ Daiichi Chuo Kisen Kaisha
▲ Gearbulk Holding Limited
▲ MSTanker Shipping Limited
▲ Trans Pacific Shipping 2 Ltd
▲ Shipowner/Chartering companies (43 companies) in Liberia, Panama, Bahamas,
Singapore
Japan
Singapore
USA
Japan
Singapore
Japan
Netherlands
Netherlands
Japan
Bermuda
Hong Kong
Bahamas
Containerships
106
Malta, Netherlands, Indonesia, Marshall Islands and Cayman Islands
Chiba Utoc Corporation
Hong Kong Logistics Co, Ltd
International Container Transport Co, Ltd
MO Air International (Taiwan) Co, Ltd
Mitsui OSK Lines (Australia) Pty Ltd
Mitsui OSK Lines (Japan) Ltd
Mitsui OSK Lines (SEA) Pte Ltd
MOL (America) Inc
MOL (Brasil) Ltda
MOL (China) Co, Ltd
MOL (Europe) BV
MOL (Europe) Ltd
MOL (Singapore) Pte Ltd
MOL Consolidation Service Limited
MOL Consolidation Service Ltd (China)
MOL Liner, Limited
MOL Logistics (Deutschland) GmbH
MOL Logistics (Europe) BV
MOL Logistics (HK) Ltd
MOL Logistics (Japan) Co, Ltd
MOL Logistics (Netherlands) BV
MOL Logistics (Singapore) Pte Ltd
MOL Logistics (Thailand) Co, Ltd
MOL Logistics (UK) Ltd
MOL Logistics (USA) Inc
MOL Logistics Holding (Europe) BV
MOL South Africa (Proprietary) Limited
Shanghai Huajia International Freight Forwarding Co, Ltd
Shipowner companies (15 companies) in Panama, Marshall Islands,
Liberia and Hong Kong
Shosen Koun Co, Ltd
TraPac, Inc
Utoc Corporation
Utoc Engineering Pte Ltd
Utoc Logistics Corporation
Utoc Stevedoring Corporation
Others (9 companies)
Japan
Hong Kong
Japan
Taiwan
Australia
Japan
Singapore
USA
Brazil
China
Netherlands
UK
Singapore
Hong Kong
China
Hong Kong
Germany
Netherlands
Hong Kong
Japan
Netherlands
Singapore
Thailand
UK
USA
Netherlands
South Africa
China
Japan
USA
Japan
Singapore
Japan
Japan
10000
7500
10000
10000
7550
5000
10000
10000
10000
8010
10000
10000
10000
10000
10000
10000
10000
7500
10000
10000
10000
7001
10000
10000
10000
10000
10000
10000
10000
4900
5000
2475
2060
2060
2696
4900
5000
5000
10000
10000
5100
10000
10000
10000
10000
10000
10000
10000
10000
10000
10000
10000
10000
10000
10000
10000
10000
7506
10000
10000
4900
10000
10000
10000
10000
7600
7998
10000
6755
10000
10000
10000
US$5
US$1
¥10,000
US$10
€91
€900
¥1,000
¥1,000
¥40,000
US$1
S$2,350
US$402
US$200
¥660,000
¥0
US$8
US$3,500
US$13,061
US$14,752
€18
€195
¥640,000
US$328,811
US$10
US$10
S$138,018
¥2,000,000
US$344
US$200
¥90,000
US$20,743
¥600,045
€100
€100
¥20,758,410
US$61,225
HK$2,000
¥1,200,000
¥90,000
HK$58,600
¥100,000
NT$7,500
A$1,000
¥100,000
S$200
US$6
R$2,403
US$1,960
€456
£1,500
S$5,000
HK$1,000
RMB8,000
HK$40,000
€537
€414
HK$3,676
¥756,250
€3,049
S$700
BT20,000
£400
US$9,814
€19
R3,000
US$1,720
¥300,000
US$3,000
¥2,155,300
S$2,000
¥50,000
¥50,000
Containerships
ferry & domestic
transport
associated Business
others
*MOL includes MOL and its subsidiaries
▲ Mitsui OSK Lines (Thailand) Co, Ltd
▲ Shanghai Kakyakusen Kaisha, Ltd
▲ Shanghai Longfei International Logistics Co, Ltd
▲ Other company (1 company)
Blue Sea Network Co, Ltd
Blue Highway Express Kyushu Co, Ltd
Blue Highway Service KK
Ferry Sunflower Limited
MOL Naikou, Ltd
Shipowner company (1 company) in Panama
MOL Ferry Co, Ltd
Others (7 companies)
▲ Meimon Taiyo Ferry Co, Ltd
▲ Others (2 companies)
Daibiru Corporation
Daibiru Facility Management Ltd
Green Kaiji Kaisha, Ltd
Green Shipping, Ltd
Hokuso Kohatsu KK
Ikuta & Marine Co, Ltd
Japan Express Co, Ltd (Kobe)
Japan Express Co, Ltd (Yokohama)
Japan Express Packing & Transport Co, Ltd
Japan Hydrographic Charts & Publications Co, Ltd
Jentower Limited
Kosan Kanri Service Co, Ltd
Kosan Kanri Service · West Co,Ltd
Kitanihon Tug-boat Co, Ltd
Kobe Towing Co, Ltd
Kusakabe Maritime Engineering Co, Ltd
MOL Career Support, Ltd
Mitsui OSK Kosan Co, Ltd
Mitsui OSK Passenger Line, Ltd
MOL Kaiji Co, Ltd
MOL Techno-Trade, Ltd
MO Tourist Co, Ltd
Nihon Tug-Boat Co, Ltd
Chartering company (1 company) in Panama
Saigon Tower Co, Ltd
Tanshin Building Service Co, Ltd
Ube Port Service Co, Ltd
▲ Nippon Charter Cruise, Ltd
▲ Shinyo Kaiun Corporation
▲ South China Towing Co, Ltd
▲ Tan Cang-Cai Mep Towage Services Co, Ltd
Euromol BV
MOL Ocean Expert Co, Ltd
International Transportation Inc
Linkman Holdings Inc
MOL Cableship Ltd
MOL Marine Consulting, Ltd
MOL Ship Tech Inc
Mitsui Kinkai Kisen Co, Ltd
Mitsui OSK Holdings (Benelux) BV
MOL Accounting Co, Ltd
MOL Adjustment, Ltd
MOL Engineering Co, Ltd
MOL FG, Inc
MOL Information Systems, Ltd
MOL Manning Service SA
MOL Ship Management Co, Ltd
MOL SI, Inc
Shipowner/Chartering companies (4 companies) in Panama
▲ Minaminippon Shipbuilding Co, Ltd
▲ Osaka Shipping Co, Ltd
Registered
Office
MOL’s Voting
Rights (%)*
Paid-in Capital
(Thousands)
Thailand
Japan
China
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Hong Kong
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Vietnam
Japan
Japan
Japan
Japan
Hong Kong
Vietnam
Netherlands
Japan
USA
Liberia
Japan
Japan
Japan
Japan
Netherlands
Japan
Japan
Japan
USA
Japan
Panama
Japan
USA
Japan
Japan
4700
3198
2205
10000
10000
10000
10000
10000
BT20,000
¥100,000
US$1,240
¥54,600
¥50,000
¥30,000
¥100,000
¥650,000
10000
¥1,577,400
3873
¥880,000
5107
10000
10000
10000
10000
10000
8627
10000
10000
9525
10000
10000
10000
6200
10000
10000
10000
10000
10000
10000
10000
10000
8726
10000
10000
9939
5000
3600
2500
4000
10000
10000
10000
10000
10000
10000
10000
8042
10000
10000
10000
10000
10000
10000
10000
10000
10000
2400
3012
¥12,227,847
¥17,000
¥95,400
¥172,000
¥50,000
¥26,500
¥99,960
¥236,000
¥60,000
¥32,000
US$0
¥20,000
¥14,400
¥50,000
¥50,000
¥200,000
¥100,000
¥300,000
¥100,000
¥95,000
¥490,000
¥250,000
¥134,203
VND48,166,000
¥20,000
¥14,950
¥290,000
¥100,000
HK$12,400
US$4,500
€8,444
¥100,000
US$0
US$3
¥10,000
¥100,000
¥50,000
¥350,000
€17,245
¥30,000
¥10,000
¥20,000
US$20
¥100,000
US$135
¥50,000
US$100
¥200,000
¥498,000
107
worldwide offiCes
head office
1-1, Toranomon 2-chome, Minato-ku,
Tokyo 105-8688, Japan
PO Box 5, Shiba, Tokyo
Tel: 81-3-3587-6224
Branch Offices
Fax: 81-3-3587-7734
Nagoya, Kansai, Hiroshima, Kyushu
Japan
Mitsui o.s.K. lines (Japan), ltd.
Head Office (Tokyo):
Yokohama:
Nagoya:
Osaka:
Kyushu:
Tel: 81-3-3587-7684
Tel: 81-45-212-7710
Tel: 81-52-564-7000
Tel: 81-6-6446-6501
Tel: 81-92-262-0701
Fax: 81-3-3587-7730
Fax: 81-45-212-7735
Fax: 81-52-564-7047
Fax: 81-6-6446-6513
Fax: 81-92-262-0720
north america
Mol (America) Inc.
Head Office (Chicago): Tel: 1-630-812-3700
Main Branch Offices
Atlanta:
Long Beach:
New Jersey:
San Francisco:
Seattle:
Tel: 1-678-855-7700
Tel: 1-562-983-6200
Tel: 1-732-512-5200
Tel: 1-925-603-7200
Tel: 1-206-444-6900
Fax: 1-630-812-3703
Fax: 1-678-855-7747
Fax: 1-562-983-6292
Fax: 1-732-512-5300
Fax: 1-925-603-7229
Fax: 1-206-444-6903
Mitsui o.s.K. Bulk shipping (usA) Inc.
Head Office (New Jersey): Tel: 1-201-395-5800
Tel: 1-832-615-6470
Houston:
Tel: 1-562-528-7500
Long Beach:
Fax: 1-201-395-5820
Fax: 1-832-615-6480
Fax: 1-562-528-7515
africa
Mol south Africa (Pty) ltd.
Head Office (Cape Town): Tel: 27-21-441-2200 Fax: 27-21-419-1040
Mitsui o.s.K. lines (Nigeria) ltd.
Lagos:
Mol (ghana) ltd.
Tema:
Tel: 234-1-2806556 Fax: 234-1-2806559
Tel: 233-30-3212084 Fax: 233-30-3210807
middle east
Mitsui o.s.K. lines ltd. Middle East Headquarters
Dubai:
Mol (uAE) l.l.C.
Tel: 971-4-3573566 Fax: 971-4-3573066
Head Office (Dubai):
Tel: 971-4-3573566 Fax: 971-4-3573066
Mitsui o.s.K. Bulk shipping (Asia, oceania) Pte. ltd.
Doha:
Muscat:
Mol (Europe) ltd.
Beirut:
Tel: 974-4-836541
Tel: 968-2440-0950 Fax: 968-2440-0953
Fax: 974-4-836563
Tel: 961-3-809812
Fax: 961-4-530492
oceania
Mitsui o.s.K. lines (Australia) Pty. ltd.
Head Office (Sydney):
Tel: 61-2-9320-1600 Fax: 61-2-9320-1601
Mitsui o.s.K. lines (New Zealand) ltd.
Auckland:
Tel: 64-9-3005820
Fax: 64-9-3091439
Mitsui o.s.K. Bulk shipping (Asia, oceania) Pte. ltd.
Melbourne:
Perth:
Brisbane:
Tel: 61-3-9691-3224 Fax: 61-3-9691-3223
Tel: 61-8-9278-2499 Fax: 61-8-9278-2727
Tel: 61-7-3007-2115 Fax: 61-7-3007-2116
Mol logistics (Australia) Pty. ltd.
Mol logistics (usA) Inc.
Head Office (Melbourne): Tel: 61-3-9335-8555 Fax: 61-3-9335-8599
Head Office (New York): Tel: 1-516-403-2100
Tel: 1-310-787-8351
Los Angeles:
Fax: 1-516-626-6092
Fax: 1-310-787-8168
Central and south america
Mol (Brasil) ltda.
asia
Mol liner ltd.
Head Office (Hong Kong): Tel: 852-2823-6800
Fax: 852-2865-0906
Mitsui o.s.K. lines (India) Private limited
Head Office (Sao Paulo): Tel: 55-11-3145-3972
Fax: 55-11-3145-3945
Head Office (Mumbai):
Tel: 91-22-4054-6300 Fax: 91-22-4054-6301
Mol (Chile) ltda.
Mitsui o.s.K. lines lanka (Private) ltd.
Head Office (Santiago): Tel: 56-2-630-1950
Fax: 56-2-231-5622
Corporativo Mol de Mexico s.A. de C.V.
Head Office (Colombo):
Mol (singapore) Pte. ltd.
Tel: 94-11-2304721
Fax: 94-11-2304730
Head Office (Mexico City): Tel: 52-55-5010-5200
Fax: 52-55-5010-5220
Head Office (Singapore): Tel: 65-6225-2811
Fax: 65-6225-6096
Mol (Panama) Inc.
Mitsui o.s.K. lines (Malaysia) sdn. Bhd.
Head Office (Panama): Tel: 11-507-300-3200
Fax: 11-507-300-3212
Head Office (Kuala Lumpur): Tel: 60-3-5623-9666 Fax: 60-3-5623-9600
Mitsui o.s.K. Bulk shipping (usA) Inc.
P.t. Mitsui o.s.K. lines Indonesia
Sao Paulo:
Tel: 55-11-3145-3980
Fax: 55-11-3145-3946
Head Office (Jakarta):
Tel: 62-21-521-1740 Fax: 62-21-521-1741
Mol (Peru) s.A.C.
Mitsui o.s.K. lines (thailand) Co., ltd.
Lima:
Tel: 51-1-6119400
Fax: 51-1-6119429
Head Office (Bangkok):
Tel: 66-2-234-6252
Fax: 66-2-237-9021
europe
Mol (Europe) B.V.
Head Office (Rotterdam): Tel: 31-10-201-3200
Antwerp:
Genoa:
Hamburg:
Le Havre:
Vienna:
Tel: 32-3-2024860
Tel: 39-010-2901711
Tel: 49-40-356110
Tel: 33-2-32-74-24-00
Tel: 43-1-877-6971
Fax: 31-10-201-3186
Fax: 32-3-2024870
Fax: 39-010-5960450
Fax: 49-40-352506
Fax: 33-2-32-74-24-39
Fax: 43-1-876-4725
Mol (Europe) ltd.
Head Office (Southampton): Tel: 44-2380-714500
Fax: 44-2380-714519
Mitsui o.s.K. Bulk shipping (Europe) ltd.
Head Office (London): Tel: 44-20-7265-7676
Tel: 32-2-305-4240
Brussels:
Tel: 49-40-3609-7410
Hamburg:
Fax: 44-20-7265-7699
Fax: 32-2-305-4241
Fax: 49-40-3609-7450
Mol logistics (deutschland) gmbH
Head Office (Dusseldorf): Tel: 49-211-41883-0
Fax: 49-211-4183310
Mol logistics (Netherlands) B.V.
Head Office (Tilburg): Tel: 31-13-537-33-73
Fax: 31-13-537-35-75
Mol logistics (u.K.) ltd.
Head Office (London): Tel: 44-1895-459700
Fax: 44-1895-449600
108
Mol Philippines, Inc.
Head Office (Manila):
Tel: 632-888-6531
Fax: 632-884-1766
Mitsui o.s.K. lines (Vietnam) ltd.
Head Office (Ho Chi Minh): Tel: 84-83-8219219
Fax: 84-83-8219317
Mitsui o.s.K. lines (Cambodia) Co., ltd.
Head Office (Phnom Penh): Tel: 855-23-223-036 Fax: 855-23-223-040
Mitsui o.s.K. lines Pakistan (Pvt.) ltd.
Head Office (Karachi):
Mol (China) Co., ltd.
Tel: 9221-5205397
Fax: 9221-5202559
Head Office (Shanghai):
Beijing:
Tianjin:
Shenzhen:
Tel: 86-21-2320-6000 Fax: 86-21-2320-6402
Tel: 86-10-8529-9121 Fax: 86-10-8529-9126
Tel: 86-22-8331-1331 Fax: 86-22-8331-1318
Tel: 86-755-2598-2200 Fax: 86-755-2598-2210
Mol (taiwan) Co., ltd.
Head Office (Taipei):
Tel: 886-2-2537-8000 Fax: 886-2-2537-8098
Mitsui o.s.K. Bulk shipping (Asia, oceania) Pte. ltd.
Head Office (Singapore): Tel: 65-323-1303
Bangkok:
Kuala Lumpur:
Seoul:
Mumbai:
Chennai:
Tel: 66-2-634-0807
Tel: 60-3-5623-9772 Fax: 60-3-5623-9666
Tel: 82-2-5672718
Tel: 91-22-4071-4500 Fax: 91-22-4071-4557
Tel: 91-44-4208-1020 Fax: 91-44-4208-1020
Fax: 65-323-1305
Fax: 66-2-634-0806
Fax: 82-2-5672719
SHAREHOLDER InFORMATIOn
Capital:
Head office:
¥65,400,351,028
1‑1, Toranomon 2‑chome, Minato‑ku,
Tokyo 105‑8688, Japan
number of MOL employees:
926
number of MOL Group employees: 9,465
(The parent company and consolidated subsidiaries)
Total number of shares authorized:
3,154,000,000
number of shares issued:
number of shareholders:
Shares listed in:
Share transfer agent:
Communications materials:
1,206,286,115
120,874
Tokyo, Osaka, Nagoya
Mitsubishi UFJ Trust and Banking Corporation
10‑11, Higashisuna 7‑chome, Koto‑ku, Tokyo 137‑8081, Japan
Annual Report (English/Japanese)
Investor Guidebook (English/Japanese)
Market Data (English/Japanese)
News Releases (English/Japanese)
Website (English/Japanese)
Quarterly Newsletter Open Sea (English/Website)
Monthly Newsletter Unabara (Japanese)
Environmental and Social Report (English/Japanese)
(As of March 31, 2013)
Stock Price range (tokyo Stock exchange) and VoLume oF Stock trade
Fiscal 2010 High ¥713
Low ¥433
Fiscal 2011 High ¥477
Low ¥220
Fiscal 2012 High ¥369
Low ¥177
(¥)
800
700
600
500
400
300
200
100
0
(Million shares)
800
10
/4
98765
10
11
12
11
/1
98765432
10
11
12
12
/1
98765432
10
11
12
13
/1
765432
700
600
500
400
300
200
100
0
109
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A
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R
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2
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1
3
For further information, please contact:
Investor Relations Office
Mitsui O.S.K. Lines, Ltd.
1-1, Toranomon 2-chome, Minato-ku,
Tokyo 105-8688, Japan
Telephone: +81-3-3587-6224
Facsimile: +81-3-3587-7734
E-mail:
URL:
iromo@molgroup.com
http://www.mol.co.jp/en/
This annual report is printed on Forest Stewardship Council™ (FSC)‑certified paper made of wood from responsibly managed forests.
It was also printed using vegetable oil inks.
Printed in Japan