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Onward
The Next 130 Years
Annual Report 2015
Year ended March 31, 2015
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The Next 130 Years
In fi scal 2014, MOL marked its 130th anniversary and initiated its midterm management plan
“STEER FOR 2020,” under which the Company is making great strides toward the next 130 years
by innovating its business portfolio, business model and business domain.
MOL GROUP CORPORATE PRINCIPLES
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.
We will strive to maximize
corporate value by always
being creative, continually
pursuing higher operating
effi ciency and promoting
an open and visible
management style that is
guided by the highest
ethical and social standards.
We will promote and
protect our environment by
maintaining strict, safe
operation and navigation
standards.
Layout and Contents of Annual Report 2015
Past
130 years
A corporate culture fostered
over the course of 130 years
Challenge and
Innovation
FFea
Feature:
The Role of the
Marine Transport
Industry and MOL’s
Value Creation
P.3
M
MOL at a Glance
MM
Manufactured Capital
and Market Position
Overview of
Operations
P.34
P.40
Onward
Toward the Future
Me
Message from the Chairman
and the CEO
Strategy and Direction
Inter w
Interview
with
the CFO
Feat
Feature:
Training LNG
Carrier Seafarers
Human Capital
P.16 P.32
P.52
Next
130 years
The
The Management Foundation
n
Underpinning the Next 130
Years of Growth
Intellectual, Social,
Environmental Capital
P.57
Fin
Financial Section
Financial Capital
P.75
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Contents
Value Creation
Intellectual, Social, Environmental Capital
Feature: The Role of the Marine
Transport Industry and MOL’s Value
Creation ......................................... 3
Management Strategy
Message from the Chairman ......... 16
Message from the CEO .................. 22
Financial Highlights ................................... 28
Key Indicators ............................................ 30
Interview with the CFO ................. 32
Manufactured Capital
MOL at a Glance ............................ 34
Market Position in the Industry .... 38
Overview of Operations ................ 40
Human Capital
Feature: Training LNG Carrier
Seafarers ......................................... 52
Safe Operation ........................................... 55
The Management Foundation
Underpinning MOL ....................... 57
Board of Directors, Corporate Auditors and
Executive Offi cers ...................................... 58
Outside Director and Corporate Auditor
Roundtable Discussion .............................. 60
Corporate Governance ............................... 64
Risk Management ...................................... 68
Corporate Social Responsibility (CSR) ....... 70
Glossary ..................................................... 74
Financial Capital
Financial Section ........................... 75
The MOL Group ........................................ 112
Worldwide Offi ces ................................... 114
Shareholder Information ......................... 115
Editorial Policy
In this annual report, we have included a main feature explaining the characteristics and social
signifi cance of the marine transport industry as well as how MOL aims to create value.
We have also included an additional feature about training LNG carrier seafarers, one of the
issues related to successfully implementing the midterm management plan “STEER FOR
2020.” In addition, we strove to ensure readers fully understand MOL’s strategies as the
Company sails ahead toward the next 130 years, using the international integrated reporting
framework as a reference to explain long-term value creation.
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/ir-e/
Annual Report
Investor Guidebook
Market Data
http://www.mol.co.jp/csr-e/ Safety, Environmental and Social Report
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.
(*)As of June 23, 2015 unless otherwise specifi ed.
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Annual Report 2015 1
MOL’s 130 years: Challenge and Innovation
1964
Mitsui O.S.K. Lines (MOL) is
founded by a merger of OSK
Line and Mitsui Steamship.
OSK Line’s former head-
quarters building (Osaka)
AMERICA MARU
(700TEU)
1989
Navix Line is
established by the
merger of Japan
Line and
Yamashita-Shin-
nihon Steamship.
1968
Full containership
service commenced.
1884
Osaka Shosen Kaisha
(OSK Line) is founded.
2004
Established the MOL
Group Long-Term Vision.
1995
The fi rst double hull very large
crude carrier (VLCC), the
ATLANTIC LIBERTY, is launched.
1999
New Mitsui O.S.K. Lines
is established by the
merger of MOL and
Navix Line.
2007
The World’s largest
iron ore carrier, the
BRASIL MARU, is
launched.
2012
The world’s fi rst hybrid
car carrier, the
EMERALD ACE, is
launched.
2001
Established the MOL
Group Corporate
Principles.
2015
Established the
MOL CHART.
2009
Next-generation
vessel concept,
Senpaku ISHIN
project
announced.
1961
World’s fi rst
automated ship, the
KINKASAN MARU, is
launched.
1965
Japan’s fi rst
specialized car
carrier, the
OPPAMA MARU,
is launched.
1983
Japan’s fi rst
specialized
methanol tanker,
the KOHZAN MARU,
is launched.
1984
LNG carrier, the
SENSHU MARU is
launched.
2014
MOL celebrated its
130th anniversary.
MOL has been navigating the oceans for over 130 years. During this time, MOL has grown into the world’s largest
full-line marine transport group by anticipating the needs of its customers and the demands of the future, while
overcoming various challenges along the way. What has supported us has been our “spirit of challenge and inno-
vation.” What we have gained is the trust of our customers and other stakeholders. Making use of these irreplace-
able assets, we will achieve “solid growth through innovative changes” as outlined in the midterm management
plan and maintain course into the next 130 years.
Long-Term Vision
To make the MOL Group an excellent and resilient organization that leads
the world shipping industry
What is MOL CHART?
MOL CHART represents the values that are to be shared by all
members of the MOL Group worldwide. These values shall be
common guidelines to pursue the best course of action for the
highest quality of output for our stakeholders and to achieve
MOL’s corporate goal and long term vision.
Innovate through insight
C hallenge
H onesty
A ccountability
Do the right thing
Commit to acting with
a sense of ownership
Gain the trust of customers
R eliability
T eamwork
Build a strong team
2 Mitsui O.S.K. Lines
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What you should
know about
Shipping & MOL
Feature: The Role of the Marine Transport Industry
and MOL’s Value Creation
This year’s special feature is dedicated to explaining the marine transport industry. Globally,
seaborne trade exceeded 1.4 tons per person in 2013. Despite the indispensable role it plays
in everyday life, many people don’t understand marine shipping that well. We hope the fi ve
questions and answers in this section will prove helpful, providing shareholders, investors
and all our other stakeholders with a deeper understanding of the signifi cance of the marine
transport industry in society and how MOL creates value.
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Q1. What is marine transport?
Q2. What are the important types of ships?
Q3. Is marine transport a cyclical industry?
Q4. Is bigger always better?
Q5. Besides overall market conditions,
what other risks confront the industry?
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Question
What is marine
transport ?
The social signifi cance of the marine transport
industry and MOL
A nswer 1
Look around. A surprising amount of what you see—
from the food and clothes inside the store where
you’re standing to the cars outside in the parking lot,
the oil that fuels them, and the coal and natural gas
that provide the electricity to keep the lights on over-
head—was transported by ship. Marine transport has
long been recognized as essential to bulk transport
over great distances. Compared with the alternatives,
shipping is especially cost effective for bulk, long-dis-
tance cargo. Indeed, most natural resources and ener-
gy sources are transported by ship as producers need
to transport items like petroleum, coal, LPG, iron ore
and wood chips in bulk volumes at low cost.
Modern container shipping was introduced in
the 1950s to facilitate the trade of food, electric
appliances and other consumer goods. Loading
cargo into standardized metal boxes for shipping
proved revolutionary. Container shipping mecha-
nized the loading and unloading of cargo, which
had previously relied heavily on manual labor, and
enabled a streamlined transport system spanning sea
and land. As a result, shipping was able to reliably
connect production sites with consumers separated
by vast distances at lower cost. Beginning in 1970,
container shipping began expanding at a rate great-
ly in excess of global economic growth, accelerating
the development of global supply chains.
Though largely invisible—ships don’t need tracks
or roads—marine transport serves as indispensable
4 Mitsui O.S.K. Lines
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World Population & Global Seaborne Traffi c
18
16
14
12
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8
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4
2
0
Seaborne traffic (bn t)
World Population (bn)
estimate (2015–)
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Source: World population=UN, Seaborne traffi c=Fearnley/ Clarkson (–2014), MOL
estimation based on assumption that the trend of traffi c per capita in the past
continues in the future (2015–)
The amount of gas a large LNG
carrier can transport in one trip
1Year’s Worth* for
270,000 Households
*Calculated using the average amount of gas used by an ordinary family in Japan.
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infrastructure supporting the global economy. The
world’s manufacturing base has shifted from the
United States and Japan, to Southeast Asia, China
and Latin America. This is expanding and diversify-
ing the trade fl ows of materials, components and
fi nished products. More and more countries, and the
people living in them, have begun participating in
the rich bounty of global trade. Fifty years ago in
1965, the global population was 3.3 billion and glob-
al seaborne trade was 1.7 billion tons, which means
there was around half a ton of cargo per person.
Seaborne trade has since outpaced population
growth. In 2000, the population increased to 6.1 bil-
lion, but seaborne trade grew even faster to 6.3 bil-
lion tons, surpassing one ton per person. In 2013,
seaborne trade exceeded 1.4 tons per person, and
the gap is only continuing to widen.
MOL’s more than 130 years of history is the histo-
ry of modern marine transport. We transport cargo
in step with expanding seaborne trade to contribute
to the development of the global economy and sup-
port people’s lives. While advancing by adapting our
businesses to the changing business environment,
MOL fulfi lls the social responsibility of marine trans-
port. As we continue to do this, we will further
enhance the tangible and intangible assets MOL has
accumulated, including our diverse fl eet of vessels,
the human resources supporting safe operations, our
ability to anticipate transport demand and customer
needs, the trust placed in us by stakeholders, our
solid fi nancial foundation and earnings power. This
is MOL’s value creation model. We will continue to
create new value by continuing to transport cargo
globally for the next 130 years.
Annual Report 2015 5
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Types of commercial vessels and MOL’s portfolio
A nswer 2
Ships have evolved to transport a wide variety of
cargo effi ciently. Through innovation, conventional
designs for multipurpose cargo ships have been
adapted with structures optimized to transport spe-
cifi c types of cargo. Adaptation has resulted in crude
oil tankers; bulk carriers for iron ore, coal, wood
chips and other dry bulk cargoes; container ships to
transport clothes, household goods, appliances and
other manufactured goods; and car carriers for com-
pleted vehicles. LNG carriers, which transport natural
gas that has been cooled to minus 162 degrees
Celsius to liquefy it, are a relatively recent arrival. Of
course, there are also ships that transport passengers
and MOL’s fl eet includes ferries that can simultane-
ously transport automobiles and trucks, as well as a
cruise ship featuring an array of facilities, from a
pool to a movie theater, to make voyages more
enjoyable.
As a full-line marine transport group, MOL cur-
rently operates a wide range of ships. This is an
upshot of the strong link between our business and
the growth of the Japanese economy. Shipping was
vital for resource-poor Japan to become a major
trading country, importing resources from overseas
and manufacturing value added products for export.
MOL drew upon the growth of the Japanese econo-
my and grew in tandem by supporting imports and
exports. For example, we readied dry bulkers to
Question
What are the
important types
of ships ?
6 Mitsui O.S.K. Lines
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import iron ore and coal, and expanded our tanker
fl eet to transport crude oil in the economic boom
period following WWII. When the Japanese auto
industry expanded exports, we readied car carriers
and supported the industry’s bulk transport.
Since then, with the overseas shift of our client
companies and the rise of emerging countries, the
global level of trade to and from Japan has been in
relative decline. Simultaneously, we have allocated
more vessels to countries and regions outside of
Japan. The knowhow and fl eet composition attained
through trade with Japanese companies over many
years is also perfectly suited to the transport
demands of emerging countries. At present, as trade
structures diversify, we provide a broad spectrum of
services to meet marine transport needs around the
world. In addition, as a full-line marine transport
group active around the globe, MOL is able to diver-
sify its risk. Should the trade volume of one type of
cargo temporarily drop due to economic conditions
or global events, we are better able to mitigate the
impact on the Company’s overall earnings and fi nan-
cial strength.
MOL has a diverse portfolio comprising 411 dry
bulkers, the world’s largest dry bulker fl eet; 176
tankers to transport crude oil and petroleum prod-
ucts; 67 LNG carriers; 127 car carriers; 118 container-
ships; and 48 other vessels, such as ferries, domestic
transport vessels and a cruise ship. This constitutes
the world’s largest fl eet for a full-line marine trans-
port group.
MOL’s fl eet
947 Vessels
As of March 31, 2015
MOL’s Fleet Portfolio
Products/
passengers
ターミナル
Terminal
Ground transport
Ferries
Automobiles
Cruise ship
Everyday goods
Electrical
appliances
Car carriers
Wood chips
Raw
materials
Woodchip carriers
Oil products
Containerships
Grain,
Iron ore,
Lumber
Dry bulkers
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Product tankers
Natural gas
LNG carriers
Crude oil
Energy
Crude oil tankers
Offshore businesses
Coal
Dry bulkers
FPSO
Annual Report 2015 7
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Question
Is marine
transport a cyclical
industry ?
Characteristics of the marine transport industry
and MOL’s business model
A nswer 3
One noteworthy characteristic of the international
marine transport industry is that it conducts business
on a single global market. Unlike real estate or
other fi xed assets, vessels can move freely across
oceans. They’re globally mobile and fairly liquid. In
addition, due to the principle of freedom of the
seas, there are virtually no barriers to entry in terms
of national regulations. Accordingly, the industry is
market driven toward reestablishing equilibrium.
When global cargo fl ows outpace the supply of ves-
sels, freight and charter rates soar; but when cargo
fl ows decline or fail to keep pace with vessel supply,
freight and charter rates fall. This is why the marine
transport industry is considered a cyclical industry. It
is governed by economic principles and strongly
infl uenced by the various factors that cause the
global economy to fl uctuate. To generate profi ts in
this kind of industry, companies need to possess the
foresight to procure vessels one step ahead of mar-
ket surges as well as the ability to improve profi t-
ability under the complete range of market
conditions. MOL makes full use of the business intel-
ligence base it cultivates as a full-line marine trans-
port group, optimizes the duration of vessel
procurement and service, and has the knowhow to
realize effi cient operations.
8 Mitsui O.S.K. Lines
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Highly Stable Profi ts
¥55 Billion*
* Outlook for Fiscal 2015 (as of April 30, 2015)
Outlook for Ordinary Income in Fiscal 2015: ¥60 billion
(Highly Stable Profi ts of ¥55 billion + Other Income of ¥5 billion)
On the other hand, it is because marine transport
is a cyclical industry that both customers and marine
transport companies want to limit the risks from
market volatility associated with freight and charter
rates. Customers want to conclude long-term trans-
port contracts at steady prices with reliable marine
transport companies. Marine transport companies
can expect, with certainty, to recover their expensive
asset investments in vessels by concluding contracts
that generate stable profi ts over the long-term.
Connecting both these aims, MOL’s strength lies in
its ability to offer services and optimally sized vessels
aligned with customer needs, its solid fi nancial
standing, and its track record of safe operations.
Globally, it is actually rare for a marine transport
company to have as many long-term contracts as
MOL has secured.
In the mid 2000s, thanks to the vessels it had
ordered in advance, MOL was able to take advan-
tage of bullish market conditions as China rapidly
expanded its imports of natural resources.
Subsequently, however, a sudden turn in the supply-
demand environment left us exposed to spot market
conditions and restrained by an oversupply of vessels
in operation. We are currently correcting this by fur-
ther shifting investments to accumulate stable prof-
its through medium- to long-term contracts and
reducing MOL’s market exposure.
Over its more-than- 130-year history, MOL has fre-
quently experienced the undulations of the market.
In marine transport, which is both a cyclical industry
and a growth industry, we continue to aim for sus-
tainable growth while mitigating the impact of mar-
ket fl uctuations by securing an appropriate contract
portfolio.
Underlined words are explained in the Glossary on page 74.
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A portfolio to achieve long-term, stable growth
Optimal Cargo (Contract) Portfolio
Optimal Vessel Procurement Portfolio
Stable Earnings
LNG carriers
Dry bulkers and tankers
(under long-term contracts)
Owned and
medium- and
long-term
chartered
vessels
Market-linked Earnings
Containerships
Dry bulkers and tankers
(on spot operations)
Short-term
chartered
vessels
Low
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High
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Annual Report 2015 9
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Question
Is bigger always
better ?
The pursuit of economies of scale in bulk trans-
port and MOL’s strategy
A nswer 4
The history of marine transport is also the history of
bigger and bigger ships. This is understandable. The
lower operating costs per weight unit and distance
unit achieved by large-volume shipping are benefi cial
for both marine transport companies and their cus-
tomers. In terms of economic effi ciency, bigger ships
are better in many respects. Marine transport is the
most economical and environmentally friendly mode
of transport, considering CO2 emissions and fuel con-
sumption in terms of weight of cargo transported and
distance traveled. Larger ships further enhance this
advantage. Nearly every type of cargo ship has gotten
larger over time. Ships traveling through transport
routes like the Panama and Suez canals, which restrict
the maximum length and draft of a ship, have
increased to the very limit in size. Most other ships
have gotten even larger.
MOL has decided to launch six of the world’s larg-
est containerships, which are each capable of carrying
20,000 containers of twenty-foot equivalent units
(TEU), on the Asia-Europe route in 2017. Our aim is
clear: to lower transport costs per container by
increasing the size of the ship. Although many ultra-
large containerships of 18,000 TEU or more have
recently been launched on the same route, MOL’s new
containerships will be highly competitive with expand-
ed carrying capacity and more effi cient engines. As for
further increasing the size of containerships, it seems
that we have reached the upper limit with these ves-
sels due to the transit restrictions of the Suez Canal.
On the other hand, larger vessels are not always
10 Mitsui O.S.K. Lines
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20,000 Containers*
120 km**
* Capacity of the world’s largest containerships, which MOL is
currently building, in twenty-foot equivalent unit (TEU) containers.
** The total length of a ship’s containers when aligned in a row
The transit restriction
of the Panama Canal
(after expansion)
55m
18.3m
427m
The maximum size vessel that
can transit the Panama Canal:
Length: 360 m
Breadth: 49 m
the most logical choice. Crude oil tankers were at the
forefront of the trend toward larger vessels and some
decades ago saw the appearance of what were
known as ultra-large crude carriers (ULCCs) capable of
transporting 400,000 to 500,000 deadweight tons
(DWT). However, ULCCs have since faded away.
Currently the largest vessel size is the 300,000-DWT
class very large crude carrier (VLCC). The reason lies in
versatility. Companies need to decide on vessel size by
carefully weighing the benefi ts afforded by larger
size against greater compatibility in various sea lanes
and ports across the globe. The size of potential ports
and the ability to transit straits must always be taken
into account, something which applies to other vessel
types as well.
There are also other considerations. In car carriers,
the overall trend in increasing size is continuing with
the planned expansion of the Panama Canal in 2016.
Yet, we decided to construct new vessels with roughly
the same external dimensions as our existing standard
size vessels that hold 6,400 vehicles, though we found
ways to increase actual capacity to 6,800 vehicles on the
new vessels. In light of how automakers are trying to
optimally site production around the world, we priori-
tized the fl exibility provided by a standard-size fl eet.
Customer convenience can also be a factor in the
decision not to choose larger vessels. We develop iron
ore carriers customized for each customer’s port, with
the intention of providing optimal solutions that bal-
ance carrying capacity and convenience.
The MOL Group Corporate Principles refl ect this
need to optimize fl exibility, convenience and the eco-
nomic effi ciency of larger vessels as the Company
strives to meet and respond to customers’ needs and
to this new era.
Annual Report 2015 11
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Question
Besides overall
market conditions,
what other risks
confront
the industry ?
Other risks and MOL’s safe operation system
A nswer 5
Other market risks facing the marine transport indus-
try include fl uctuations in exchange rates, interest
rates and bunker prices. These market risks directly
impact profi tability, but other risks related to vessel
operations can affect not only profi tability but also
the trust gained from customers and society. Ocean-
faring vessels must always be on guard against the
risk of a marine incident, which might lead to ocean
pollution, arising from adverse weather or other
unforeseen circumstances. Ships may also be exposed
to geopolitical risks, such as encountering war zones,
terrorists, and pirates among other threats.
For example, it takes roughly three weeks to
transport crude oil in a VLCC from the Middle East to
Japan or another Asian country. Depending on the
loading port, the VLCC departs from the Persian Gulf
and transits the Strait of Hormuz, or departs from the
Red Sea and passes through the Gulf of Aden. After
traversing the Indian Ocean, she then must transit the
Strait of Malacca between the Malay Peninsula and
the island of Sumatra. The Middle East is fraught with
political instability, and the Gulf of Aden, Indian
Ocean and Strait of Malacca are treacherous areas
plagued with pirates. Moreover, there are also
encounters with adverse weather, super typhoons and
other abnormal weather phenomena that seem to be
increasing in intensity each year. Amid this challeng-
ing environment, to safely transport cargo and live up
to the trust placed in us by customers and the rest of
society, we need to be more vigilant than ever.
12 Mitsui O.S.K. Lines
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View a video introducing MOL's
measures to enhance safe operation.
FOUR ZEROES
This is MOL’s unwavering goal of achieving
the world’s safest operations.
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The number of tropical storm alerts
sent out to ships
(Results in 2014)
17,349 Alerts
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MOL is committed to ensuring thoroughly safe
operations through various initiatives, beginning with
the recruitment and training of excellent seafarers.
(See the special feature on p. 52.) But what makes
MOL stand out in its response to the hazards of
marine transport, including the aforementioned risks,
is its Safety Operation Supporting Center (SOSC). The
center monitors the position and movement of MOL-
operated vessels as well as weather and ocean condi-
tions in real time, supplying invaluable information to
relevant personnel onboard and on land. The SOSC is
staffed at all times by two marine technical specialists,
including an experienced MOL captain, and supports
the safe navigation of about 900 MOL Group-
affi liated vessels around the clock 365 days a year.
They provide assistance from the captain’s perspective,
supplying information gathered on weather and
ocean conditions (including abnormal weather and
tsunamis) and security threats (including piracy and
terrorism) to the relevant personnel. As onboard
equipment becomes increasingly sophisticated, engi-
neers may during operations encounter situations not
described in the manuals. Captains and navigators
may encounter unexpected weather phenomena. In
these instances, the knowledge and judgment of an
experienced MOL captain is invaluable. Recently, as
political instability, abnormal weather conditions and
other uncertainties intensify, transport technology
continues to increase in sophistication, with LNG carri-
ers being the most representative example. The slogan
of the SOSC is: “The captain must never feel alone”
The center provides robust support for seafarers work-
ing on the open ocean and underpins the safe opera-
tions of MOL-operated vessels day and night.
Annual Report 2015 13
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Strategy
and
14 Mitsui O.S.K. Lines
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Contents
the Chairman
16 Message from
22 Message from the CEO
28 Financial Highlights
30 Key Indicators
32 Interview with the CFO
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Direction
Annual Report 2015 15
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Message from the Chairman
Koichi Muto Chairman
Maintain course,
Full speed ahead
“We have concluded the fi rst year of the midterm management plan ‘STEER FOR
2020,’ which was crafted with the intention of adjusting the Company’s rudder to
head for our desired course in 2020. I’ve been at the helm of MOL for the past fi ve
years as president but have now decided to hand over management duties to the
new president, Junichiro Ikeda. In my new role as Chairman of the Board of
Directors, I am in a position where I can strengthen governance and support
management. I will support President Ikeda’s leadership as he continues uniting
the Company’s comprehensive strengths to solve the issues that face us and to
reinforce sustainable growth.”
16 Mitsui O.S.K. Lines
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Progress Made in the First Year of the Midterm
Management Plan and Subsequent Evaluation of Results
Fiscal 2014 was the fi rst year of “STEER FOR 2020,”
which centered on solid growth through innovative
changes. Please tell us about the progress of the
overall strategies and your evaluation of the results.
Although we did not achieve the targets
for our fi nancial results, I’d say we got
off to a good start in line with the gen-
eral direction of the strategies.
Solid growth through innovative change, the main
theme of “STEER FOR 2020,” refers to moving away
from business dependent on strong markets and
instead accumulating long-term and stable profi ts to
contribute to solid growth. To achieve these aims,
our main strategies are the Three Innovations:
Innovation of Business Portfolio, Innovation of
Business Model and Innovation of Business Domain.
The core of these strategies is Innovation of
Business Portfolio. The aim of this strategy is to allo-
cate management resources to fi elds where we
expect to secure strong growth and long-term, sta-
ble profi ts, especially to LNG carriers and offshore
businesses. In fi scal 2014, we made great strides
toward achieving our goals, especially in LNG carri-
ers, where we secured new long-term contracts for
10 vessels. Under the plan, we aimed to increase the
size of MOL’s LNG carrier fl eet from 67 vessels at the
end of fi scal 2013 to 120 by the end of fi scal 2019.
Including those under construction, our fl eet has
grown to 92 vessels as of the end of fi scal 2014.
Another major accomplishment was securing a long-
term contract for six very large ethane carriers, a
new fi eld.
With the second strategy—Innovation of
Business Model—we aim to rein in effects from mar-
ket volatility and build a corporate structure that can
record solid profi ts regardless of market conditions.
To do this, we are reducing market exposure in dry
bulkers and tankers as we transform our fl eet for
higher market tolerability and competitiveness while
also continuing to focus efforts on transport fi elds,
where we provide added value in response to cus-
tomer needs. Market exposure is being reduced
mostly according to the plan. With small and medi-
um-sized dry bulkers, we are beginning to establish
a business model where we don’t own a large num-
ber of ships and try to slot in cargo, but instead fi rst
secure cargo and then ready the necessary vessels,
including short-term chartered ships. We are also
making solid progress in strengthening our cost
competitiveness, including the disposal of unprofi t-
able vessels.
Turning to Innovation of Business Domain, in
which we outlined expanding our business domain
to both the upstream and downstream of marine
transport, we secured a long-term contract for one
FPSO and entered the shuttle tanker business by
establishing a joint venture with Viken Shipping.
And as for the container terminal business, the auto-
mated terminal at the Port of Los Angeles began
operations in November 2014. Another accomplish-
ment was launching a joint venture with the Synergy
Group in India to begin external sales of our ship
management knowhow.
Although we were able to rack up solid accom-
plishments in line with the general direction of the
overall strategies in this way, we unfortunately fell
27% short of our originally planned target of ¥70.0
billion in consolidated ordinary income for fi scal
2014, instead recording ¥51.3 billion.
Underlined words are explained in the Glossary on page 74.
Annual Report 2015 17
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Message from the Chairman
What were the factors that kept the Company from
attaining the fi nancial targets?
The biggest factor was the inability of
containerships to turn a profi t
In bulkships, while the dry bulker market stagnated,
tankers saw a lot of activity beginning in autumn last
year due to the low price of oil. Supported by hefty,
stable profi ts, the segment as a whole posted profi ts
at about the level originally forecast. The primary
reason we did not meet the target despite strong
tailwinds from the weak yen and lower bunker pric-
es was containerships. Containerships not only failed
to turn a profi t, it actually widened its losses from
the previous fi scal year and even performed more
poorly than some other containership companies.
Port congestion on the U.S. West Coast and
within Asia hurt revenues across the industry, but the
following detrimental factors were unique to MOL.
As Brazil’s economy stalled due to lower natural
resource prices, cargo fl ows stagnated on the Asia-
South America route, in which MOL had been lever-
aging its historically superior presence. This pushed
down freight revenues from the route. The com-
mencement of operations of the automated terminal
at the Port of Los Angeles was delayed about half a
year from schedule. In addition, we incurred wide
losses on bunker price hedges placed at the begin-
ning of the fi scal year.
Effects from the Changing Business Environment and
the Falling Prices of Crude Oil and Natural Resources
Considering the assumptions about the business
environment at the time “STEER FOR 2020” was
formulated, do you think revisions are necessary due
to subsequent changes in the business environment?
I believe that, regardless of the short-
term market conditions, we must
respond by calmly assessing the situation
without losing sight of the big picture.
Our understanding of the business environment pro-
vided the basis for the formulation of the midterm
management plan. These assumptions can be divid-
ed into the short-term environment and the medi-
um- to long-term environment. The short-term
business environment (essentially foreign exchange
rates, bunker prices, and marine transport markets
for each vessel type) did not progress quite as
expected. However, the medium- to long-term envi-
ronment, which formed the basis for focusing on
solid growth through innovative changes, proceeded
just as we expected. There was a surplus of ship-
building facilities, and demand rose for transporting
new energy sources. I think we need to calmly
observe major trends and respond with resolute
direction, without losing sight of the big picture due
to short-term changes in the environment.
The drop in crude oil prices led to lower fuel
prices and simultaneously lifted the tanker market
due to increased trade, including demand for
reserves, of crude oil and refi ned petroleum prod-
ucts. The additional trade provided strong tailwinds
for the Company’s operating results. Despite con-
cerns over slowing projects in the LNG carrier busi-
ness, the projects MOL incorporated into its plan
have been largely unaffected and are proceeding
mostly as expected. On the other hand, lower natu-
ral resource prices contributed to economic stagna-
tion in natural resource exporting countries,
especially Brazil, and this did in fact have a negative
impact on containerships. So while there were pluses
and minuses, it appears that on the whole the posi-
tive effects outweighed the negative ones.
Underlined words are explained in the Glossary on page 74.
18 Mitsui O.S.K. Lines
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Main theme: Solid growth through innovative changes
Overall Strategies
Ⅰ
Ⅱ
Ⅲ
Three Innovations
Innovation of Business Portfolio
Innovation of Business Model
Innovation of Business Domain
Allocate management resources earlier
and signifi cantly to businesses where
we expect high growth and stable
long-term profi ts
Transform our fl eet for higher market
tolerability and more competitiveness
Focus on businesses that offer added
value and meet customer needs
Create value chains by expanding
business domain to both upstream and
downstream of ocean shipping transport
Profi t Targets/Financial Targets (Billions of yen)
Revenue
Ordinary income
(Highly stable profi ts)
Net income
ROA*1
ROE*2
Equity ratio
Net gearing ratio
Exchange rate JPY/US$
Bunker price US$/MT
FY2013
FY2014
FY2015
(Forecast)*3
FY2016 (Plan)
FY2019 (Target)
1,729.4
54.9
57.3
2.4%
9.5%
29%
135%
99.79
610
1,817
51.3
42.3
2.1%
5.8%
30%
135%
1,820
60
(55)
43
2.3%
5.4%
31%
127%
1,900
100
(55)
80
4-5%
above 10%
(around FY2019)
(around FY2019)
108.34
529
118.00
380
100
620
2,100
140
(75)
110
35-40%
100%
100
620
*1 ROA =Ordinary income/ Average total assets at the beginning and the end of the fi scal year
*2 ROE =Net income/ Average shareholders’ equity at the beginning and the end of the fi scal year
*3 As of April 30, 2015
Expansion of LNG carrier and Offshore business (Innovation of Business Portfolio / Innovation of Business Domain)
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LNG carriers
Offshore Businesses
1
March 31, 2014
March 31, 2015
(Including on order)
March 31,2020
(Target)
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92
120
15
March 31, 2014
March 31, 2015 (Including on order)
Downsize Market Exposure in Dry Bulkers and Tankers (Innovation of Business Model)
0
20
40
60
80
100%
FY2013 (Result)
FY2014 (Result)
FY2016 (Plan)
FY2019 (Target)
52%
48%
45%
35%
(cid:2) Owned or mid- and long-term chartered vessels with mid- and long-term contracts (cid:2) Owned or mid- and long-term chartered vessels with short-term contracts (=Market exposure)
(cid:2) Short-term chartered vessels with short-term contracts
Annual Report 2015 19
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Message from the Chairman
Unfi nished Business
With the fi rst year of “STEER FOR 2020” wrapped
up, what business remains to be fi nished?
The fi rst thing is rebuilding the contain-
ership business.
Of course we must continue to steadily implement
concrete measures related to the Three Innovations,
but the most pressing priority for MOL is rebuilding
the containership business. Previously mentioned
temporary factors like port congestion, delayed start
of automated operations at the Port of Los Angeles
or losses on bunker hedges in fi scal 2014, will most-
ly disappear by fi scal 2015, but we need to address
the structural factors. As part of these efforts, we
have already decided to launch new joint service
with Maersk and MSC for the Asia-South America
East Coast route in July. We can expect sizable ratio-
nalization effects by reshuffl ing the ports of call and
decreasing the number of vessels deployed while
maintaining capacity. Along with this rationalization
of unprofi table routes, we are accelerating disposal
of relatively expensive small and medium-sized ves-
sels. In addition, we recently ordered six large
20,000 TEU containerships as we look to the future.
We plan to launch these ships on the Asia-Europe
route in 2017, and expect improved fuel effi ciency
and decreased unit costs.
Interest-bearing debt is increasing, so what are your
thoughts on strengthening the fi nancial foundation?
Behind the increase in interest-bearing
debt are businesses that generate long-
term and stable profi ts.
Because of large initial investments centering on
LNG carriers and offshore businesses in line with
“STEER FOR 2020,” interest-bearing debt will be
hard to suppress until fi scal 2016. What I’d like to
emphasize here, though, is that these investments
are being made in order to generate long-term and
stable profi ts in the future. Although strengthening
the fi nancial foundation is important, it isn’t neces-
sarily management’s ov erriding goal. When there is
an investment opportunity that can assuredly con-
tribute to stable profi t—the foundation of future
growth—management should pursue it without hes-
itation. Behind the temporary increase in interest-
bearing debt are remarkably stable businesses,
which will certainly help strengthen MOL’s fi nancial
foundation in the long-term.
Meanwhile, we have been continuing to move
assets off the balance sheet. By accumulating solid
profi ts, we plan to improve the net gearing ratio to
100% and the equity ratio to 35–40% by around
fi scal 2019.
Building up Highly Stable Profi ts (Billions of yen)
160
140
120
100
80
60
40
20
0
(Ordinary Income = Stable Profits + Other Profits)
140
100
(Ordinary Income)
60
55
55
75
Highly Stable Profi ts
1) Profi ts that are fi xed, or expected to be
fi xed during this midterm management
plan, from contracts of two years
or more.
2) Projected profi ts from highly stable
businesses.
(The included segments: Drybulkers,
Tankers, LNG Carriers, Offshore businesses,
Associated businesses and Others)
FY2015(Forecast)
*As of April 30,2015
FY2016(Plan)
*As of April 30,2014
FY2019(Target)
*As of April 30,2014
(cid:2) Stable profi ts (cid:2) Other profi ts
20 Mitsui O.S.K. Lines
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Initiatives as Chairman
Following your appointment as chairman, what do
plan to pursue going forward?
As Chairman of the Board of Directors, I
will do all I can to make corporate gov-
ernance more transparent.
Working with the president, I’d like to improve cor-
porate value, especially by improving corporate gov-
ernance and supervising Group companies. As for
corporate governance, I’m proud of the fact that
MOL led Japan in carrying out management reforms
from the shareholders’ perspective, including having
had external directors since 2000, but I think we now
need to consider further improvements to corporate
governance in response to the needs of the times.
I’m currently advancing discussion on pertinent
topics at the Board of Directors’ meetings, such as
what kind of system is needed to amply fulfi ll the
oversight function expected of the board and how
we can ensure the level of transparency that needs to
be achieved for our shareholders and other external
stakeholders. With Japan’s Corporate Governance
Code, which has now come into effect, I will contin-
ue working hard as the Chairman of the Board of
Directors to reinforce our management foundation.
Summation of Five Years as President
What are your thoughts as you refl ect on the
turbulent time during your term as president?
I did what had to be boldly done for
MOL’s future.
Some people say the fi ve years since I became presi-
dent in June 2010 have been turbulent. In MOL’s his-
tory of over 130-years, however, I believe there were
harsher times. I think I can safely say that I consis-
tently kept the long-term in mind, focusing on what
needed to be done for the future and decisively car-
rying it out. Of course, I feel genuine regret for our
shareholders that we posted the largest loss in the
Company’s history in fi scal 2012. However, this was
also due to our focus on the future, having executed
the Business Structural Reforms for dry bulkers.
We seized business opportunities that generate
long-term, stable profi ts (such as those presented by
the shale revolution) and accumulated contracts. In
my fi ve years as president, I approved investments
for 120 new vessels. Over 70% of these are for LNG
carriers, offshore businesses, dry bulkers, tankers
and other vessels that will generate stable profi ts for
about 20 years. The remaining 30% or so were for
investments to raise the cost-competitiveness of con-
tainerships, car carriers, chemical tankers, ferries and
other vessels. There were almost no orders for free
vessels with speculation on strong market condi-
tions. If stable profi ts could be expected, I approved
the investment, even for projects that presented a
high degree of technical diffi culty, including the
Russian Yamal project to transport LNG across the
Northern Sea route by ice class vessels.
I concentrated MOL’s business intelligence,
thought about what needed to be done at that par-
ticular point in time while looking ahead to the next
ten to twenty years, and implemented those initia-
tives. That direction is clearly refl ected in “STEER FOR
2020.” Essentially, I issued a rudder command to
effect a great corporate change in direction.
Although there is still unfi nished business, including
securing and training seafarers and rebuilding the
containership business, I’d like the new president
Junichiro Ikeda to maintain course, accelerate and
proceed full steam ahead.
Underlined words are explained in the Glossary on page 74.
Annual Report 2015 21
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Message from the CEO
Junichiro Ikeda President & CEO
What we are doing now
for 2020 and beyond
“I, Junichiro Ikeda, assumed the position of president on June 23rd.
As president, my main duty is to safeguard the strategies of the midterm
management plan “STEER FOR 2020,” launched under the direction of the
previous president Koichi Muto, ensuring the strategies are carried out
effectively and elevating MOL as a truly global corporation.”
22 Mitsui O.S.K. Lines
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Issues and Resolutions for the Second Year of
“STEER FOR 2020”
Please tell us about the issues and strategies heading
into the second year of “STEER FOR 2020.”
A major medium- to long-term issue is
the advancement of globalization. An
immediate, pressing issue is rebuilding
the containership business.
As for “STEER FOR 2020,” solid progress was made
in the fi rst year of the plan under the leadership of
the previous president Koichi Muto. We’ve already
attained substantial accomplishments in Innovation
of Business Portfolio and Innovation of Business
Model, and I will continue to steer this course. In
Innovation of Business Domain, however, we need
to further ramp up our efforts, and I’d like to fulfi ll
my role as president by motivating or, when neces-
sary, even directing the sales division.
I believe the globalization of MOL is the key to
further support the Three Innovations. You might
fi nd it surprising that the Company, which has a net-
work of trade routes spanning the globe, would aim
for globalization, but there are various facets of glo-
balization. In what might be called a fi rst phase, glo-
balization of our customer base has already
progressed considerably and it’s probably safe to say
that each department has fi nished establishing over-
seas bases to facilitate this.
What we need to strengthen going forward,
however, is the second phase: recruiting globally
competitive personnel. For example, in such energy-
related fi elds as LNG carriers and offshore business-
es, which aim to expand overseas going forward, we
need to recruit experts like those that have worked
for global resource majors in Europe or the United
States. While we are already conducting this type of
hiring in some fi elds, we need to reinforce our
efforts. Related human resource measures will be
another major issue. For example, how should we
compensate and motivate our hires based on their
experience and accomplishments?
Simultaneously we will devote attention to ele-
vating MOL’s brand around the world as the third
phase of globalization. Even if each business receives
high praise from customers, that doesn’t necessarily
mean MOL receives global recognition for being the
world’s largest full-line marine transport group,
which operates a wide array of vessels and is able to
meet comprehensive transport needs. By raising
MOL’s profi le as a full-line marine transport group,
it’s my aim to have our clients around the world
think fi rst and foremost of consulting MOL for their
transport needs.
As for pressing issues, it goes without saying
that we need to rebuild the containership business.
We are already taking measures to resolve MOL’s
unique structural problems, including measures to
rationalize North-South trade. I will give my all to see
this is implemented without fail and that the busi-
ness becomes profi table.
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Annual Report 2015 23
Message from the CEO
Please tell us about the medium- to long-term
strategies for containerships.
I aim to get the Company in the top
one-third in terms of cost competitive-
ness and seek synergies with the con-
tainer terminal business.
The key to rebuilding the containership business is
strengthening cost competitiveness and securing
effi cient revenue streams. If we can enter the top
tertile of major containership companies in terms of
cost competitiveness, we could weather the ups and
downs of the market. We’ve already been working
towards this goal. Although we slipped in ranking
between fi scal 2013 and fi scal 2014, we maintained
a similar position before then, so we have both
latent abilities and executable abilities. We will swift-
ly recover our leading position in the top third by
successfully implementing measures to resolve struc-
tural problems once we have quickly eliminated tem-
porary negative factors.
Let’s examine the trade routes separately. On
East-West routes, operating through the G6 Alliance
and lowering unit costs by launching large vessels
remain effective strategies. Currently, we have char-
tered 14,000 TEU vessels from another company to
tide us over. But using this time, we determined the
optimal vessel size and were able to order 20,000
TEU vessels, which are the largest ships able to tran-
sit the Suez Canal, at a competitive price. On the
other hand, medium-sized vessels continue to cas-
cade from East-West routes to North-South routes
and Inter-Asian routes, where the market environ-
ment is expected to remain unstable. On these
routes, we need to streamline our core fl eet and
switch over to a trade route operation structure that
takes advantage of short-term chartered vessels. In
this respect, MOL has been slow to dispose of small
and medium-sized vessels but is now accelerating
these efforts.
As for securing effi cient revenue streams, we are
working to pursue comprehensive yield manage-
ment and strengthen our sales capabilities.
These measures will maintain MOL’s presence in
container shipping, but our target business model is
combining this business with the container terminal
business—a part of Innovation of Business Domain.
The container terminal business is expected to gen-
erate relatively stable profi t and, typical of the capi-
tal-intensive industry, profi t margins rise rapidly after
exceeding certain volume thresholds. We are able to
secure a high level of stable income by operating
highly competitive terminals like the automated one
at the Port of Los Angeles and attracting vessels
operated by alliances of which MOL is a member.
Aiming to expand this business model beyond North
America, we are currently pursuing new investment
opportunities with Brookfi eld, a major Canadian
fund with which we agreed to a strategic alliance in
January 2014.
24 Mitsui O.S.K. Lines
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Profi t Opportunities and Risk Controls
The marine transport market for dry bulkers and
containerships was worse than expected under
“STEER FOR 2020.” How do you plan to control the
impact of this kind of market volatility?
We will continue to strengthen total risk
control.
The foundation of management at a marine trans-
port company lies in working to correctly perceive
the balance of supply and demand and the market
conditions while keeping the big picture in mind. But
what is more important is recognizing as a company
the total volume of risk, namely the size of the
impact that would be incurred if you misread the
business environment. Based on this, you should
take only risks that the company is capable of taking
and that are worth taking. MOL calls this total risk
control. “STEER FOR 2020” is based on this idea,
and we are continuing to reduce market exposure.
However, the risk positions are, once taken, not easi-
ly lifted. In formulating “STEER FOR 2020,” there
were indications from outside offi cers that the
Company’s quantitative risk analysis was insuffi cient.
In light of such refl ections, we are currently working
to reinforce total risk control.
In LNG carriers and offshore businesses, some are
voicing concerns about the impact of the decrease in
crude oil prices and geopolitical risks. What do you
think the impact will be on MOL?
We devote considerable effort to evalu-
ating opportunities and risks. While
there may be some delays in new proj-
ects, I don’t think there will be a large
impact on achieving the plan’s goals.
The drop in crude oil prices is certainly worsening
the profi tability of some shale gas fi elds, and I think
some of the new developments are being put on
hold at the moment. However, MOL is not partici-
pating in any upstream shale gas projects. We
placed orders with a shipyard after concluding a
contract with a highly reliable customer to charter
LNG carriers over the long term, only for projects
that had received fi nal investment decisions. In this
way, we are strategically selecting the risks we take
as a marine transport company. The same goes for
other projects in LNG carriers and offshore business-
es. Conversely, when we determine that we can con-
trol for related risk by making use of the Company’s
insight and technical capabilities as a marine trans-
port company, we will pursue even challenging ini-
tiatives and earnings opportunities. The Russian
Yamal project mentioned by the chairman is an
example of this. While some people are also con-
cerned about the geopolitical risks associated with
the project, we can effectively control them through
the contract.
Projects aiming to secure future contracts are
mostly competitive ones incorporated into the plan.
Some of those are even government projects.
Accordingly, I believe these projects will proceed
steadily even if they are somewhat delayed.
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Underlined words are explained in the Glossary on page 74.
Annual Report 2015 25
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Message from the CEO
The Social Signifi cance of the Marine Transport
Industry and How MOL Creates Value
What do you think is the signifi cance of the marine
transport industry in society?
It is the duty of a marine transport com-
pany to move things across the ocean to
enrich the lives of people around the
world.
I believe the social signifi cance of the marine trans-
port industry, especially the international marine
transport industry, is to make people happy by trans-
porting things. Of course there is spiritual enrich-
ment, but I think the physical sense of fulfi llment
and economic improvement makes it easier to really
feel happy. This means supporting economic growth
by transporting oil and iron from resource rich coun-
tries to resource poor ones, or delivering a region’s
special delicacy to people all over the world.
Enriching the lives of people all around the world by
moving things across the ocean is the duty of a
marine transport company.
What’s more, per unit CO2 emissions from trans-
port are smallest in the marine transport industry,
and we can reinforce this advantage by increasing
the size of vessels or developing even more energy-
effi cient technology. That is why we can say the
marine transport industry provides a mode of trans-
port that enriches people all over the world while
also being gentle on the environment. It is an indis-
pensable industry for society. In their work, I’d also
like our employees to be proud of this important role.
Q. What strengths and competitive elements underpin
the sustainable growth of MOL?
Defi nitely credibility. MOL has been
backed by credibility for over 130 years.
Beginning with MOL, Japan’s marine transport com-
panies have mirrored the progress of Japan’s econo-
my. MOL has also grown by developing ships and
services to meet customer needs across the archipel-
ago of Japan, which developed by importing
resources and exporting products. I think you can
say that MOL’s strength lies in its credibility, which
has been cultivated over the years as we worked to
gain the trust of Japan’s customers, who have high
standards, including seeking improvements in trans-
port effi ciency and thoroughly safe transport.
Although credibility cannot be seen with the eyes, it
attracts customers and business partners. Credibility
could be the ability to uncover customer needs and
offer appropriate solutions, the approach of the
Company to work hard with an indomitable fi ghting
spirit to make that solution a reality, the track record
of safe transport, or the technical capabilities under-
pinning everything. All of these comprise the
Company’s credibility. Through all those things we
gain new transport opportunities, further polishing
our credibility and creating a virtuous cycle. Thanks
to this, MOL has amassed the intangible asset of
credibility, in addition to its more tangible asset: the
world’s largest fl eet with a wide range of vessel
types. Our credibility has long since been accepted
by customers outside Japan as well and is even
today helping us secure overseas projects.
For example, in January 2015, we safely delivered
the fi rst LNG carrier made in a shipyard in China by a
non-Chinese shipping company. I think one of the
reasons we were chosen as a shipping company part-
ner for this challenging project was, without a doubt,
our credibility. Thanks to our participation in this proj-
ect, we gained the trust of China Shipping, who co-
owns the vessels, and secured a separate opportunity
to participate in a project for China.
Capitalizing on our strengths comprising both
tangible and intangible assets accumulated over our
more than 130 years of history, we continue to fulfi ll
the social duty of marine transport. This then helps
us accumulate more tangible and intangible assets
and, through this process, we improve corporate
value in a broad sense.
26 Mitsui O.S.K. Lines
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Improving Shareholder Value
Please describe your thoughts on improving
shareholder value and providing shareholder returns.
I will continue to improve medium- to
long-term shareholder value and
strengthen shareholder returns by seiz-
ing prime business opportunities and
accumulating stable profi ts.
To improve medium- to long-term shareholder value,
I will continue to decide on investments aimed at
accumulating stable profi ts and strengthening cost
competitiveness in line with “STEER FOR 2020.”
fi nancial standing, it would be illogical to raise ROE
in the short term by such a measure as stock buy-
back. On the other hand, the funding necessary for
capital investment is mostly backed by long-term
contracts, and if cash fl ows from operating activities
prove insuffi cient, we could easily cover the rest with
bank loans. There is neither need nor plan to cover
capital investment by raising capital.
There is no change in MOL’s policy on sharehold-
I think it’s helpful to realize that there is a baton
er returns to maintain a dividend payout ratio of
20% and raise this to around 30% as our fi nancial
standing improves over the medium to long term. By
fi rst carrying out investment aimed at securing
future stable profi ts, MOL expects to achieve its
fi nancial targets, equity ratio of 35% to 40% and
net gearing ratio of 100%, no earlier than around
fi scal 2019. However, we have determined that now
is the best time to seize business opportunities and
actively invest in sources of stable profi ts. Sound
fi nancial standing is also important for securing
long-term contracts. Business opportunities will not
wait for us. Prioritizing capital investment and
improvement in fi nancial standing will, I believe, lead
to improved shareholder value over the medium- to
long-term. This is the time frame, and I would like to
request the understanding of our shareholders.
Of course, when deciding on investments, we
use ROI and other standards to facilitate the selec-
tion. Aiming to improve our ability to generate cash,
we are encouraging all business divisions to strive to
strengthen cost competitiveness and improve oper-
ating effi ciency. Through this, ROA will be lifted to
between 4% and 5% within the term of “STEER
FOR 2020,” and ROE should reach 10% early on in
the plan, a level we seek to maintain or improve. I
intend to increase ROE by consistently raising profi ts.
Looking at our present capital requirements and
in management that is carried by one person and
handed off to the next. Just like a long-distance relay
race, each person gives their all to get closer to the
goal. It goes without saying that each year’s operat-
ing results are important. But if you only focus on
that amid changing business environments, you lose
sight of the goal you should be aiming for, namely
meeting shareholders’ expectations by improving
medium- to long-term corporate value.
I have been entrusted with the baton from the
previous president Koichi Muto. Over its more than
130 years of history, there have been times when
MOL has encountered great swells, but I think our
forebears succeeded in opening many navigable
channels through their ingenuity and drive. When I
refl ect on this, I am once again moved deeply by the
meaning of “excellent and resilient” in the
Company’s long-term vision “To make the MOL
Group an excellent and resilient organization that
leads the world shipping industry.” To ensure that I
carry the baton forward in a way that contributes to
the next 130 years, I, too, will boldly face change
and advance full steam ahead.
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Annual Report 2015 27
Financial Highlights
For the year:
Shipping and other revenues
Shipping and other expenses
Selling, general and administrative expenses
Operating income (loss)
Ordinary income (loss)
Income (loss) before income taxes and minority interests
Net income (loss)
Free cash fl ows [(a) + (b)]
Cash fl ows from operating activities (a)
Cash fl ows from investing activities (b)
Depreciation and amortization
At year-end:
Total assets
Net vessels, property and equipment
Interest-bearing debt
Net assets
Shareholders’ equity
Amounts per share of common stock:
Net income (loss)
Net assets
Cash dividends applicable to the year
Management indicators:
Gearing ratio (%)
Net gearing ratio (%)
Equity ratio (%)
ROA (%)(*)
ROE (%)
Dividend payout ratio (%)
MOL STEP
2005/3
2006/3
2007/3
2008/3
¥1,173,332
¥1,366,725
¥1,568,435
¥1,945,697
917,149
1,101,459
1,300,038
1,544,109
84,388
171,795
174,979
155,057
98,261
80,230
167,897
(87,667)
52,969
92,273
172,993
176,502
188,290
113,732
8,838
163,914
100,324
168,073
182,488
197,854
120,940
20,369
156,418
110,303
291,285
302,219
318,202
190,321
23,291
283,359
(155,076)
(136,049)
(260,068)
65,700
68,581
74,481
1,232,252
1,470,824
1,639,940
769,902
571,429
424,461
424,461
847,660
569,417
620,989
550,764
1,900,551
1,047,825
601,174
751,652
679,315
¥94.98
354.01
18.00
¥101.20
¥159.14
459.55
20.00
567.74
31.00
135
120
28.9
13.1
31.5
19.0
104
94
33.6
11.7
24.8
19.8
88
79
35.8
17.1
30.9
19.5
665,320
514,131
298,258
298,258
¥81.99
248.40
16.00
173
157
24.2
15.7
37.8
19.5
Number of MOL Group employees:
(the parent company and consolidated subsidiaries)
7,385
8,351
8,621
9,626
(*) Ordinary income (loss) /Average total assets at the beginning and the end of the fi scal year.
28 Mitsui O.S.K. Lines
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MOL ADVANCE
GEAR UP! MOL
RISE 2013
STEER FOR
2020
Millions of yen
2009/3
2010/3
2011/3
2012/3
2013/3
2014/3
2015/3
¥1,865,802
¥1,347,965
¥1,543,661
¥1,435,221
¥1,509,194
¥1,729,452
¥1,817,070
1,564,486
1,228,479
1,328,960
1,368,795
1,432,014
1,587,902
1,683,795
104,105
197,211
204,511
197,732
126,988
(71,038)
118,984
98,547
20,939
24,235
27,776
12,722
(40,055)
93,428
91,300
123,401
121,622
95,367
58,277
46,970
181,755
90,886
(24,460)
(24,320)
(33,516)
(26,009)
(129,298)
5,014
92,946
(15,766)
(28,568)
(137,939)
(178,847)
(25,285)
78,956
100,458
116,025
41,092
54,986
71,710
57,394
(25,615)
94,256
17,250
51,330
58,332
42,356
(66,656)
92,495
(190,022)
(133,484)
(134,785)
(134,313)
(104,241)
(119,871)
(159,151)
78,156
88,366
77,446
85,624
94,685
83,984
87,804
1,807,080
1,106,746
702,617
695,022
623,714
1,861,312
1,209,176
775,114
735,702
659,507
1,868,741
1,257,823
724,259
740,247
660,795
1,946,162
1,293,803
869,619
717,909
637,422
2,164,611
1,303,967
1,046,865
619,493
535,423
2,364,695
1,379,245
1,094,081
783,549
679,160
¥106.13
521.23
31.00
¥10.63
551.70
3.00
¥48.75
552.83
10.00
(¥21.76)
533.27
5.00
(¥149.57)
447.76
−
¥47.99
567.90
5.00
2,624,050
1,498,028
1,183,401
892,435
782,557
Yen
¥ 35.42
654.26
7.00
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34.5
11.0
19.5
29.2
118
105
35.4
1.3
2.0
28.2
110
100
35.4
6.5
8.8
20.5
136
123
32.8
(1.3)
(4.0)
−
196
158
24.7
(1.4)
(30.5)
−
161
135
28.7
2.4
9.5
10.4
151
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29.8
2.1
5.8
19.8
10,012
9,707
9,438
9,431
9,465
10,289
10,508
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Annual Report 2015 29
Key Indicators
Shipping and Other Revenues/
Ordinary Income (Loss)
Total Assets/Net Assets
Ordinary Income (Loss) by
Consolidated Segment
(¥ billions)
2,000
1,500
1,000
500
0
–500
(¥ billions)
400
3,000
300
2,400
200
1,800
100
1,200
0
600
(¥ billions)
1,000
180
800
600
400
200
120
60
0
10/3
11/3
12/3 13/3 14/3 15/3
–100
0
10/3
11/3
12/3 13/3 14/3 15/3
0
-60
10/3
11/3
12/3 13/3 14/3 15/3
(cid:2) Shipping and other revenues (left scale)
(cid:2) Ordinary income (loss) (right scale)
(cid:2) Total assets (left scale)
(cid:2) Net assets (right scale)
(cid:2) Bulkships (cid:2) Other segments, etc.
(cid:2) Containerships
FY2014
Shipping and Other Revenues ¥1,817.0 billion
¥51.3 billion
Ordinary Income
FY2014
Total Assets
Net Assets
¥2,624.0 billion
¥892.4 billion
FY2014
Bulkships
Containerships
Other segments, etc.
¥54.1 billion
¥(24.1) billion
¥21.3 billion
Ordinary income decreased ¥3.6 billion year on year
due mainly to a drop in freight rates for container-
ships, offshoring in car carriers and stagnant market
conditions for dry bulkers despite tailwinds from the
weaker yen, lower bunker prices and improving mar-
ket conditions for tankers.
Total assets as of March 31, 2015 were ¥259.3 billion
higher than at March 31, 2014 due to increases in
vessels and long-term loans receivable attributable to
investment for fl eet enhancement. Net assets
increased ¥108.8 billion year on year due mainly to
increases in retained earnings and unrealized gains
on hedging derivatives.
In the bulkships segment, while the tanker division
greatly increased profi ts, dry bulkers, car carriers and
other divisions recorded lower profi ts. The containerships
segment posted a larger ordinary loss than fi scal 2013
due mainly to a decrease in freight rates and lower
utilization rates.
Net Income (Loss) per Share/Cash
Dividends Applicable to the Year
Dividend Payout Ratio
Cash Flows
(¥)
150
100
50
0
–50
–100
–150
10/3
12/3 13/3 14/3 15/3
11/3
(cid:2) Net income (Loss) per share
(cid:2) Cash dividends applicable to the year
(%)
30
20
10
0
10/3
11/3
12/3 13/3 14/3 15/3
FY2014
Net Income per Share
Cash Dividends Applicable
to the Year
¥35.42
¥7
FY2014
Dividend Payout Ratio
19.8%
(¥ billions)
200
150
100
50
0
–50
–100
–150
–200
10/3
11/3
12/3 13/3 14/3 15/3
(cid:2) Cash fl ows from operating activities
(cid:2) Cash fl ows from investing activities
Free cash fl ows
FY2014
Cash Flows from Operating
Activities
Cash Flows from Investing
Activities
¥92.4 billion
¥(159.1) billion
In contrast with the previous year, which had large
extraordinary gains due mainly to sales of affi liates’
stocks, net income declined ¥15.0 billion. MOL paid
¥7 per share in dividends for the fi scal year, including
a ¥3 interim dividend, a year-on-year increase of ¥2
per share.
Due to the ¥2 increase in the dividends paid for the
year, the dividend payout ratio increased from 10% in
the previous fi scal year to 20%, reaching our present
guideline. We aim to raise this to 30% as a medium-
to long-term issue.
Operating activities provided net cash of ¥92.4 billion,
down ¥1.7 billion year on year. Investing activities
used net cash of ¥159.1 billion, ¥39.2 billion more
than a year prior, due to continued active capital
investments. This resulted in continuous negative free
cash fl ows.
30 Mitsui O.S.K. Lines
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ROA/ROE
(%)
20
10
0
–10
–20
–30
–40
10/3
11/3
12/3 13/3 14/3 15/3
ROA
ROE
FY2014
ROA
ROE
Interest-bearing Debt / Net Interest-
bearing Debt / Shareholders’ Equity
Gearing Ratio / Net Gearing Ratio
/ Equity Ratio
(¥ billions)
1,200
1,000
800
600
400
200
0
10/3
11/3
12/3 13/3 14/3 15/3
(cid:2) Interest-bearing Debt
(cid:2) Net Interest-bearing Debt
(cid:2) Shareholders’ Equity
(%)
200
150
100
50
0
40
30
20
10
0
10/3
11/3
12/3 13/3 14/3 15/3
Gearing Ratio (left scale)
Net Gearing Ratio (left scale)
Equity Ratio (right scale)
2.1%
5.8%
FY2014
Interest-bearing Debt
Net Interest-bearing
Debt *
Shareholders’ Equity **
¥1,183.4 billion
¥1,054.6 billion
¥782.5 billion
FY2014
Gearing Ratio
Net Gearing Ratio
Equity Ratio
151%
135%
29.8%
ROA and ROE were both lower as ordinary income
and net income both fell due to the lower market-
linked profi ts and a decrease in extraordinary gains,
while total assets increased due to prior investments
for future stable profi ts.
* Interest-bearing debt – cash & cash equivalents
** “Shareholders’ equity” in this section comprises the total of
owners’ equity and accumulated other comprehensive income (loss).
Interest-bearing debt increased ¥89.3 billion to
¥1,183.4 billion, as the Company procured funds by
bank loans to cover negative free cash fl ows.
The gearing ratio improved 10 points and the equity
ratio improved 1 point, refl ecting the ¥103.3 billion
increase in shareholders’ equity, the ¥89.3 billion rise
in interest-bearing debt, and the ¥259.3 billion
increase in total assets.
Enhancement of Cost
Competitiveness
(¥ billions)
Credit Ratings (As of June 2015)
Capital Expenditure
Type of Rating
Rating
(¥ billions)
40
30
20
10
0
(cid:2) Target
(cid:2) Result
FY2014
Target
Result
Short-term debt
rating (CP)
JCR
Long-term preferred
debt (issuer) rating
Long-term debt
rating
J-1
A
A
Issuer rating
BBB+
Target
Result
R&I
Short-term debt
rating (CP)
Long-term individual
debt rating
Moody’s
Corporate family
rating
¥30.0 billion
¥30.0 billion
JCR
R&I
Moody’s
a-2
A–
Ba1
A
BBB+
Ba1
250
200
150
100
50
0
10/3
11/3
12/3 13/3 14/3 15/3
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FY2014
Capital Expenditure
¥164.2 billion
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In fi scal 2014, MOL achieved its target of ¥30.0 bil-
lion total cost reductions. This was accomplished by
further reducing bunker expenses through fuller
implementation of slow steaming, improving vessel
allocation effi ciency, delivering large containerships
and taking other actions.
MOL provides explanations to the credit rating agen-
cies about how its increased capital investments
promise to generate future cash fl ows and are backed
by solid, long-term contracts, and seeks to improve its
credit ratings.
Capital expenditure represented here is the net
amount calculated by deducting proceeds from the
sale of vessels when delivered from “Tangible/intangi-
ble fi xed assets increased” contained in the annual
securities report.
Annual Report 2015 31
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Interview with the CFO
Masahiro Tanabe
Senior Managing Executive Offi cer
Q.1 What is your assessment of the fi scal
2014 fi nancial results?
Especially in the second half of the year, bunker prices continued
to fall, and while it did provide a signifi cant tailwind, we could
not fully take advantage of the lower prices for the full year,
resulting in a 7% year-on-year decrease in consolidated ordinary
income to ¥51.3 billion.
In bulkships, the market remained weak due to stagnation of
Brazilian iron exports and a decrease in the volume of coal
imported into China. The market for tankers, however, was weak
until autumn but then remained at a fi rm level due in part to fall-
ing bunker prices and the subsequent demand for oil reserves on
top of winter demand. Underpinned by stable profi ts from medi-
um- to long-term contracts for dry bulkers, tankers and LNG car-
riers, we secured ¥54.1 billion in ordinary income overall in this
segment, a bit of a decrease from the previous fi scal year.
Containerships aimed to regain profi tability, but ended up
performing below original expectations, posting an ordinary loss
of ¥24.1 billion, which was even worse than the results of many
competitors. This was due to both temporary and structural fac-
tors. The temporary factors are rapidly disappearing, and we are
simultaneously implementing measures to eliminate the structur-
al factors.
term stable profi ts, especially LNG carriers and offshore business-
es. While we place orders for the vessels after securing long-term
transport contracts, there is a gap of around three years between
order and delivery, when the vessels begin contributing to prof-
its. Therefore, it will be 2017, before cash fl ows from operating
activities increase considerably as a return on the investment.
Accordingly, total cash fl ows used in investing activities between
the period between fi scal 2014 and 2016 are expected to exceed
total cash fl ows provided by operating activities for the same
period. Interest-bearing debt, which had been ¥1,094.0 billion at
the end of fi scal 2013, increased ¥89.3 billion to ¥1,183.4 billion
at the end of fi scal 2014.
Fiscal 2015 is a transition year for payments to shipyards dur-
ing the construction of vessels, so cash fl ows from operation will
cover the cash used for investment. However, we will continue
with additional investments mainly in LNG carriers and offshore
businesses. To suppress the increase in interest-bearing debt, we
intend to utilize off-balance sheet structures, such as chartering
(instead of owning vessels) and inviting partners on suitable proj-
ects. However, as mentioned before, these are upfront invest-
ments to secure future stable profi ts and will lead to
improvements in shareholder value in the medium- to long-term,
so we ask for your understanding.
Q.2
Due to prior investments in LNG carriers
and offshore businesses, interest-bear-
ing debt is increasing…
In line with Innovation of Business Portfolio, one of the Three
Innovations outlined in “STEER FOR 2020,” we are actively
investing in new shipbuilding in fi elds that will generate long-
Q.3 What are your thoughts about credit
ratings?
We are exchanging information more closely with the credit rat-
ing agencies, which have raised concerns over the increase in
interest-bearing debt. I think we fi rst need to show we are on
course to implement our growth strategies and the accompany-
32 Mitsui O.S.K. Lines
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ing improvement in fi nancial standing by fi rmly achieving the
profi t targets. But I’d also like to emphasize that behind this
increase in interest-bearing debt are sound long-term transport
contracts with highly credible customers. We are carefully
explaining that these investments promise to generate future
cash fl ows and greatly differ in essence from investments in spot
operations, which are exposed to the waves of the market.
Q.4 What kind of policy do you have
towards procuring funds?
For the time being, investments exceed cash fl ows provided by
operating activities, but this can easily be covered by funding,
mainly by bank loans. The funding will be used for investments
in LNG carriers and offshore businesses, a fi eld backed by long-
term contracts. The Company will also utilize project fi nance
according to each contract’s characteristics. Through these and
other measures, MOL is also focusing on maintaining its corpo-
rate credibility.
Q.5
What is the impact of exchange rate and
bunker price fl uctuations on fi nancial
results?
As for exchange rates, our fi nancial results are primarily impacted
by the Japanese yen-U.S. dollar exchange rate. This is because
freight revenues are primarily denominated in U.S. dollars while a
certain portion of costs are in yen. In fi scal 2015, we project that
each ¥1-per-dollar change against the assumed ¥118-to-U.S.
dollar yearly average exchange rate will have an impact of
approximately ¥1.8 billion in ordinary profi t. (If the yen weakens,
it will improve profi tability.)
Turning to bunker prices, the yearly average price was
assumed to be US$380 per metric ton, and we calculated at the
beginning of the fi scal year that every dollar deviation would
have an impact of ¥190 million. (If the price falls, it will improve
profi tability.) But this impact could be smaller due to the status of
bunker price hedges. Some hedges were placed at the beginning
of fi scal 2014, and bunker prices fell signifi cantly afterward,
resulting in a hedge loss of ¥13.0 billion. A large portion of these
hedges were related to the containership business, and this was
one of the factors that caused the business to fare worse than
other containership companies. Although the bunker price hedg-
es produced a loss in fi scal 2014, we will continue to strategically
utilize hedging in order to control the effect of fl uctuating bun-
ker prices going forward. With the progress made in placing
hedges, the degree of impact from fl uctuating bunker prices will
become smaller.
Q.6 What is the outlook for operating
results in fi scal 2015?
We are expecting consolidated ordinary income to increase 17%
year on year to ¥60.0 billion and net income to rise 2% to ¥43.0
billion, on the assumption that the exchange rate will be ¥118 to
the U.S. dollar and bunker prices will be US$380, as mentioned
previously.
In bulkships, the stagnant market for dry bulkers will contrib-
ute to a decline in profi t from the previous fi scal year. In contain-
erships, however, we aim for a return to profi tability with a year-
on-year improvement of ¥29.1 billion. The temporary factors in
fi scal 2014, including bunker price hedge losses, will be gone,
and by effectively implementing measures to resolve the structur-
al factors unique to MOL, we believe this is an achievable target.
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Impact of Exchange Rate
Fluctuations (Model)
Impact=1+2
Revenues
Expenses
Profi t
2
U.S. Dollar
Revenue
Impact of Bunker
Prices Fluctuations
(Model)
Exposure
I
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Expense
1
Imbalance
Japanese Yen
Revenue
Japanese Yen
Expense
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Hedged portion
Customer’s share
Consolidated Ordinary Income
(Loss) by Segment
Bulk ships
Containerships
Ferry/Domestic
transport
Associated business
Other
Corporate/Eliminate
Total
FY2014
Result
54.1
(24.1)
4.4
10.9
4.1
1.8
51.3
(Billions of yen)
FY2015
Outlook*
38.0
5.0
6.0
10.0
3.0
(2.0)
60.0
Exchange rate
Bunker price
¥108.34/$
¥118.00/$
$529/MT
$380/MT
*As of April 30, 2015
Annual Report 2015 33
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MOL at a Glance
Revenues Breakdown by Segment
(Fiscal 2014 results)
ASSOCIATED
BUSINESSES
6%
OTHERS
1%
BULKSHIPS
47%
Dry Bulkers
23%
Tankers
8%
LNG Carriers/Offshore
Businesses
2%
Car Carriers
14%
FERRY & DOMESTIC
TRANSPORT
3%
CONTAINERSHIPS
43%
Fleet Table
As of March 31, 2015
As of March 31, 2014
Number of
vessels
Thousand
dwt
Number of
vessels
Thousand
dwt
Dry Bulkers
411
36,217
403
35,760
Tankers
176
16,644
180
16,874
LNG Carriers
67
5,233
67
5,182
Offshore
Businesses (FPSO)
2
−
1
−
Car Carriers
127
2,105
125
2,033
Containerships
118
7,401
119
7,091
Ferry & Domestic
Transport
Cruise Ships
Others
Total
43
171
40
160
1
2
5
13
1
2
5
13
947
67,789
938
67,117
(Note) Including spot-chartered ships and those owned by joint ventures
Underlined words are explained in the Glossary on page 74.
34 Mitsui O.S.K. Lines
Business Activities
With the world’s largest fl eet, MOL
Dry Bulkers
reliably transports such dry bulk cargo as iron ore,
coal, grains, wood, wood chips, cement, fertilizer and
salt. Our fl eet includes highly versatile bulk carriers
and specialized vessels for specifi c cargo types.
With the world’s largest fl eet, MOL is
Tankers
expanding activities globally. Our fl eet includes crude
oil tankers; product tankers that carry naphtha, gaso-
line and other refi ned petroleum products; chemical
tankers that carry liquid chemical products; and LPG
tankers that carry liquefi ed petroleum gas.
With the
LNG Carriers/Offshore Businesses
world’s largest LNG carrier fl eet, MOL safely transports
liquefi ed natural gas (LNG), which is experiencing
growing global demand. In addition, we are active in
offshore businesses, including FSPOs and FSRUs,
which are poised for continued growth.
MOL is stably expanding transport
Car Carriers
services to meet the changing needs of automakers as
they move production to optimal sites around the
world. We operate globally with specialized car carri-
ers that can effectively transport any type of vehicle
from passenger cars to construction machinery.
Through MOL’s global network of sea routes, we
transport containers loaded with electric products,
automotive parts, clothes, furniture, food products
and many other products to deliver them around the
world.
We are expanding our network with wider port
coverage and increased service frequency, not only on
our self-operated routes but also in joint operations
with partners, e.g. by forming the G6 Alliance with
fi ve other major shipping companies.
In addition, we are actively developing the termi-
nal business—part of the container shipping value
chain—for use as a tool to differentiate ourselves
from peers.
MOL develops the ferry business, which transports
both passengers and vehicles (automobiles, trucks, etc.)
and simultaneously raises our profi le as the leader of an
eco-friendly modal shift in domestic logistics. We also
promote the domestic transport business, connecting
important domestic sites and transporting large
amounts of raw materials and energy for industry.
Leveraging the knowhow accumulated over more
than 130 years in the marine transport business, we
are promoting various businesses in related activities
including real estate, tugboats, cruise ships (the
NIPPON MARU), and trading.
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Dry Bulkers
[Dry Bulker] Capesize Bulker: MIDNIGHT DREAM
[Dry Bulker] Wood Chip Carrier: DALIA
Tankers
[Tanker]VLCC: AZUMASAN
[Tanker] Product tanker: OPAL EXPRESS
LNG Carriers/Offshore Businesses
Car Carriers
[LNG Carrier] ENERGY NAVIGATOR
[Car Carrier] EMERALD ACE
[Containership] MOL MAJESTY
[Terminal] Los Angeles Container Terminal
Strengths and Strategies
Dry Bulkers
Strengths: A diverse fl eet suited to customer needs and a
rich transport track record
Strategies: Expanding stable profi ts from large vessels and
specialized vessels, while reducing market expo-
sure in small and medium-sized vessels.
Tankers
Strengths: A long track record of safe operations and cus-
tomer trust
Strategies: Strengthening our presence mainly by setting up
pools with other operators in various fi elds,
including crude oil tankers, petroleum product
tankers and chemical tankers.
LNG Carriers/Offshore Businesses
Strengths: An outstanding track record, knowhow related
to safe operations and a global customer base
Strategies: We take on technologically challenging projects
by encompassing technology, ship management
and specialized business divisions.
Car Carriers
Strengths: Worldwide service to meet and surpass the high
transport quality standards of our customers
Strategies: Flexibly responding to diversifying cargo fl ows
with our highly versatile fl eet that features a
uniform vessel size.
Strengths: A global network of sea lanes and high quality
service, beginning with high on-time perfor-
mance percentages
Strategies: Raising our cost competitiveness while maintain-
ing an expansive network of sea routes through
the leading G6 Alliance, launching large vessels
and ceaselessly rationalizing costs. We also built
up a foundation for stable profi ts by expanding
terminal and other businesses.
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Strengths: The largest ferry network in Japan and the MOL
Group’s solid customer base
Strategies: Capturing domestic transport demand, which is
expanding thanks to the rebounding Japanese
economy and the modal shift, while raising the
competitiveness of our fl eet.
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[Ferry] SUNFLOWER SAPPORO
Shin
-Daibiru
Building
Strengths: A customer base and business knowhow culti-
vated in the marine transport industry
Strategies: Leveraging the MOL Group’s network to expand
business globally, beginning in Southeast Asia,
where demand is growing.
[Cruise ship] NIPPON MARU
Annual Report 2015 35
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MOL at a Glance
Year in Review
Performance (¥ billions)
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This division maintained a high level of earn-
Dry Bulkers
ings by securing stable profi ts from long-term contracts for
iron ore, steaming coal, and wood chip carriers. However,
the market stagnated due to sluggish Brazilian exports of
iron ore and a lower volume of coal imports to China. As a
result, profi ts declined year on year.
Market conditions remained fi rm overall for
Tankers
crude oil tankers, product tankers and LPG tankers. The division
sustained efforts to improve operational effi ciency by setting up
pools. As a result, the division greatly improved profi tability
from the previous fi scal year and succeeded in turning a profi t.
Although the division
LNG Carriers/Offshore Businesses
accumulated profi ts from long-term contracts, profi ts
declined year on year due to a worsening in the operating
rates from scheduled dry-dockings and the incurrence of
seafarer training and other expenses. In offshore businesses,
the 2nd FPSOs commenced operations.
Despite the yen remaining weak, there was no
Car Carriers
major change in the trend of automakers moving production
overseas, and exports of vehicles from Japan declined. Although
the division strengthened the volume of cross trades and import
cargo by launching new services, profi ts declined year on year.
The rate increase on Asia to Europe /East Coast of South
America did not take root, and the Company was unable to
fully enjoy a rate increase for North America bound cargo
due to a high proportion of year-long freight rate contracts
already in effect. In addition, cargo volume from Europe/
North America to Asia stalled, and our lifting in Intra-Asia
trade also declined due to port congestion. MOL strove to
bolster its cost competitiveness mainly through the expansion
of the G6 Alliance, the delivery of large vessels, the disposal
of medium-sized vessels, and the rationalization in some
North-South trades. However, due in part to losses on bunker
price hedges, the loss widened year on year.
900
600
300
0
75
50
25
0
FY2014
Revenues
¥857.2 billion
2% Increase YoY
Ordinary income
¥54.1billion
5% Decrease YoY
13/3
14/3
15/3
-25
■ Revenues (left scale)
■ Ordinary income (loss) (right scale)
800
600
400
200
0
100
FY2014
75
50
25
0
Revenues
¥787.0 billion
10% Increase YoY
Ordinary loss
¥(24.1) billion
—
13/3
14/3
15/3
-25
■ Revenues (left scale)
■ Ordinary income (loss) (right scale)
As the modal shift accelerated, primarily driven by the short-
age of truck drivers, cargo movements increased. The seg-
ment also enhanced its fl eet amid steady volumes of
mainstay cargo such as steel. As a result, profi ts expanded
year on year.
60
40
20
0
13/3
■ Revenues (left scale)
■ Ordinary income (loss) (right scale)
14/3
15/3
Daibiru Corporation, which is the core of the real estate
business, sustained stable profi ts. Operating results also
remained fi rm for cruise ships, tugboats and trading. The
segment recorded stable profi ts roughly level with the previ-
ous fi scal year.
120
90
60
30
0
13/3
14/3
15/3
■ Revenues (left scale)
■ Ordinary income (loss) (right scale)
6
4
2
0
12
9
6
3
0
FY2014
Revenues
¥56.0 billion
1% Increase YoY
Ordinary income
¥4.4 billion
100% Increase YoY
FY2014
Revenues
¥108.3 billion
7% Decrease YoY
Ordinary income
¥10.9 billion
2% Decrease YoY
36 Mitsui O.S.K. Lines
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Business Environment
Highlights of the Year
Dry Bulker Market (Spot Charter Rate/Capesize, TC Average)
(Unit: US $/Day)
40,000
30,000
20,000
10,000
0
14/1
14/4
14/7
14/10
15/1
15/4
Source: MOL internal calculation based on TDS and others
VLCC Market (World Scale) (AG - Japan)
(WS)
90
60
30
0
14/1
14/4
14/7
14/10
15/1
15/4
WS for 2014 has been translated by the Flat Rate of 2015.
Source: Researched by MOL
Containership Market (CCFI)
(Jan 1, 1998=1,000)
Europe Trade U.S. West Coast Trade U.S. East Coast Trade
1,800
1,200
600
0
14/1
14/4
14/7
14/10
15/1
15/4
Source: SSE
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Dry Bulkers
Delivered three coal carriers with long-term
contracts for domestic electric companies
Tankers
Established a joint venture with Viken Shipping
(Norway) and embarked on a shuttle tanker
business
Launched ship management and seafarer
training business in partnership with Synergy
Group (India)
Started pool operation in MR product tankers
and large LPG tankers
LNG Carriers/Offshore Businesses
Signed new long-term contracts for 10 LNG
carriers and one FPSO.
Delivered the fi rst vessel from the LNG carrier
construction project in China
Concluded a long-term contract for shipping
liquefi ed ethane to India using six very large
ethane carriers—the fi rst of their kind in the
world
Car Carriers
Began transport service from Mexico to other
NAFTA regions
Expanded service for the G6 Alliance, Asia-
North America West Coast and Transatlantic
routes
Began operations of the automated terminal
on the North America West Coast
Ordered six 20,000 TEU containerships
MOL Ferry Co., Ltd. decided to launch two
energy effi cient, high-speed ferries on the
Hokkaido route
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Delivered three new domestic transport vessels
Daibiru acquired an offi ce building in Hanoi,
its second in Vietnam
Orders for Propeller Boss Cap Fins (PBCFs),
which are devices to improve energy effi ciency,
reached 3,000 vessels
Underlined words are explained in the Glossary on page 74.
Annual Report 2015 37
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Market Position in the Industry
MOL operates a large and balanced oceangoing fl eet. In terms of its total
fl eet size and presence in individual market categories, MOL ranks among
the world’s largest shipping companies.
1,000
947
1,200
World Major Carriers’ Fleets (All Vessel Types)
(Number of vessels)
0
200
400
600
800
68
MOL (Japan)
NYK (Japan)
COSCO (China)
K Line (Japan)
China Shipping (China)
APM-Maersk (Denmark)
Oldendorff (Germany)
MSC (Switzerland)
Swiss Marine (Switzerland)
CMA-CGM (France)
Fredriksen (Norway)
Teekay (Canada)
0
20
40
60
80
100
120
(Million deadweight tons (DWT))
■■ Number of vessels ■■ Million deadweight tons (DWT)
Source: MOL internal estimation based on each companies’ published data, Clarkson and Alphaliner (March 2015)
40
47
60
80
43 10
100
World Major Carriers’ Revenue Portfolio by Segment
(%)
0
20
MOL
NYK
K Line
APM-Maersk
COSCO
NOL
OOIL
MISC
Frontline
Teekay
Pacifi c Basin
Golar LNG
■ Bulkships ■ Containerships and related business ■ Other businesses
Source: MOL calculations based on each company’s fi nancial statements and/or news.
MOL’s containerships and related business includes revenue from Containerships, Terminals and Logistics. NYK’s
containerships and related business includes revenue from Containerships, Air freighters and Logistics. APM-Maersk’s
containerships and related business includes revenue from Terminal business. COSCO’s containerships and related
business includes revenue from Terminal business.
38 Mitsui O.S.K. Lines
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Dry Bulkers
(Thousand deadweight tons)
0
10,000
20,000
30,000
40,000
50,000
NYK
MOL
Oldendorff
K Line
Swiss Marine
COSCO
MOL
SCF
NYK
MISC
Fredriksen
Teekay
Source: Companies’ published
data and Clarkson (March 2015)
Tankers
(Thousand deadweight tons)
Source: Companies’ published
data and Clarkson (March 2015)
LNG Carriers
(Number of vessels)
■■ In operation ■■ On Order
*Qatar Gas Transport Company Ltd.
Source: MOL (March 2015)
(Note) The numbers include the vessels which
are owned by each company (wholly or par-
tially) and the vessels for which vessel opera-
tion is entrusted to each company.
MOL
NYK
Nakilat(*)
K Line
Shell
MISC
Car Carriers
(Number of vessels)
Source: MOL (March 2015)
Note: Excluding spot-chartered vessels
Containerships
(Thousand TEU)
NYK
MOL
K Line
EUKOR
GLOVIS
HOEGH
Maersk
MSC
CMA-CGM
Evergreen
Hapag-Lloyd
COSCO
CSCL
Hanjin
MOL
Hamburg-Sud
NOL
OOCL
NYK
Yang Ming
K Line
UASC
Hyundai
Source: MDS (April 2015)
36,217
0
0
0
5,000
10,000
15,000
20,000
16,664
25
50
75
67
100
25
92
40
80
120
160
116
0
600
1,200
1,800
2,400
3,000
577
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Annual Report 2015 39
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Overview of Operations
Kenichi Nagata, Executive Vice President
Fiscal 2014 in Review—
The First Year of “STEER FOR 2020”
The division experienced a year-on-year decline in profi ts due to
stagnation in the dry bulker market. Looking at the bigger pic-
ture, however, even amid this diffi cult business environment we
were able to sustain margins, which were underpinned by long-
term, stable profi ts. As for large iron ore and coking coal carriers,
profi ts exceeded those of the previous fi scal year owing to a
weaker yen, lower bunker prices and such operating techniques
as slow steaming, all of which offset a deterioration in profi tabili-
ty due to the weak market. Steaming coal and wood chip carri-
ers maintained consistent profi tability on the back of medium- to
Bulkships
Dry Bulkers
long-term contracts. On the other hand, small and medium-sized
vessels of Panamax size or under, which have a relatively low per-
centage of medium- to long-term contracts, posted a loss stem-
ming from the stagnant market. Even for MOL’s highly
cost-competitive fl eet, which resulted from the Business
Structural Reforms carried out in fi scal 2012, the effects of the
dormant market were formidable.
As fi scal 2014 began, the general consensus was that the dry
bulker market would improve during the year as vessel supply
tightened. The initial results were good, but shortly thereafter
the market took a sharp dive. Even the boost at the beginning of
autumn was short-lived. Chinese imports of iron ore remained
fi rm and its Australian exports reached a record high, but there
were also negative factors such as sluggish Brazilian iron ore
exports, which involve long transport distances, and decreased
coal imports to China. In addition, freight derivatives, which cur-
rently have a large impact on the physical market, weighed on
the market, amplifying the pessimistic sentiment in contrast with
early expectations of a market recovery.
Outlook for Fiscal 2015 and Beyond
The Baltic Dry Index recorded an all-time low in February 2015
and remains at historic lows. Even with a certain degree of mar-
ket recovery expected as more vessels are scrapped, profi ts in fi s-
cal 2015 will be under more pressure than in fi scal 2014. Despite
this, the division as a whole is expected to remain in the black,
Consolidated Revenues Breakdown (FY2014)
General Cargo Carrier/
Heavy Lifter
7%
Steaming Coal Carrier
10%
Wood Chip Carrier
10%
General Bulk Carrier
28%
Dry Bulker Fleet Table (Number of vessels)
Standard
DWT
At the
end of
Mar.2014
At the
end of
Mar.2015
180,000
107
104
Vessel Type
Capesize
Panamax
Handymax
Small handy
Steaming coal
carriers
72,000
55,000
28,000
93,000
37
72
56
44
38
67
56
40
42
53
403
411
Iron Ore and
Coking Coal Carrier
46%
Use
Steel raw materials
(iron ore, coking coal)
Iron ore, coking coal,
steaming coal, grains, etc.
Steaming coal, grains,
salt, cement,
steel products, etc.
Steel products, cement,
grains, ores, etc.
Steaming coal
43 Wood chips,
soybean meal, etc.
55
Steel products,
plants, etc.
[Steaming Coal Carrier] HAKUTAKA
Wood chip carriers
50,000
Others (Heavy
lifter, General
cargo carriers)
Total
12,000
40 Mitsui O.S.K. Lines
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buoyed by stable profi ts.
Beyond fi scal 2015, we will continue to expand long-term
and stable profi ts and reduce market exposure as outlined in
“STEER FOR 2020.”
To achieve an expansion in long-term and stable profi ts
amidst a harshly competitive environment, we will need to serve
an indispensable role in our customers’ supply chain. The fi rst
key is maintaining an organizational structure that guarantees
safe and dependable transportation. The second key is accurately
perceiving customer needs to make the best proposal. While
some shipping companies are outsourcing vessel operations and
marine technical specialists, MOL’s organizational system provides
fully integrated services encompassing sales and customer ser-
vice, vessel operation, ship management and technical divisions.
Our scale as a full-line marine transport group makes such an
organization possible, and the fi nance division, which procures
funding for shipbuilding, provides yet another competitive
advantage.
MOL’s integrated organization also enables new buildings of
vessels perfectly sized to match customer needs and proposals to
make loading and unloading more effi cient. For example, we
recently developed a vessel size capable of effi ciently transport-
ing iron ore to shallow unloading ports, securing a long-term
contract. In addition, a growing number of customers now con-
sider low environmental burden an integral aspect of transport
service quality. In response, we are developing newer, more
advanced vessels that surpass current environmental regulations,
spurring demand for new and replacement vessels.
We are also working to reduce market exposure. We will
accelerate the reduction of vessels without medium- to long-
term contracts, especially those of small and medium-sized ves-
sels of Panamax size or under. Small and medium-sized dry bulk
carrier transport is a very fl uid business fi eld catering to a wide
range of cargo where it is easy to charter vessels on the spot
market. We strive to improve profi tability by combining various
types of cargo and optimizing operations, while carefully match-
ing terms of procurement and freight contracts so that stable
profi ts are not negatively impacted under any market environ-
ment. If MOL leverages the operational knowhow cultivated over
its 130-year history, this will be possible.
At their heart, ships are just tools. Our goal should not be to
simply increase the number of ships, but rather to ensure we
have the right number and types of ships to meet the needs of
our customers. We will balance fl exible transport via small and
medium-sized vessels with long-term stable transport centering
mainly on large vessels that play an integral role in the supply
chain. We will do this while ratcheting up operational effi ciency,
including the use of slow steaming. In these ways, the dry bulker
division will continue to make a sustainable contribution to the
results of the entire MOL Group.
Vessels Supply (Capesize) (Number of vessels)
China: Dependence on Imported Iron Ore
(Million tons)
Underlined words are explained in the Glossary on page 74.
300
200
100
0
-100
2009 2010 2011 2012 2013 2014
(cid:2) Deliveries (cid:2) Demolitions YOY %
Source: MOL internal calculation based on IHS-Fairplay
24%
16%
8%
0%
-8%
1,600
1,200
800
400
80%
60%
40%
20%
0
2009 2010 2011 2012 2013 2014
(cid:2) Crude steel production (cid:2) Imported iron ore (cid:2) Domestic production Import dependency (%)*
Source: MOL estimation
*MOL internal calculation based on the premises of Fe content of 96% in pig iron and 62% in imported iron one
0%
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Iron Ore: Global Seaborne Trade by Country/Area
(Million tons)
Steaming Coal: Global Seaborne Trade
by Country/Area (Million tons)
1,400
1,200
1,000
800
600
400
200
0
(cid:2) Others
(cid:2) Europe
(cid:2) Taiwan
(cid:2) Korea
(cid:2) Japan
(cid:2) China
09 10 11 12 13 14
Import
13
14
Export
1,000
800
600
400
200
0
(cid:2) Others
(cid:2) North
America
(cid:2) Europe
(cid:2) Taiwan
(cid:2) Korea
(cid:2) Japan
(cid:2) India
(cid:2) China/
Hong Kong
(cid:2) Others
(cid:2) India
(cid:2) Sweden
(cid:2) Canada
(cid:2) South Africa
(cid:2) Brazil
(cid:2) Australia
Source: MOL internal calculation based on Tex Report, Clarkson, Trade Statistics
Source: SSY
(cid:2) Others
(cid:2) FSU
(cid:2) U.S.
(cid:2) Columbia
(cid:2) South Africa
(cid:2) Australia
(cid:2) Indonesia
09 10 11 12 13 14
14
Import
Export
Annual Report 2015 41
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Overview of Operations
Akio Mitsuta, Managing Executive Offi cer
Fiscal 2014 in Review—
The First Year of “STEER FOR 2020”
Profi tability improved greatly year on year. Not only did the tank-
er division successfully secure ordinary income for the fi rst time in
six years, results surpassed targets for the fi rst year of “STEER
FOR 2020.” We operate a wide variety of vessel types: crude oil
tankers, product tankers, LPG tankers, methanol tankers and
chemical tankers. We have endeavored to improve our operating
effi ciency by setting up pools with other operators and worked
to reduce bunker costs by slow steaming. With market condi-
tions remaining favorable overall, those efforts paid off.
Bulkships Tankers
The market for very large crude carriers (VLCCs) and product
tankers improved despite only a gradual increase in worldwide
petroleum demand. This is because long-distance Indian and
Chinese imports of West African crude oil grew faster than U.S.
imports fell due to the shale revolution, as well as an underlying
trend of improving supply and demand balance. As the price of
crude fell, rising demand for oil reserves and increased operating
rates at refi neries also supported the market. In the LPG tanker
market as well, favorable market conditions persisted as U.S.
exports of LPG, a by-product of shale gas, increased throughout
the year. The market for chemical tankers also remained fi rm.
Amid this upswing in the external environment, we are still aggres-
sively pursuing initiatives to improve effi ciency, including through
the Clean Products Tankers Alliance, a new medium range (MR)
product tanker pool arrangement established in fi scal 2014.
The division’s dual mission outlined in “STEER FOR 2020” is to
reduce market exposure and accumulate long-term stable profi ts.
We made solid achievements toward both targets in fi scal 2014.
As for reducing market exposure, we carried out such strategic
initiatives as taking advantage of favorable market conditions to
fi rm up earnings, in addition to selling and redelivering vessels to
reduce the size of our fl eet. As a result, we reduced MOL’s mar-
ket exposure beyond the targets set at the beginning of the year.
We also made progress in terms of accumulating long-term
stable profi ts. The most notable example is our entry into the
Consolidated Revenues Breakdown (FY2014)
Chemical Tanker
19%
LPG Tanker
11%
Methanol Tanker
10%
Crude Oil Tanker
35%
Product Tanker
25%
Tanker Fleet Table (Number of vessels)
At the
end of
Mar.2014
At the
end of
Mar.2015
Vessel type under pool
management (at the
end of March 2015)
Crude oil tankers
Product tankers*1
Chemical tankers*2
Including Methanol
tankers
LPG tankers
38
59
72
11
42
50
LR1 (70,000 DWT)
MR (50,000 DWT)
75
Chemical tanker
9
VLGC (very large gas
carrier, 80,000m3)
Total
180
176
42 Mitsui O.S.K. Lines
[Tanker] VLCC: MITAKE
*1 Petroleum products: gasoline, naphtha, kerosene, jet fuel and gas oil, etc.
*2 Chemical products: xylene, benzene, methanol and plant oil, etc.
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shuttle tanker business by establishing a joint venture to operate
fi ve vessels with Norway-based Viken Shipping. This joint venture
recorded a profi t from the very fi rst year. This is one of the
expansions of our offshore businesses, which is integral to realiz-
ing the “innovation of our business domain” outlined in the
medium-term management plan. Taking advantage of this
opportunity, we aim to accumulate stable profi ts by deepening
alliances with Viken in other businesses.
Outlook for Fiscal 2015 and Beyond
In fi scal 2015, we expect to record a similar level of profi t as the
previous year. Although we forecast market conditions will remain
fi rm overall, we formulated our fi nancial outlook based on rela-
tively conservative assumptions regarding market conditions.
The volume of crude oil transported by sea is not expected to
increase greatly going forward, but ton-miles are likely to rise in
tandem with the growing transport volume of West African and
South American crude oil to China and India. In the medium and
long term, demand for product tankers will likely remain fi rm
due to higher operational rates at refi neries in oil-producing
nations. We also expect rising demand for LPG and chemical
tankers owing to the shale revolution. On the supply side, we
foresee increased supply of new vessels in certain types of ships,
which will in some ways increase downward pressure on market
conditions over the medium term.
Amid this environment, there is no change in our policy of
aiming to reduce market exposure and accumulate long-term
stable profi ts. We aim to accumulate medium- to long-term con-
tracts while reducing market exposure at appropriate times. We
will simultaneously expand the pool arrangement to various
types of vessels. As for large LPG tankers, we began pool
arrangements in March 2015, preparing ourselves for a market
correction due to an increase in the number of new ships to be
supplied in the second half. While we continue to reduce our
fl eet, we make use of those pool arrangements to maintain our
broad market presence and expand benefi ts for our customers.
As pool managers, we dispatch personnel and take responsibility
for chartering and operations, further deepening our relation-
ships with our customers.
Leveraging the knowhow cultivated through our safe opera-
tion initiatives, which is our core competence, we entered a new
business fi eld in October 2014 by establishing a joint-venture
with Synergy Group in India that provides ship management and
seafarer training. We decided to commercialize ship manage-
ment and seafarer training, an area where we really differentiate
ourselves from other companies, amid growing requirements for
safe operations and better responses to environmental regula-
tions. By providing our customers with value-added services, we
will contribute to the sustainable growth of the Company.
Vessels Supply (VLCC) (Number of vessels)
Crude Oil: Global Seaborne Trade by Import Country/Area
(Million tons)
Underlined words are explained in the Glossary on page 74.
75
50
25
0
-25
2009 2010 2011 2012 2013 2014
15%
10%
5%
0%
-5%
2,000
1,500
1,000
500
0
2009
2010
2011 2012 2013 2014 2015
(forecast)
(cid:2) Deliveries (cid:2) Withdrawal YOY %
Source: MOL internal calculations based on IHS-Fairplay
(cid:2) China (cid:2) Japan (cid:2) Other Asia/Pacifi c (cid:2) Europe (cid:2) North America (cid:2) Others
Source: Clarkson
Global Seaborne Trade from Africa/Latin America to Asia(*)
(*) Japan, China, Korea, India
(Million tons)
Petroleum Products: Global Seaborne Trade
by Import Country/Area (Million tons)
200
150
100
50
0
2009 2010 2011 2012 2013 2014
1,200
900
600
300
0
2009
2010
2011 2012 2013 2014 2015
(forecast)
(cid:2) ex. Africa (cid:2) ex. Latin America
Source: MOL internal calculation based on Japan METI / China Customs /
Korea Customs / India MCI
(cid:2) Japan/China/Korea (cid:2) Other Asia/Pacifi c (cid:2) Europe (cid:2) Latin America
(cid:2) North America (cid:2) Africa (cid:2) Others
Source: Clarkson
Annual Report 2015 43
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Overview of Operations
for 10 LNG carriers. This increased the size of our fl eet to more
than 90 ships when including outstanding orders. Including con-
tracts under negotiation, expansion of the fl eet to 100 ships is
now in sight. We made signifi cant progress this year toward
reaching a 120 LNG carrier fl eet, the target set out in “STEER
FOR 2020.” Another major accomplishment was the signing of a
long-term contract with India’s Reliance Industries Limited to
operate and manage six very large ethane carriers—the fi rst ves-
sels of their kind in the world.
In offshore businesses, our second FPSO commenced opera-
tions, and we secured a new contract for another FPSO. The off-
shore businesses, which we embarked on in fi scal 2010, turned a
profi t in fi scal 2014, and stand poised to contribute solid profi ts
going forward.
Outlook for Fiscal 2015 and Beyond
We believe profi ts will rise in fi scal 2015 based on the rollback
of temporary expenses incurred in fi scal 2014 and the accumu-
lation of highly stable profi ts with the delivery of new LNG carri-
ers and FPSO.
Our mission in “STEER FOR 2020” is to accumulate long-term
and stable profi ts. While we do need to slightly reprioritize proj-
ects in light of the recent drop in oil prices, there is no signifi cant
change in the targeted fl eet scale. Amid the considerations, the
Takeshi Hashimoto, Managing Executive Offi cer
Fiscal 2014 in Review—
The First Year of “STEER FOR 2020”
We made dynamic, forward-looking investments despite lower
profi ts year on year due to increased seafarer training expenses
and scheduled dry-dockings, which led to reduced vessels’ oper-
ating rates. In this sense, I think it’s safe to say this year was
highly productive. Even seafarer training expenses can be
regarded as a prior investment which is indispensable for future
fl eet expansion.
In more concrete terms, we signed new long-term contracts
Bulkships LNG Carriers/Offshore Businesses
[Offshore Business] FPSO: Cidade de Angra dos Reis MV22
(photo: MODEC, INC.)
[LNG Carrier] GDF SUEZ POINT FORTIN
[Offshore Business] FSRU (CG image)
(photo: ENGIE)
44 Mitsui O.S.K. Lines
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previously mentioned contract for very large ethane carriers is
pivotal. Beyond contributing to long-term and stable profi ts, this
contract positions us to capture new fl ows of cargo arising from
the shale revolution as the United States increases its exports of
ethane. We secured the ethane project by keeping our fi nger on
the pulse of customer needs through our global business net-
work, while optimizing tangible and intangible assets to give
shape to solutions. When it comes to transporting ethane, the
properties of ethane resemble those of LNG, but it’s also neces-
sary to have a thorough understanding of how to transport LPG.
Our wealth of experience in both fi elds and our renowned ser-
vice quality were deciding factors in securing the deal. Going for-
ward, we will leverage our fi rst-mover advantage to secure
future contracts capturing this great cargo growth potential.
The negative impact of falling oil prices on the offshore busi-
nesses is a concern that has been raised. While FPSO projects
currently underway will proceed largely according to plan, we
expect to delay or revise some new projects. On the other hand,
as the price of energy drops, demand for projects may accelerate
in countries reliant on energy imports. So we could see an
increase in FSRU and similar projects that facilitate LNG import
into emerging economies. Here, too, we should be able to lever-
age our competitive advantage of having intimate knowledge of
both the FPSO and FSRU fi elds.
I feel it’s especially noteworthy that in January 2015 the fi rst
of the LNG carriers we are building in China was delivered. This
is MOL’s fi rst project to build LNG carriers in China. We organized
a shipbuilding supervision team to the shipyard. At its height, the
team expanded to nearly 50 people. As a result, the fi rst carrier
was delivered without a hitch, solidifying the trust placed in us
by oil majors and our Chinese partner companies. The trust
earned through this project, along with the knowledge and cus-
tomers gained, will surely play a signifi cant role in future projects
to transport LNG to the burgeoning market in China.
We have the fi ghting spirit to boldly take on challenging
projects and the technical capabilities to see them through suc-
cessfully, as evidenced by the Uruguayan FSRU project, and the
Russian Yamal project to operate ice class LNG carriers in the
Northern Sea Route. As the division responsible for accumulat-
ing long-term and stable profi ts—the core of “STEER FOR
2020”—we will achieve fi rm growth going forward. We will
accomplish this by offering our customers comprehensive full
line service encompassing technical, ship management and busi-
ness divisions.
FY2014: Signed Long-Term Contracts
LNG: Seaborne Trade (Million tons)
Underlined words are explained in the Glossary on page 74.
LNG Carriers
Tokyo Gas
ex.USA
To Japan
2 vessels
Mitsui & Co. ex.USA
To Japan
3 vessels
Yamal
ex.Russia
To China
3 vessels
E.ON
ex.USA
To Europe
and others
2 vessels
Offshore Businesses
Petrobras
Brazil
FPSO
To start in
FY 2017
To start in
FY 2017
To start in
FY 2017
To start in
FY 2018
To start in
FY 2017
LNG: Demand Forecast by Area
37%
37%
6%
6%
6%
6%
8%
8%
9%
9%
2014
2014
13%
13%
16%
16%
25%
12%
7%
4%
19%
2020
(forecast)
5%
17%
450
400
350
300
250
200
150
100
50
0
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2007
2008
2009 2010 2011 2012 2013 2014 2015* 2016* 2017* 2018* 2019* 2020*
*forecast
(cid:2) Japan (cid:2) Korea (cid:2) Europe (cid:2) America (cid:2) China
(cid:2) India (cid:2) Taiwan (cid:2) Others
Source: MOL internal calculation based on Wood Mackenzie
(cid:2) Middle East (cid:2) Australia (cid:2) Other A/P (cid:2) North America (cid:2) Africa
(cid:2) South America (cid:2) Europe
Source: MOL internal calculation based on Wood Mackenzie
Annual Report 2015 45
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Overview of Operations
Naotoshi Omoto, Managing Executive Offi cer
Fiscal 2014 in Review—
The First Year of “STEER FOR 2020”
Global auto sales reached 87 million units in 2014, a record high
for the fourth straight year. The number of vehicles transported
by sea worldwide, however, dipped below 15 million units.
Despite a weakening yen, the number of vehicles exported from
Japan declined from 4.2 million to 4.0 million as Japanese auto-
makers continued to shift manufacturing toward end markets,
accelerating local production for local consumption. We fl exibly
responded to these offshoring trends while strengthening bonds
with customers and increased the volume of cargo transported
Bulkships Car Carriers
outside of Japan. However, due mainly to higher than expected
costs associated with setting up new routes (cross trades involv-
ing Mexico), income fell from the previous fi scal year.
Nevertheless, the new routes from Mexico got on track in
the second half of the year. In addition, we kept up efforts to
minimize ballast voyages by pursuing an appropriate mix of
cargo amid diversifying trade patterns. As a result, operating
results were better than originally forecast at the beginning of
the year. I believe we put up a good fi ght for the fi rst year of
“STEER FOR 2020.”
Mexico has grown remarkably in recent years as an export
hub for global automakers with many Japanese, American and
European automakers building and enlarging plants in the coun-
try. MOL is ahead of the game in Mexican vehicle exports, estab-
lishing the industry’s fi rst direct route to Europe in the second
half of the fi scal year. We will further strengthen our sales bases
in each such region for cross trades and create a fl exible service
network able to meet customer needs.
Outlook for Fiscal 2015 and Beyond
In fi scal 2015, we predict a similar level of earnings as the previ-
ous year, even though the number of vehicles exported from
Japan is expected to decline. We will maintain earnings by bol-
stering the volume of cross trades and imported cargo, including
inter-Asian trade, Transatlantic trade, China-bound cargo from
Next-generation Car Carriers “FLEXIE” (Depiction)
[Car Carrier] NEPTUNE ACE
46 Mitsui O.S.K. Lines
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Europe, and cargo from Mexico.
Global auto sales are forecast to exceed 90 million units in
2015, led by sales in emerging countries. The number of vehicles
transported by sea worldwide is expected rise along with global
sales. Simultaneously, the diversifi cation of trade patterns will
likely be accelerated, most notably in cross trades.
To capitalize on these developments, MOL is expanding busi-
ness under the keyword fl exibility. As part of this effort, in April
we ordered four next-generation car carriers, each with capaci-
ty for 6,800 vehicles. The vessels are scheduled to be delivered
beginning in 2017. The structure of the hold has been greatly
redesigned. The number of liftable decks with adjustable height
has increased from two to six, providing the advantage of being
able to fl exibly respond to various vehicle heights. Another
advantage of these vessels is that while the carrying capacity
has increased to 6,800 vehicles, the size of the vessel is nearly
the same as the standard vessel size of the 6,400 vehicle car
carrier, ensuring high usability in various sea lanes and ports
across the globe.
Eyeing the expansion of the Panama Canal, some car carrier
operators have placed orders for vessels with carrying capacity
for 7,500 to 8,000 vehicles. MOL has seen beyond this trend and
has instead been focusing on 6,400 vehicle capacity vessels to
enhance its fl eet. We reached this decision after considering the
shipping patterns of our customers and physical port restrictions,
determining that we could fl exibly meet customer needs by hav-
ing a uniform size vessel fl eet compatible with various sea lanes
and ports around the world. This is another strength of MOL’s car
carrier fl eet, and the new orders were placed based on this poli-
cy. MOL has named the new ships the FLEXIE series after the
word fl exibility. This represents the fl exibility of the ships to use
space effectively and load various types of vehicles with their six
liftable decks as well as the business style of the Company to
fl exibly respond to diversifying customer needs.
We will continue working to improve profi tability by mini-
mizing ballast voyages in response to changes in trade and pur-
suing synergies with the Group company Nissan Motor Car
Carrier Co., Ltd. In July 2015, we united the MOL car carrier
network under the new brand MOL AUTO CARRIER EXPRESS
(MOL ACE) to strengthen our business on a global scale.
Overseas bases are making better use of local talent and
strengthening sales for export cargo. Under the new brand
MOL ACE, we will leverage our fl exibility to respond to the
changing business environment while continuing to improve
profi tability and customer satisfaction.
Main Routes
Global Car Seaborne Trade
(Thousand units)
(excluding CKD)
Underlined words are explained in the Glossary on page 74.
16,000
12,000
8,000
4,000
0
2009 2010 2011 2012 2013 2014
(cid:2) Exports from Japan (cid:2) Exports from Korea (cid:2) Others
Source: MOL internal calculation based on Trade Statistics of Japan (MOF), etc.
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Car Export from Japan by Destination
(Thousand units)
(excluding CKD)
Car Export from Emerging Countries
(Thousand units)
6,000
4,500
3,000
1,500
0
2009 2010 2011 2012 2013 2014
6,000
4,000
2,000
0
2009 2010 2011 2012 2013 2014
(cid:2) North America (cid:2) Europe (cid:2) Middle East (cid:2) Oceania (cid:2) Asia
(cid:2) LatinAmerica (cid:2) Africa
Source: MOL internal calculation based on Trade Statistics of Japan (MOF)
(cid:2) ex. Thailand (cid:2) ex. China (cid:2) ex. India (cid:2) ex. Mexico (cid:2) ex. South Africa
Source: MOL internal estimation based on FOURIN data, etc.
Annual Report 2015 47
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Overview of Operations
Akihiko Ono, Managing Executive Offi cer
Fiscal 2014 in Review—
The First Year of “STEER FOR 2020”
At the beginning of fi scal 2014, the containership business
sought to reverse the ¥14.5 billion loss of fi scal 2013 by posting
a profi t of ¥2.0 billion. Unfortunately, the loss widened to ¥24.1
billion despite successfully carrying out many of the measures to
improve profi tability outlined at the beginning of the year.
For example, the delivery of large vessels, disposal of small and
medium-sized vessels, the expansion of the G6 Alliance, and
slow steaming went largely according to plan. On the other
hand, the automation of our container terminal in Los Angeles
was delayed from July to November.
Containerships
What really knocked us off course was a downswing in gross
margins due to falling freight rates and rising costs. With ongo-
ing deliveries of large containerships for Asia-Europe and other
East-West routes, we assumed at the beginning of the year there
would be a decline in our average freight rates, but the actual
decline was worse than predicted. Freight rate increases could
not gain traction, especially for Asia-Europe trade and Asia-South
America East Coast trade, the latter having suffered stagnant
cargo volumes. Meanwhile the volume of inbound cargo to Asia
from North America and Europe could not keep pace with the
increase in outbound cargo from Asia, which weakened the mar-
ket. The stagnant inbound cargo volumes also put pressure on
profi tability by lowering average slot utilization rates and increas-
ing costs due to the return of empty containers. This was exacer-
bated by port congestion amid strained labor negotiations at
U.S. West Coast ports. These factors, along with the congestion
in Manila and other Asian ports, lowered slot utilization rates
and raised costs.
Nevertheless, amid this harsh environment, some container-
ship companies improved their profi tability and achieved profi ts
as bunker prices plunged with lower crude oil prices from the
beginning of autumn. MOL, however, incurred a signifi cant loss
on bunker price hedges placed at the beginning of the year and
could not fully benefi t from the lower prices. Had it not been for
this loss, we would have turned a profi t in the fourth quarter of
fi scal 2014. Compared with other companies, we were also neg-
Revenue Breakdown by Trade (FY2014)
Intra-Asia Trade
19%
North-South Trade
11%
Europe Trade
30%
Main Routes
North
America
Trade
40%
[Containership] MOL BRAVO
(cid:3) Container Terminal Business
(cid:2) North America Trade (cid:2) Europe Trade (cid:2) North-South Trade (cid:2) Intra-Asia Trade
48 Mitsui O.S.K. Lines
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atively impacted by our large share of trade from Asia to South
America, especially Brazil, which stagnated due in part to falling
natural resource prices. Another factor was our fl eet’s relatively
high number of small and medium-sized vessels, which are rath-
er expensive at current charter market rates.
Outlook for Fiscal 2015 and Beyond
The factors that prevented our anticipated return to profi tability
can be broadly categorized into temporary factors and structural
factors. Together, these knocked us off course, both compared to
our plan and our competitors. The conclusion of the temporary
factors and the abatement of the structural factors (especially
those unique to MOL), will allow positive momentum, enabling
our return to profi tability. This will be underpinned by the accu-
mulation of other positive factors.
The loss on bunker hedges is one such temporary factor des-
tined to end. Coupled with the positive effects of lower average
bunker prices throughout the year, we should be able to improve
our performance by around ¥40.0 billion compared with the pre-
vious year. In addition, the congestion at U.S. West Coast ports
disappeared at the end of May.
As for freight rates, we foresee a year-on-year decline for the
average of all routes as it will likely take more time for the struc-
tural supply-demand balance of vessels to improve. To counteract
this, we need to successfully carry out our unique cost cutting
measures, including initiatives aimed at allaying negative struc-
tural factors. First we will rationalize unprofi table routes, begin-
ning by launching new joint service with Maersk and MSC for
the Asia-South America East Coast route in July. Second we will
ramp up the disposal of small and medium-sized vessels. This
includes the redelivery of vessels to their shipowners before the
expiry of charter contracts. In addition to the improvement in the
profi tability of vessel operations, the automated terminal in Los
Angeles started full operations at the end of the previous year
after a temporary delay, and is now expected to contribute to
profi tability. All things considered, we are on course to achieve a
profi t of ¥5.0 billion in fi scal 2015.
To further improve profi tability going forward, we ordered six
containerships of 20,000 TEU in March 2015. These vessels will
succeed the 14,000 TEU vessels that were chartered to buy us
time until we could determine the optimum vessel size for
replacements. Considering the limits of the Suez Canal, the
20,000 TEU vessel is the largest and most effi cient possible with
current shipbuilding technology. With delivery of the vessels slat-
ed for 2017, we expect a large improvement in profi tability.
Even in the container terminal business, we will accumulate
stable profi ts by expanding the automated area of our terminal
in the U.S. and beginning the operation of new terminals in
Rotterdam Port and Vietnam’s Hai Phong Port. We are deter-
mined to transform the containerships business into one that can
generate sustainable profi ts.
Global Containership Capacity by TEU
Size Range (Thousand TEU)
20,000
15,000
10,000
5,000
0
2009
2010
2011
2012 2013 2014
20%
15%
10%
5%
0%
Others
2%
O3
15%
2M
16%
(cid:2) 14,000TEU~ (cid:2) 11,000-13,999TEU (cid:2) 8,000-10,999TEU
(cid:2) 5,100-7,999TEU (cid:2) 4,300-5,099TEU (cid:2) ~4,299TEU YOY %
Source: MOL internal calculations based on Alphaliner / IHS-Fairplay
Source: MDS
Share by Major Carrier Alliance
North America Routes
Europe Routes
Others
2%
G6
18%
O3
22%
CKYHE
35%
G6
32%
2M
35%
CKYHE
23%
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Asia-North America Container Trade Cargo
Movements (Million TEU)
(Excluding Canada cargo)
Asia-Europe Container Trade Cargo Movements
(Million TEU)
(Including Mediterranean cargo)
15
10
5
0
2009
2010
2011
2012 2013 2014
(cid:2) Outbound
(cid:2) Inbound
Source:
Piers/JoC etc
15
10
5
0
View a video
introducing the
automated
terminal in L.A.
2009
2010
2011
2012 2013 2014
(cid:2) Outbound
(cid:2) Inbound
Source: Drewry
Annual Report 2015 49
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Overview of Operations
Ferry & Domestic Transport
Hirokazu Hatta, Managing Executive Offi cer
Fiscal 2014 in Review—
The First Year of “STEER FOR 2020”
The ferry & domestic transport segment comprises the ferry busi-
ness, which transports passengers, automobiles and trucks, and
the domestic transport business, which transports cement, heavy
oil, steel, coal, salt and other cargoes. In fi scal 2014, we recorded
¥4.4 billion in ordinary income, double that of the previous year.
In the ferry business, a shortage of truck drivers helped accel-
erate a modal shift in long distance transport from inland trans-
port to ferries. Amid this shift, we have worked hard to meet the
increase in transport demand. We also strove to unearth new
demand in passenger transport. To this end, we worked to raise
brand awareness by bolstering advertising efforts while offering
products designed around the fun o f marine travel such as a
project, recognized with an award from the Japan Tourism
Agency, to promote voyages among young people.
In the domestic transport business, while cargo fl ows remain
steady for steel products and other mainstay cargo, we seized
the opportune time to launch three new vessels, increasing our
loading volume. With declining bunker prices providing a tail-
wind, our sales efforts and continual cost reductions bore fruit.
Outlook for Fiscal 2015 and Beyond
In fi scal 2015, ordinary income is projected to rise to ¥6.0 billion
as cargo transport volumes increase and bunker prices decline.
Looking toward the Tokyo 2020 Olympic and Paralympic
Games, demand for domestic transport, including the shipment
of materials for renovating infrastructure, is likely to experience
fi rm growth. Amid an aging pool of truck drivers and enforce-
ment of legitimate labor management, the shortage of truck
drivers will only worsen. Considering this, we do not expect a
reversal of the modal shift to ferries, which are superior in terms
of cost, safety and environmental impact.
To seize this opportunity, we decided to launch two new ves-
sels in the ferry business on the Eastern Japan route. The vessels
are scheduled to be delivered in 2017. Both vessels are energy-
effi cient ships with improved fuel effi ciency, and are optimized to
raise operational speed to provide more convenient schedules for
customers. The passenger rooms are also being upgraded. We
are trying to capture stable demand for manned truck transport,
which can collect and deliver the small-lot cargoes of couriers
and convenience stores, demand for which is expected to grow
in the future. We are also working to shore up passenger
demand by strengthening tie-ups with rail and bus companies.
In the domestic transport business, we are pursuing synergis-
tic effects with our overseas shipping business. In fi scal 2014, we
launched two bulk carriers much larger in size than our other
domestic bulk carriers. One major aim is to expand business by
leveraging the total power of the MOL Group, namely its rela-
tionships of trust with customers fostered in the overseas ship-
ping business. We aim to secure long-term contracts in the
future and will help expand stable profi ts.
[Ferry] SUNFLOWER GOLD
50 Mitsui O.S.K. Lines
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Associated Businesses
Hirokazu Hatta, Managing Executive Offi cer
Fiscal 2014 in Review—
The First Year of “STEER FOR 2020”
This segment comprises MOL’s real estate, tugboat, cruise ship,
trading and other businesses. Real estate, especially Daibiru
Corporation, accounts for a large portion of profi ts and is a main
pillar supporting MOL’s stable profi ts.
Ordinary income for fi scal 2014 was ¥10.9 billion, staying at
roughly the same level as the previous year. Daibiru has been
expanding the offi ce leasing business, particularly in central
Tokyo and Osaka. The offi ce rental market in the Tokyo area is
showing signs of improvement, and Daibiru strove to differenti-
ate itself from its peers through strong customer relations,
which is a core competence. As a result, Daibiru sustained
steady revenues.
The cruise ship business narrowed its loss thanks to higher
numbers of passengers amid an active domestic market stimulat-
ed by increased calls to Japanese ports by foreign luxury cruise
ships. The trading business broke the sales record for Propeller
Boss Cap Fins (PBCFs), a device to improve energy-effi ciency. The
tugboat business remained fi rm.
Outlook for Fiscal 2015 and Beyond
In fi scal 2015, ordinary income is expected to decline to ¥10.0
billion primarily because of increased depreciation expenses in
the real estate business for newly constructed buildings.
Nevertheless, we will aim to improve our bottom line by further
reducing costs.
Daibiru oversaw the completion of the Shin-Daibiru Building
in Osaka in March 2015, and the number of tenant contracts has
surpassed initial expectations. Also in March, Daibiru acquired
the property neighboring the Akihabara Daibiru Building in front
of Akihabara Station. This is projected to further enhance the
value of Daibiru’s portfolio over the long term. Overseas, Daibiru
acquired its second building in Vietnam in December 2014—the
CornerStone Building in Hanoi—following its entry into Ho Chi
Minh City. Daibiru embarked on a new medium-term manage-
ment plan entitled “Design 100” Project Phase-I in April 2013.
This fi ve-year plan, which continues through the end of fi scal
2017, aims to expand profi ts by approximately 20%, thus allow-
ing the company to continue making steady contributions to
MOL Group’s stable profi ts.
In the cruise ship business, large foreign cruise ships have
been making inroads into the Japanese market, but they have
also been raising awareness of cruises in Japan. Seizing this
opportunity, we have worked to increase the number of passen-
gers for the NIPPON MARU by differentiating our business
through meticulous, high-class service with the aim of improving
our profi tability. The tugboat business, serving at the very front
of shipping, will continue to support the reinforcement of the
Group’s safe operating structure as outlined in the medium-term
management plan. The tugboat business continues to leverage
the MOL Group’s comprehensive strengths to capture growing
demand not only in Japan but also Southeast Asia. It is also
uncovering growth opportunities in related fi elds of offshore
business in line with the medium-term management plan’s strat-
egy of realizing innovation throughout our business domain.
The trading business is relentlessly pursuing research to fur-
ther enhance the performance of PBCFs. Going forward, the
trading business will expand profi ts mainly by selling equipment
to raise vessels’ environmental and safety performance. As a
technology trading company, this business will also wield its
product development capabilities to expand sales channels to
include overseas shipping and ship-management companies.
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CornerStone Building (Vietnam)
Annual Report 2015 51
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Feature II: Training LNG Carrier Seafarers
Global Demand Expands for Natural Gas
amid Shortage of LNG Carrier Seafarers
Demand is rapidly expanding for natural gas as an
important green energy source to support our 21st
century lives. Development projects are currently
underway all around the world. Natural gas can be
transported inland by pipelines or offshore by spe-
cialized vessels in the form of liquefi ed natural gas
(LNG), the transport method for 30% of traded nat-
ural gas. By 2020, transport demand for LNG is
expected to increase by 50% from current levels. To
support this demand, it is calculated that the num-
ber of LNG carriers worldwide will need to increase
from less than 400 vessels at present to around 550.
Although this is a major business opportunity for
marine transport companies, there are concerns
about a severe shortage of LNG carrier seafarers in
the near future for the marine transport industry as
a whole given the rapid rise in transport demand.
LNG is transported at a constant minus 162
degrees Celsius with a portion of it continuously
vaporizing. Seafarers need to possess a high degree
Investing in
Human Capital
to Implement “STEER FOR 2020”
52 Mitsui O.S.K. Lines
52 Mitsui O.S.K. Lines
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of technical skill to maintain the correct temperature
and pressure inside the tanks of LNG carriers. To
safely operate these LNG carriers, it is crucial to
secure and train seafarers who possess specialized
knowledge and experience.
An essential part of the stable energy supply
chain depends on LNG carriers and the seafarers
who operate them. With the world’s largest fl eet of
LNG carriers, MOL is the company best positioned to
fulfi ll this social duty and respond to rising demand.
Under “STEER FOR 2020,” the midterm management
plan currently being carried out, MOL is devoting
attention to the LNG carrier business as a pillar of
future growth strategies and is promoting concrete
initiatives to train high-quality seafarers.
MOL’s Initiatives Focus on LNG Carriers and
Training Seafarers
In line with the strategies outlined in “STEER FOR
2020,” MOL is actively investing in building new LNG
carriers while stably acquiring long-term LNG trans-
port contracts. Of the less than 400 LNG carriers cur-
rently in operation around the world, 67 are fully or
partially owned or operated by MOL. Including ships
under construction, MOL boasts 92 LNG carriers as of
March 31, 2015. This fl eet is already the world’s larg-
est and will expand to 120 vessels by March 31, 2020.
Our plan is to solidify our dominant rank as a lead-
ing company. The recruitment and training of LNG
carrier seafarers are indispensable to implementing
this plan. Succeeding in this effort is the key for MOL
to seize solving social challenges as an opportunity
to grow.
MOL has therefore been actively training LNG
seafarers. We operate eight training centers in six
countries worldwide. We also implement the Cadet
Actual Deployment for Education with Tutorial
(CADET) Training, wherein hands-on training is con-
ducted aboard operated vessels. In addition to sea-
farers from Europe, a traditional source of LNG
carrier seafarers, there are already 12 Indonesians
aboard our LNG carriers as captains and chief engi-
neers. MOL has a deep, long-lasting bond with
Indonesia, which was the loading country when the
Company entered the LNG carrier business in 1983.
Another method of securing LNG carrier seafar-
ers is to provide specialized training to seafarers
who already possess a wealth of experience on
tankers or other vessel types, remaking them into
LNG carrier seafarers. This is a strategy that the
MOL Group is specially placed to carry out, owing
to its many skilled seafarers and the world’s largest
diversifi ed fl eet.
Long-term practical training aboard LNG carriers
is indispensable in both cases. In order to deploy
trainees to existing LNG carriers, MOL is investing
around ¥2.0 billion each year on LNG carrier seafar-
er training expenses for the duration of “STEER
FOR 2020.” We believe this is a necessary forward-
looking investment to ensure the sustainable
growth of MOL.
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Annual Report 2015 53
Feature II: Training LNG Carrier Seafarers
MOL operates MOL Training centers in eight locations spanning six countries and conducts a wide variety of training
from lectures for learning theories to practical training using simulators and on operated vessels.
The MOL Training Centers, where excellent seafarers around the world are trained
MOLTC
(Montenegro)
MOLTC
(MSU-Russia)
MOLTC (Japan)
MOLMC*(Japan)
*MOL Marine
MOLTC
(MANET-India)
MOLTC
(MOL Mi-India)
MOLTC
(STIP-Indonesia)
MOLTC
(Philippines)
Vessel Operation Simulator
MOL employs an advanced onshore simulator, which perfectly rec-
reates the bridge of a large vessel in operation. The highly func-
tional vessel operation simulator is a cylinder 11 meters in diameter
and provides a panoramic view of the ocean. The steering stand,
control panel and radar used on the bridge are genuine articles.
This system is run by about 50 high-speed computers, whose rapid
processing power is capable of recreating any marine environment,
and the 15 projectors on the ceiling generate life-like video. The
captain and numerous seafarers, including deck offi cers, partici-
pate in training, polishing their technical skills and improving team-
work. In addition, this simulator is not only used for seafarer
training, it is also used in our consulting business with municipal
governments and port authorities mainly to design ports. In plan-
ning ports, we evaluate the safety of operating vessels by adjusting
the conditions in the port, including currents, waves and water
depth. Before large bridges or other construction projects begin,
we analyze the planned structure’s profi le and the blind spots or
hazards that might result. This simulator features concentrated
real-life experiences of seafarers. Not only does this smart simulator
improve the skills of Group employees, it accumulates data while
providing a wide range of services, turning the skills and knowhow
cultivated into effective intellectual assets.
Training
Simulator
MESSAGE
Captain Andy Dwi Putranto
Message for the Captain
I decided to become a seafarer when
I was in Elementary school. We call
Indonesia “JAMRUD KATULISTIWA”
(“Equatorial Emerald”) because the
islands lie like a necklace near the
equator. I thought it would be beau-
tiful to connect all the islands with a
very long bridge, but my teacher said
that reaching other islands depended on using a “seaplane” or
airplane. Since it could accommodate so many things and pas-
sengers in one trip, I thought the seaplane was more effective. I
asked my teacher whether the seaplane could be “driven” by
me. She smiled and said, “Of course, you can, but you have to
study hard & enter Maritime School.”
I was promoted to Captain in 2012, and my childhood dream
came true. It was an amazing coincidence that the vessel’s name
was “Dwiputra,” same as my name.
We have a good Training Center in STIP Jakarta, namely the
MOL Training Center (MTC). We’re proud of this because MOL is
one of only a few shipping companies which have a Training
Center in Indonesia.
MOL’s education and training programs are very useful
because they always provide good materials such as training vid-
eos, books and magazines relating to ship safety, personal safety,
the marine environment and crew orientation.
Since being promoted to Captain, I have been focusing on the
safe behavior, health, knowledge and prosperity of my crew. A
skilled crew is a big investment/asset of a shipping company. If
the crew are happy and comfortable working on board, I believe
that they will perform well, which is important for not only the
safety of the ship but also the Company. Safe ship operations
and the long life of the ship can only be maintained by a good
crew. For LNG vessels, expert and skillful seafarers are absolutely
needed considering the nature of the cargo.
Safe behavior on board is not only mandatory, it is our culture
during life at sea. If safety on board is not implemented properly,
it will negatively impact ship operation. On the other hand, fatal
accidents, property loss, and environmental pollution can be
avoided if safety is carved into the heart of every seafarer.
54 Mitsui O.S.K. Lines
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Safe Operation
Safe operation is of the utmost importance and lies at the heart of MOL’s management. In the midterm management plan “STEER FOR
2020,” we set the reconstruction of our safe operating system as an integral initiative to strengthen our management foundation, which
supports the successful execution of the plan. We will continue to restrengthen our safe operating system to ensure the thorough imple-
mentation of measures to prevent serious marine incidents as we strive to become the world leader in safe operation.
Safe Operation Management
Safe Operation Management Structure
MOL reorganized the division responsible for safe operation in
February 2015. This move was aimed at integrating and horizon-
tally disseminating information among different types of vessels
while maintaining a structure that focuses on the front-line opera-
tion of every vessel type, reinforcing company-wide operational
safety measures, and developing an organizational structure that
focuses all the authority necessary to be responsible for the entire
Group’s safe vessel operations into the Marine Safety Division.
Under the new structure, all land-based and ocean-going person-
nel are united to strive to maximize operating safety, with the
goal of becoming the world leader in safe operation.
Organizational Structure Supporting Safe Operation
Executive Committee
Operational Safety Committee
Safety Assurance
Committee
Ship Standard
Specifi cation
Committee
Manning
Committee
Safety Operations Headquarters
• Marine Safety Division
• Ship management coordinating divisions
• Marine technical teams supporting vessel operations
for business divisions
• In-house ship management companies leading work-
ing-level ship management *
*MOL Ship Management Co., Ltd., and MOL LNG Transport Co., Ltd.
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, includ-
ing an experienced
MOL captain, and
supports the safe
navigation of MOL-
operated vessels
around the clock
365 days a year.
The center monitors the position and movement of more than
900 MOL Group-affi liated vessels in real time, providing assis-
tance from the captain’s perspective by supplying information 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
Safety Operation Supporting Center (SOSC)
operation of MOL ships, the center also functions as a help desk
for urgent inquiries from ships regarding safe operation. Since its
establishment, the center has helped to steadily reduce the num-
ber of incidents involving adverse weather or emergency entry*1.
For detailed SOSC information, see the
Safety, Environmental and Social Report.
Evacuation drill on board
Accident Response Drills
MOL regularly con-
ducts accident
response drills on
vessels while at sea.
These drills simulate
various situations
such as an on-
board fi re or water
immersion, or act
of piracy or terror-
ism, so that seafar-
ers can respond swiftly and appropriately in an emergency. Head
Offi ce conducts serious marine incident emergency response drills
twice a year with the cooperation of the Regional Coast Guard
Headquarters. The drills involve MOL’s President, other corporate
offi cers, representatives of relevant departments and ship manage-
ment companies, and vessels. In October 2014, we conducted an
emergency response drill based on the premise of a collision of our
product tanker while underway in Galveston Bay. In May 2015, we
conducted an emergency response drill based on the premise of
our cruise ship colliding with a containership while under way on
the Kanmon passage. 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 priority on ensuring customer safety in an emergency.
Safe Operation Measures
Efforts to ensure safe operation will never end. Coupled with the
revision and continuation of policies already in place to strength-
en safe operation, MOL will thoroughly implement policies to
prevent a recurrence of recent serious marine incidents.
Making Processes for Realizing Safe Operation Visible
MOL has introduced objective numerical indicators for measuring
safety levels, and also set the following numerical targets, includ-
ing 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
In fi scal 2014, MOL worked on three important targets:
(1) eradicate work-related accidents causing death, and reduce
work-related accidents causing injury,
Annual Report 2015 55
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Safe Operation
(2) eradicate collisions and groundings, and
(3) eradicate machinery trouble resulting in a dead ship condition
(a ship being unable to move under its own power).
Preventing New or a Recurrence of Serious Incidents
MOL is constantly, repeatedly implementing and raising aware-
ness of fundamental matters while striving to thoroughly keep
fresh the memory of serious incidents we have experienced and
prevent a recurrence of serious incidents while giving due consid-
eration to improving teamwork, safety awareness, awareness of
relevant parties and vessel management quality. We will continue
to adapt our accident prevention system by making improve-
ments related to both seafarer training and ship facilities to break
the chain of errors in which minor factors combine and ultimate-
ly lead to major maritime accidents.
In terms of seafarer training, we are thoroughly implementing
drills prior to boarding and supervising the instruction of less expe-
rienced seafarers. We are also enhancing land-based education
and training curriculum and programs such as “Hazard experi-
ence” training sessions and BRM drills*5. These measures are
geared towards enhancing the ability of seafarers to perceive dan-
ger and promoting teamwork. 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 and
promoting the adoption of information technology. 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.
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 and propose preventive measures for
examples of serious incidents and problems as if they were each
wholly responsible as part of efforts to prevent accidents.
Cooperation for Safe Operation
The MOL Group works together with vessels, shipowners, and
ship management companies to work toward achieving the
world’s highest level of safe operation of all owned and char-
tered vessels by sharing safety-related information. The Company
regularly broadcasts “Safety Alerts”— information pertaining to
safe operation, including work-related incidents involving casual-
ties—to every vessel. MOL conducts “Safety Operation
Meetings” and “Safety Campaigns” involving vessels, shipown-
ers, ship management companies and even the sales division to
deepen understanding of its safety standards and to discuss safe-
ty improvements. MOL also inspects vessels to check whether its
safety standards are understood 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
management company in the process.
For detailed safe operation, see the Safety,
Environmental and Social Report.
Third party evaluations
Safe Operation, Including Evaluations of Seafarer
Educational Programs
■ LNG Carrier Standard Training Course
acquired certifi cation from DNV**
The LNG Carrier Standard Training
Course implemented globally by MOL
was certifi ed by Norway’s Det Norske
Veritas AS (DNV)** in 2007 for compli-
ance with the LNG carrier crew ability
standards advocated by SIGTTO.***
** Now DNV GL AS
*** Society of International Gas Tanker & Terminal Operators Ltd.
■ Management program for seafarer
education and training acquired
certifi cation from DNV**
MOL’s management program for seafarer
education and training was recognized to
be effective and certifi ed in its tanker and
LNG carrier operations by DNV** in 2012
for compliance with the Competence
Management System (CMS).
Lost Time Injury Frequency (LTIF)
1.8
1.5
1.2
0.9
0.6
0.3
0
2014 average for all industries: (1.66)
MOL target:
0.25 or below
0.31
0.24
0.38
0.44
0.30
2010 2011 2012 2013 2014
(Fiscal year)
56 Mitsui O.S.K. Lines
Operational Stoppage
Accidents Average Time and
Frequency
(Hour/ship)
(Number of accidents/ship)
40
30
20
10
0
Average operational stoppage time target:
24 hours or below
28.45
25.04
22.96
19.82
19.04
0.64
0.66
0.52
2.0
1.5
1.0
0.40
0.51
0.5
Operational stoppage
accident rate target: 1.00 or below
2010 2011 2012 2013 2014
0
(Fiscal year)
Average operational stoppage time
(hour/ship) (left scale)
Operational stoppage accident rate
(accidents/ship) (right scale)
Glossary
*1 Emergency entry: Entering foreign territory due to
severe weather on the sea, serious hull or engine distress,
or the injury of a crew member.
*2 LTIF (Lost time injury frequency): 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 (2014) was 1.66; for
shipping industry, 1.33; for transportation equipment
manufacturing industry, 0.51. (Source: 2014 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 Bridge resource management drill: Simulating an inci-
dent on a vessel operation simulator to enable seafarers to
acquire response techniques. It includes MOL’s original
programs.
*6 Close calls: Risky incidents that came very close to
causing a more serious accident.
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Management Foundation
Underpinning MOL:
Corporate Governance and Corporate Social Responsibility
Contents
58 Board Of Directors, Corporate Auditors and Executive Offi cers
60 Outside Director and Corporate Auditor Roundtable Discussion
64 Corporate Governance
68 Risk Management
70 Corporate Social Responsibility (CSR)
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Annual Report 2015 57
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Board of Directors, Corporate Auditors and Executive Offi cers
(As of June 23, 2015)
Board of Directors
Koichi Muto
Representative Director Born 1953
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 Offi cer, General Manager
of Corporate Planning Division
Jun. 2006 Managing Executive Offi cer
Jun. 2007 Director, Managing Executive Offi cer
Jun. 2008 Director, Senior Managing
Executive Offi cer
Jun. 2010 Representative Director, President
Executive Offi cer
Jun. 2015 Representative Director, Chairman
of the Board, Chairman Executive
Offi cer (current)
Apr. 1979 Joined Mitsui O.S.K. Lines, Ltd
Jun. 2005 General Manager of Coal and Iron
Ore Carrier Division
Jun. 2007 Executive Offi cer, General
Manager of Coal and Iron Ore
Carrier Division
Jun. 2009 Managing Executive Offi cer
Jun. 2013 Senior Managing Executive Offi cer
Jun. 2015 Representative Director, Executive
Vice President Executive Offi cer
(current)
Junichiro Ikeda
Representative Director Born 1956
Kenichi Nagata
Representative Director Born 1956
Masahiro Tanabe
Director
Born 1957
Apr. 1981 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2006 General Manager of Corporate
Planning Division
Jun. 2008 Executive Offi cer, General
Manager of Corporate Planning
Division
Jun. 2010 Executive Offi cer
Jun. 2011 Managing Executive Offi cer
Jun. 2014 Director, Managing Executive
Offi cer
Jun. 2015 Director, Senior Managing
Executive Offi cer (current)
Takeshi Hashimoto
Director
Born 1957
Shizuo Takahashi
Director
Born 1959
Independent Offi cers
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 Offi cer
Jun. 2010 Managing Executive Offi cer
Jun. 2013 Director, Senior Managing
Executive Offi cer
Jun. 2015 Representative Director,
President, Chief Executive
Offi cer (current)
Apr. 1979 Joined Mitsui O.S.K. Lines,
Ltd.
Jun. 2003 General Manager of
Logistics Business Division
Jun. 2008 Executive Offi cer,
Managing Director of
MOL Europe B.V.
Jun. 2011 Managing Executive Offi cer
Jun. 2013 Director, Managing
Executive Offi cer
Jun. 2015 Director, Senior Managing
Executive Offi cer (current)
Apr. 1982 Joined Mitsui O.S.K. Lines,
Ltd
Jun. 2008 General Manager of LNG
Carrier Division
Jun. 2009 Executive Offi cer, General
Manager of LNG Carrier
Division
Jun. 2011 Executive Offi cer
Jun. 2012 Managing Executive Offi cer
Jun. 2015 Director, Managing
Executive Offi cer (current)
Jun. 2008 Director of Mitsui O.S.K. Lines,
Ltd. (current)
Jan. 2014 President of Capital Market
Promotion Foundation (current)
Jun. 2011 Director of Mitsui O.S.K. Lines,
Ltd. (current)
Nov. 2012 Chairman of NWIC Co., Ltd.
(current)
Sept. 2014 Senior Advisor of Integral
Corporation (current)
Takeshi Komura
Outside Director
Born 1939
Masayuki Matsushima
Born 1945
Outside Director
Jun. 2014 Director of Mitsui O.S.K. Lines, Ltd.
(current)
Jun. 2014 Advisor to the Board of
Toshiba Corporation (current)
Atsutoshi Nishida
Outside Director
Born 1943
58 Mitsui O.S.K. Lines
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Corporate Auditors
Takehiko Ota
Corporate Auditor
Born 1960
Takashi Nakashima
Corporate Auditor
Born 1959
Apr. 1984 Joined Mitsui O.S.K. Lines,
Apr. 1982 Joined Mitsui O.S.K. Lines,
Ltd.
Ltd.
Jun. 2008 General Manager of
Jun. 2009 General Manager of
Investor Relations Offi ce
Research Offi ce
Jun. 2013 Corporate Auditor of
Jun. 2011 General Manager of
Mitsui O.S.K. Lines, Ltd.
(current)
General Affairs Division
Jun. 2015 Corporate Auditor of
Mitsui O.S.K. Lines, Ltd.
(current)
Independent Offi cers
Hideki Yamashita
Outside Corporate Auditor
Born 1954
Hiroyuki Itami
Outside Corporate Auditor
Born 1945
Apr. 1982 Attorney-at-Law
(current)
Apr. 1985 Established YAMASHITA &
TOYAMA LAW AND
PATENT OFFICE
Mar. 1993 Patent Attorney (current)
Jun. 2014 Corporate Auditor of
Mitsui O.S.K. Lines, Ltd.
(current)
Apr. 2008 Professor of Tokyo
University of Science,
Graduate School of
Innovation Studies
(current)
Jun. 2011 Corporate Auditor of
Mitsui O.S.K. Lines, Ltd.
(current)
Executive Offi cers
Koichi Muto
Chairman
Junichiro Ikeda
President, Chief Executive Offi cer
Kenichi Nagata
Executive Vice President
(Assistant to President, Bulk Carrier
Offi ce)
Masaaki Nemoto
Senior Managing Executive Offi cer
(Dry Bulk Carrier Supervising Offi ce,
Tanker Safety Management Offi ce,
LNG Safety Management Offi ce,
Human Resources Division, Marine
Safety Division, Safe Operation)
Masahiro Tanabe
Senior Managing Executive Offi cer
(Finance Division, Accounting
Division, Investor Relations Offi ce,
Liner Division, Port Projects &
Logistics Business Division, Research
Offi ce)
Shizuo Takahashi
Senior Managing Executive Offi cer
(Internal Audit Offi ce, Secretaries
Offi ce, Corporate Planning Division,
Public Relations Offi ce, MOL
Information Systems, Ltd.,
Compliance)
Hirokazu Hatta
Managing Executive Offi cer
(General Affairs Division, Group
Business Division, Kansai Area)
Akio Mitsuta
Managing Executive Offi cer
(Tanker Division, Tanker Safety
Management Offi ce)
Takeshi Hashimoto
Managing Executive Offi cer
(LNG Carrier Division, Offshore and
LNG Project Division, LNG Safety
Management Offi ce)
Tetsuro Nishio
Managing Executive Offi cer
(Dedicated Bulk Carrier Division)
Toshiya Konishi
Managing Executive Offi cer
(Port Projects & Logistics Business
Division, Chief Executive
Representative in Americas)
Takaaki Inoue
Managing Executive Offi cer
(Tanker Safety Management Offi ce,
LNG Safety Management Offi ce,
Marine Safety Division)
Takashi Maruyama
Managing Executive Offi cer
(Finance Division, Investor Relations
Offi ce)
Akihiko Ono
Managing Executive Offi cer
(Liner Division)
Naotoshi Omoto
Managing Executive Offi cer
(Car Carrier Division)
Toshiyuki Sonobe
Executive Offi cer
(Managing Director of Mitsui O.S.K.
Bulk Shipping (Asia Oceania) Pte.
Ltd., Chief Executive Representative
in Asia, Middle East & Oceania)
Yoshikazu Kawagoe
Executive Offi cer
(Technical Division)
Hideo Horiguchi
Executive Offi cer
(Accounting Division)
Koichi Yashima
Executive Offi cer
(Human Resources Division)
Mitsujiro Akasaka
Executive Offi cer
(Managing Director of MOL (ASIA)
LIMITED, Deputy Chief Executive
Representative in Asia, Middle East &
Oceania)
Toshikazu Inaoka
Executive Offi cer
(Dry Bulk Carrier Supervising Offi ce,
Marine Safety Division, General
Manager of Dry Bulk Carrier
Supervising Offi ce)
Toshiaki Tanaka
Executive Offi cer
(Coal and Iron Ore Carrier Division)
Nobuo Ishihara
Executive Offi cer
(Managing Director of Mitsui O.S.K.
Bulk Shipping (Europe) Ltd., Chief
Executive Representative in Europe &
Africa)
Kenta Matsuzaka
Executive Offi cer
(General Manager of LNG Carrier
Division)
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Annual Report 2015 59
Outside Director and Corporate Auditor Roundtable Discussion
We interview two outside offi cers (one director and one corporate auditor) on a range of topics
from the insight they provide the Board of Directors to their impression of MOL's governance.
Masayuki Matsushima
Outside Director
Hiroyuki Itami
Outside Corporate Auditor
“ To help the Company establish a sus-
tainable growth model as a truly global
corporation, I’d like to fulfi ll my role as
an outside offi cer and trusted
advisor. ”
–Matsushima
“ I believe outside offi cers can make the
most of their position and contribute to
effective management by taking the
initiative to say the things people inside
the Company are afraid to say. ” –Itami
What are your thoughts on your respective roles
as an outside director and an outside corporate
auditor?
Matsushima: I’d like to fi rst start off by saying that outside
offi cers are not all powerful or all knowing. When it comes
to business operations, offi cers from inside an organization
can be more knowledgeable. So if you think about what
kind of expectations outside offi cers can fulfi ll, the answer is
clear: things that internal offi cers are unable to do, namely
providing outside perspective. From the outside, it’s possible
to view the Company’s management more objectively.
ideas that lead to new creation. I think being able to provide
an original point of view is one of the things expected of
outside directors.
Itami: While I wholly agree with what Mr. Matsushima just
said, I’d like to add that outside offi cers can talk straight
about things that are known within the Company but talked
about in hushed tones. Since outside offi cers don’t have
confl icts of interest with the Company or its management,
they’re in a good position to speak truth to management. I
believe outside offi cers can make the most of their position
and contribute to effective management by taking the initia-
tive to say the things people inside the Company are afraid
Opinions rejected internally as nonsensical could be the very
to say.
60 Mitsui O.S.K. Lines
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What about the difference between a director
and a corporate auditor?
M: I don’t believe there are problems with the Company’s
governance overall. The board rarely simply approves the
M: In terms of actual
function, there does
seem to be a lot of
overlap. When some-
thing comes up, if it’s
something the corpo-
rate auditor’s responsi-
ble for, that doesn’t
mean we as directors can avoid our responsibility.
I: Speaking from the position of an outside corporate auditor,
there are functions set by law as specifi cally the responsibility
of corporate auditors, like accounting audits and internal
controls, and these must of course be fulfi lled. However, on
top of that, the auditor is in the position to attend Board of
Directors’ meetings and speak about management decisions.
How should the auditor take on this involvement? The reac-
tion could be completely different depending on the corpo-
rate auditor’s own mindset or the corporate culture at the
company. There are actually companies where corporate
auditors attend board meetings but hardly ever say anything.
Corporate auditors, myself included, don’t have voting rights,
but given our participation in board meetings, I feel we
should voice our opinions about business management frank-
ly. Corporate auditors have an obligation to audit manage-
ment. Midterm management plans and management
strategies are subject to auditing. And that’s why while there
is a difference in what is required of directors and corporate
auditors by law, there is very little difference when it comes
to participating in deliberations during board meetings.
What would you commend about MOL’s
governance and what do you think should be
improved?
I: I admire the system MOL has set up to reserve time for the
Deliberation on Corporate Strategy and Vision(*), and encour-
age thorough discourse when outside directors and outside
corporate auditors are in attendance. This is really good. As
for what should be improved, there are times when the
agenda items. The Board of Directors is highly open, debating
the issues from various angles, setting aside issues for further
debate, and offering support for items but with provisions
attached. What I’m concerned about, though, is that while,
in terms of corporate culture, everyone has superb communi-
cation skills and good character, nobody volunteers to play
devil’s advocate or say something unconventional when
something happens. Considering MOL has in the past posted
wide losses and once violated Japan’s Antimonopoly Act, dur-
ing trying times such as these, it would be much better if
someone is brave enough to voice a contrary viewpoint.
I: That could also be because there’s not enough time for
that during the meeting.
M: Yeah, that’s true. It would be even better if they could
use technology or something during meetings to shorten
speakers’ explanations and set aside time to explain how the
item relates to the strategies of the Company as a whole and
how it connects with the corporate vision.
Do you feel there are times when outside
directors and corporate auditors should take on a
leading role for the management team? What
kind of situation do you think would merit such
action at MOL?
I: I think taking on a
leading role for the
management team
means speaking frankly
with them. In general
terms, the greatest
responsibility of an out-
side offi cer is reining in
management when they begin to get out of control. How
you design a system or a control for that purpose is impor-
tant. To be clear, I’m not implying or aware that any members
of MOL’s management team are out of control at present.
But, as someone who thinks a lot about governance, it’s
important to have a system that can function during emer-
gencies. Governance systems are like air: normally it’s better
agenda is not implemented in a way that takes advantage of
not to be aware of its presence. But, if you fall to the bottom
that system. Meaning: sometimes there are a large number
of agenda items, explanations are too long, and insuffi cient
time is left for discussion, albeit the company provides ample
time for board meetings. Basically, I think the way the meet-
ings are conducted needs to be improved.
of a hole and begin running out of oxygen, that’s when you
fi rst realize how much you need it. So I feel it’s a really sound
idea to ensure it is ready before something urgent happens.
M: Moreover, in terms of organizational change, people out-
side the company may be more likely to provide insight since
* Deliberation on Corporate Strategy and Vision—
A major feature of MOL’s Board of Directors. At each meeting, the board focuses on a particular 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.
Annual Report 2015 61
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Outside Director and Corporate Auditor Roundtable Discussion
internal offi cers and employees are prone to following in the
become quite lively and things begin to pick up steam. I have
same old tracks. This includes reforming the organization and
a positive impression of that.
cutting losses. I think there are times when outside offi cers
assess the situation from a long-term perspective and give
management a bit of a push when they are hesitant to cut
losses. In addition, speaking from my experience, I feel that
outside directors can especially contribute to pointing out
and preventing compliance issues.
As an outside director and outside corporate
auditor, looking back on major proposals and
agendas for past board meetings and the
Deliberation on Corporate Strategy and Vision,
was there anything that left a particularly
strong impression?
I: As for the matters in which people outside the Company
played an important role, what most sticks in my memory are
“STEER FOR 2020” was, in a sense, crafted in
response to the result of a previous investment
that led to excessive market exposure. Could you
tell me what kind of opinions you gave as an
outside director and outside corporate auditor?
M: I stressed three points. The fi rst was that, for manage-
ment to really do its job, it would have to consider better
insulating the Company from market forces, since shipping
market conditions, exchange rates, bunker prices and other
such factors are directly connected to corporate profi ts. I said
that structural reform seemed necessary. Since it is the
marine transport industry, I do think that it’s impossible to be
completely free from market forces and it’s necessary to learn
to live with them, but I added that I believe the Company
those times when a wide range of opinions arose, such as
should get out of the situation where it’s easily shaken by the
the time when we discussed moving part of the dry bulkers
markets. The second point was truly global management.
division to Singapore. This move would lead to an extraordi-
Until now, Japan has been the Company’s major location. But
nary loss over ¥100.0 billion but improve the Company’s
with the changing demographics and geopolitics, Japan’s
standing. Another debate that stands out is when we dis-
proportion of global production and consumption are declin-
cussed what to do about a struggling affi liate requesting
ing over the long term. To respond to these changes, I said
fi nancial support. I feel those were times I could really fulfi ll
the Company needs to pivot from its current business model
my function.
M: I recall one quite heated debate. Many opinions confl ict-
ed, causing the decision to be postponed to the next meet-
to become a truly global corporation and establish a model
for sustainable growth. This could be done by employing
new technology or reorganizing trade routes from a global
ing. Ultimately an agreement was reached, but with
perspective while making use of alliances and local subsidiar-
provisions attached. I felt I was really able to contribute to the
ies. Actually, I think management is aware of this as localiza-
discussion as an outside director. And what impressed me
tion progresses at bases in Singapore and Hong Kong. The
when holding the Deliberations on Corporate Strategy and
third was controlling risks for the Company as a whole. This
Vision at the Board of Directors meetings was the frequent
also includes responses to environmental changes, not just
discussion of the containership business. The debates
market conditions. I told them that they should have a better
“ I do think that it’s… necessary to learn to
live with market forces, but I added that I
believe the Company should get out of the
situation where it’s easily shaken by the
markets. ”
–Matsushima
Underlined words are explained in the Glossary on page 74.
62 Mitsui O.S.K. Lines
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portfolio was harboring. ”
calculations on how much risk the fl eet
–Itami
sense of how much risk they are operating under.
I: “STEER FOR 2020” was supposed to be formulated based
on refl ections of the past, and that’s just what happened. At
do that, the Company needs to pour money and human
resources into the expanding areas of their portfolio. Training
personnel is especially important. I’d like to see the Company
that time, I asked if they’d done proper scientifi c calculations
soundly carry out its plans for securing and training the sea-
on how much risk the fl eet portfolio was harboring.
M: You said that at a board meeting, right? That left a last-
ing impression.
I: If you measure the total risk exposure of the fl eet portfolio,
you could say, “this is too much risk to bear” or “in that
case, let’s try decreasing this or increasing that,” and at least
have somewhere to start a discussion about reorganizing the
portfolio. But if you have no idea about the amount of risk,
even if you’re told that there are risks, you won’t know if
they’re big risks or small risks, right? Actually, when we
began trying to quantify the risks, albeit imperfectly, the ratio
of free vessels became a subject of debate. So I think it was
meaningful that someone outside the Company said some-
thing should be done because it should be possible to express
the risks quantitatively. In the meantime, while I do think it’s
wonderful that the Company has recently been focusing on
securing stable profi ts under “STEER FOR 2020,” there is the
danger that the Company may go too far to minimize risks in
divisions naturally exposed to market conditions, such as con-
tainerships and tankers. They really have to train people who
can confront risks, but if the employees get immersed into
“risk-free” tasks, the number of people who can grapple
with risks will decrease. I asked them to consider that as well.
Please tell us what your expectations are for
MOL going forward, or share any last thoughts
on your role.
M: As I said before, I’d like the Company to establish a sus-
tainable growth model as a truly global corporation. And, to
help accomplish that, I’d like to fulfi ll my role as an outside
offi cer and trusted advisor.
I: I’d like MOL, as a world-leading shipping company with the
world’s largest fl eet, to continue to grow going forward. To
farers and captains it will need as the focus begins shifting to
LNG carriers. Because companies are people. What I can do
to help achieve this is, I think, to just speak frankly with man-
agement.
Deliberation on corporate strategy and vision:
Agenda Topics
FY2012
Agenda
May
Oct.
Dec.
Feb.
Strategies for securing and training seafarers
Policy on formulating management plan
Structural reforms
The shale revolution and energy transport
FY2013
Agenda
May
Oct.
Nov.
Feb.
Prospects for offshore businesses and MOL's initiatives
Apprehending the business environment prior to
formulation of the next midterm plan
Technological revolution in marine transport
Outline of the next midterm management plan
FY2014 –
Agenda
Aug.
Sep.
Nov.
Dec.
Benchmarking against the competition in container
shipping
“STEER FOR 2020” management issues of the
Containership Business
Introduction of investment risk control indicators
Impact of hydrogen-based society on the marine
transport industry
Apr.
Corporate governance
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Annual Report 2015 63
Corporate Governance
Governance at a Glance
System of governance
Total directors
Outside directors (ratio)
Total corporate auditors
Outside corporate auditors (ratio)
Independent offi cers
(directors and corporate auditors)
Board of Directors’ meetings
held in fi scal 2014
Term of directors
Stock option system
Retirement benefi t system
Anti-takeover measures
Compliance rules
External compliance advisory
service desk
Company with a board of
corporate auditors
9
3 (1/3)
4
2 (1/2)
5
11
1 year
Yes
No
No
Yes
Yes
History
1997
Outside auditors increased from one to two out of a total of four auditors
1998
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 offi cers
2. Abolished the Managing Directors Committee and established an Executive
Committee (reduced the membership from 21 to 10)
3. Reformed the Board of Directors (redefi ned its duties as the highest-ranking deci-
sion-making body and the supervision of business activities) and reduced member-
ship from 28 to 12
4. Elected two outside directors
5. Established the Corporate Visionary Meeting
Established the IR Offi ce
Started holding the Annual General Shareholders’ Meeting on a day relatively free of
other shareholders’ meetings
2001
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
2002
Second stage of management reforms
Reforms reinforced roles of the Board of Directors concerning determination of basic
strategies and monitoring risk management while providing for faster decision-mak-
ing 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. Reviewed and consolidated 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 Offi ce was established in the Corporate Planning Division
2011
Revised the MOL’s Compliance Policy and Rules of Conduct
2014
Revised the Compliance Policy, establishing a chief compliance offi cer (COO)
Revised the Compliance Policy, establishing a chief compliance offi cer (COO)
64 Mitsui O.S.K. Lines
Corporate Governance that Supports Growth Dynamics
Effective corporate governance has two sides. The defensive side
focuses on eliminating risks and ensuring business is conducted
in line with social norms and corporate ethics. The other side is
offensive, striving to maximize corporate value by accurately
evaluating latent risks in the process of pursing business oppor-
tunities, then actively taking those risks deemed reasonable. A
company needs both wheels of governance. One brings order,
the other provides growth dynamics. With both wheels fi rmly in
place, a company can gain the trust of its customers, stockhold-
ers, business partners, employees, local communities and other
stakeholders to sustainably conduct business.
MOL greatly shored up its management structure between
1997 and 2002. Taking a lead position among Japanese compa-
nies, MOL established an advanced, highly transparent corporate
governance structure by, for example, inviting outside directors
and introducing an executive offi cer system. We are reaping the
benefi ts of those efforts, yet MOL has only arrived at its current
position through a process of continuous improvement and evo-
lution. We work hard to enhance corporate value.
Corporate Governance Organization
MOL has established a corporate governance system that maxi-
mizes shareholder profi ts through the most appropriate alloca-
tion of management resources, with higher transparency of
corporate management as shown in the chart on the next page.
The Board of Directors (with the participation of independent
outside directors, who are indispensable to corporate governance)
supervises and encourages business operations, which are carried
out by the President as chief executive offi cer. In addition, as a
company with a board of corporate auditors, four corporate
auditors, including two outside auditors, conduct business and
accounting audits.
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. The framework described in the preceding
paragraph is operated in the manner outlined in the following
sections.
The Board of Directors
The Board of Directors, as the Company’s highest-ranking deci-
sion-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 poli-
cy formulation stage. The directors thoroughly evaluate and dis-
cuss the pros and cons of the projects and make decisions on
their feasibility from many perspectives. Transferring the authori-
ty to implement projects within the scope of the basic policy to
executive offi cers supervised by the President speeds decision-
making on individual projects.
And the Board of Directors holds Deliberation on Corporate
Strategy and Vision. At each meeting, the board focuses on a
particular topic concerning management strategies, MOL’s long-
term vision or other subjects involving management. These dis-
cussions provide an opportunity for lively debates that include
the outside directors and corporate auditors, thus helping to
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ensure that the perspective of shareholders is refl ected in how
MOL is managed. The fruit of this comprehensive deliberation
was refl ected in “STEER FOR 2020.”
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.
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
activities, and also transferred the authority to implement proj-
ects within the scope of the basic policy approved by the Board
of Directors to executive offi cers 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
Executive Committee for discussion and projects straddling divi-
sions, as sub-committees of the Executive Committee.
(See the chart below)
Functions of Outside Directors and Reasons for
Appointment
Although the revised Companies Act came into effect in May
2015, as part of efforts to strengthen corporate governance,
MOL has been appointing outside directors since 2000, with the
aim of bolstering oversight of the execution of business opera-
tions by bringing an outside perspective to management.
MOL has appointed three outside directors whose experience
encompasses macroeconomic management, fi nance, and busi-
nesses in Japan. MOL has adjudged that all three individuals are
independent and have neutral positions with no confl icts of
interest with the Company. 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
Reasons for Appointment of Outside Directors
Name
Position
Reason for Appointment
Takeshi
Komura
President of Capital
Market Promotion
Foundation
Masayuki
Matsushima
Chairman of NWIC Co., Ltd.
Senior Advisor of Integral
Corporation
Atsutoshi
Nishida
Advisor to the Board of
Toshiba Corporation
(As of June 23, 2015)
MOL adjudged that he has a
neutral position with no confl icts
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 based
on his longtime experience in and
knowledge of economic
management and policy fi nance
of Japan.
MOL adjudged that he has a
neutral position with no confl icts
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 based
on his long-time experience in and
knowledge of the fi nancial sector.
MOL adjudged that he can offer
advice from the shareholders’
perspective, with an objective
view independent from that of
internal executive management,
based on his abundant experience
and extensive knowledge as a
corporate executive.
Corporate Governance Organization (as of June 23, 2015)
Elect and appoint/dismiss
Board of Directors [11]
Outside directors: 3
Internal directors: 6
Total: 9
General Shareholders’ Meeting
Business audit
Accounting audit
Accounting audit
Elect and appoint/dismiss
Elect and
appoint/dismiss
Corporate Auditors Outside auditors: 2
Internal auditors: 2
Total: 4
Corporate Auditor Office
Accounting Auditors
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Elect and appoint/supervise
Submit basic management
policies and other issues for discussion
Executive Committee [48]
Internal directors and Executive officers: 8
Provide direction on
important business issues
Submit to Executive Committee after preliminary deliberations
Committees Under the Executive Committee
STEER Committee [10], Budget Committee [2], Investment and Finance Committee [38],
Operational Safety Committee [2], CSR and Environment Committee [3],
Compliance Committee [9], Business Reconstruction Committee [12],
Global Strategy Committee [New]
Submit report on important business and other issues
Executive Officers
Director/Executive officers: 6
Executive officers: 18
Total: 24
Divisions / Offices / Branches / Vessels / Group companies
Provide
direction
Audit plan,
Audit report
Communicate and coordinate
with corporate auditors and
independent public accountant
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 2014.
The number of meetings of the compliance committee includes review committee of recurrence prevention measures for anti competitive practices. (6 meetings)
Annual Report 2015 65
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Corporate Governance
Functions of Outside Corporate Auditors and
Reasons for Appointment
MOL has appointed four corporate auditors, who are responsible
for performing statutory auditing functions, including two outside
corporate auditors who are completely independent and have no
confl icts of interest with MOL. At a time when the auditing sys-
tems of corporations are taking on added importance, it goes
without saying that the independence of auditors from manage-
ment and policy execution is assured. Our corporate auditors work
closely with the Internal Audit Offi ce and independent public
accountants to assure effective corporate governance. They also
work on strengthening corporate governance and compliance
throughout the group.
Reasons for Appointment of Outside Corporate Auditors
Name
Position
Reason for Appointment
Hiroyuki
Itami
Professor of Tokyo
University of Science,
Graduate School of
Innovation Studies
Hideki
Yamashita
Attorney-at-Law & Patent
Attorney, YAMASHITA &
TOYAMA LAW AND
PATENT OFFICE
MOL adjudged that he has a
neutral position with no confl icts
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 based
on his specialist knowledge as a
scholar of business administration.
MOL adjudged that he has a neutral
position with no confl icts 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
based on his specialist knowledge
as an attorney at law.
(As of June 23, 2015)
Compensation for Directors, Corporate Auditors
and Independent Public Accountants
The Board of Directors, including the outside directors, deter-
mines compensation for the directors and corporate auditors.
Compensation paid to directors and corporate auditors in fi scal
2014 is shown in the following table.
The Company has granted stock options to all directors, exec-
utive offi cers, general managers of divisions and branch offi ces
and managers in similar positions, as well as to presidents of
consolidated subsidiaries, to motivate them to carry out opera-
tions for the benefi t of shareholders.
Compensation for Directors and Corporate Auditors
No. of people
remunerated
Total remu-
neration
(¥ millions)
(Thousands
of U.S.$)
Directors
(Excluding outside directors)
Corporate auditors (Excluding
outside corporate auditors)
Outside directors and
outside corporate auditors
7
2
7
¥306
$3,001
66
57
550
479
66 Mitsui O.S.K. Lines
Compensation for Independent Public Accountants
Compensation
for audit
operations
(¥ millions)
Compensation
for non-audit
operations
(¥ millions)
Total
(¥ millions)
(Thousands
of U.S.$)
Parent
company
Consolidated
subsidiaries
Total
¥109
111
¥221
¥17
1
¥19
¥127
$1,060
113
944
¥240
$2,005
Independent Offi cers
Due to partial amendments to the Securities Listing Regulations that
came into force in December 2009, publicly listed companies are
required to secure independent offi cer(s) from the standpoint of
protecting general investors. An independent offi cer means an
outside director or outside corporate auditor who is unlikely to
have a confl ict of interest with general investors. Independent
offi cers are expected to act to protect the interests of general
investors. For instance, they are expected to state necessary opin-
ions to ensure the interests of general shareholders are taken
into consideration in a situation where a decision is made con-
cerning 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 offi cers, respectively, because
there is no concern about a confl ict of interest with general inves-
tors in conformity with the criteria for independent offi cers of listed
securities exchanges. Each of these individuals plays a major role in
corporate governance by checking the appropriateness of manage-
ment decisions and supervising the execution of business operations
from the shareholders’ perspective based on their experience and
insight.
Internal Control System
Since the fi scal year ended March 2009, the Financial Instruments and
Exchange Act has obligated publicly listed companies to prepare a report
evaluating their internal controls over fi nancial reporting by manage-
ment (Internal Control Reporting System) and to have this evaluation
audited by auditors outside the Company. This internal control reporting
system involves management themselves confi rming the effectiveness of
the framework for disclosing information such as appropriate and prop-
er fi nancial reporting through methods that visualize and evaluate oper-
ations, 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 further
enhance MOL Group management effectiveness, effi ciency and trans-
parency, namely ensuring the appropriateness of business operations
and the trustworthiness of fi nancial reporting.
In fi scal 2014, MOL again assessed the status of the internal con-
trols over fi nancial reporting and the operation thereof, confi rming
that there were no major fl aws in the MOL Group’s internal controls
over fi nancial reporting. Going forward, the MOL Group will contin-
ue working to enhance its internal control system.
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.
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We have established a Compliance Committee, which is
headed by the Chief Compliance Offi cer, and formulated the
Compliance Policy to assure strict adherence to rules and regula-
tions. General managers of divisions and offi ces are appointed as
Compliance Offi cers. They are responsible for enforcing compli-
ance regulations and are also required to report to the Compliance
Committee in the event of a compliance breach. The Internal
Audit Offi ce, a body that operates independently of the
Company’s divisions and offi ces, provides a counseling service.
The Internal Audit Offi ce undertakes investigations of breaches
and reports the results to the Compliance Committee. In addition
to the existing counseling service, we established an external com-
pliance advisory service desk, which we entrusted an outside attor-
ney to run. The desk provides anonymous counseling services.
Measures Ensuring Compliance with
the Antimonopoly Act
On March 18, 2014, the Japan Fair Trade Commission (JFTC) found MOL had
violated Article 3 of the Antimonopoly Act regarding certain car carrier ship-
ping trades. Considering this legal violation to be a very serious matter, we
established the Review Committee of Recurrence Prevention Measures for
Anti-competitive Practices, which is headed by the President, in April 2014.
The committee has examined and executed various concrete policies to pre-
vent a recurrence of cartel activities, including revising the compliance system
and reforming the corporate culture. The measures resolved by the Review
Committee of Recurrence Prevention Measures for Anti-competitive Practices
have been taken up by the Compliance Committee since October 2014.
For more detailed compliance information,
see the Safety, Environmental and Social Report.
Annual General Shareholders’ Meeting
MOL aims to hold open General Shareholders’ Meetings. In addi-
tion to sending the notice of the general meeting of sharehold-
ers 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
fi nancial information is an important aspect of corporate gover-
nance. In addition to being accountable to shareholders and
investors by providing information, the Company makes every
effort possible to refl ect their opinions in management.
The distinguishing feature of our investor relations activities is
that the President takes the lead in their implementation. In fi scal
2014, the President participated in the Company’s presentations of
quarterly results and attended meetings with domestic and foreign
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 fi nancial results in Japanese are released over the
Tokyo Stock Exchange’s TDnet, the Company posts them to its web-
site with an accompanying English translation. The Japanese and
English drafts of presentation materials are also posted on the web-
site. This information is e-mailed on the same day to foreign inves-
tors registered with the Company. MOL actively disseminates
information about management strategy, investment plans, market
conditions and other information through its website.
Japan’s Stewardship Code was enacted in February 2014 and
the Corporate Governance Code entered into force in June 2015.
MOL has already been proactively holding constructive dialogues
with institutional investors and there will be no change to that poli-
cy. Feedback is regularly provided to management with regard to
the content of discussions held with investors and analysts. Going
forward, MOL will further bolster the quality and quantity of com-
munication while being mindfully aware of fair disclosure.
The responsibility to provide information is not limited to man-
agement and fi nancial issues. MOL’s basic stance is to quickly disclose
information, even if it is negative such as information on accidents,
to all stakeholders. Furthermore, we hold regular drills for respond-
ing to the media in emergencies and are working to strengthen our
ability to be able to quickly and properly disclose information.
MOL will continue working to raise confi dence in its business policies
and management through close communication with various stakeholders.
IR Activities in Fiscal 2014 (April 2014–March 2015)
Activity
For securities
analysts and
institutional
investors
For overseas
institutional
investors
For individual
investors
Business
performance
presentations
President’s small
meetings
Operations
presentations
Overseas
investor road
shows
Conferences
held by securities
companies
Corporate
presentations for
individual
investors
Frequency
Details
4 times
Quarterly results/forecasts
2 times
Held for analysts in Japan
1 time
4 times
6 times
3 times
LNG carriers and offshore
businesses
Once in North America,
twice in Europe, once in
Asia (Hong Kong and
Singapore)
Attended conferences in
Japan and held individual
meetings
Attended seminars for
individual investors in Tokyo,
Osaka and Nagoya: once in
each city.
IR Materials (available on MOL’s website)
Material
Japanese
English
Financial reports
Stock exchange fi lings (fi nancial highlights, etc.)
Business performance presentation materials
(including summaries of Q&A sessions)
Annual reports
Securities reports
Quarterly reports
Business reports for shareholders
Safety, Environmental and Social reports
Investor guidebooks
Market data
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes
Yes
Yes
Annual Report 2015 67
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Risk Management
The Company identifi es the risks surrounding the MOL Group,
such as fl uctuations of freight rates, with the aim of managing
and reducing these risks. In the midterm management plan
“STEER FOR 2020,” MOL has designated the reinforcement of
total risk control as one measure to strengthen its management
foundation and support the successful execution of the plan. To
fully exercise sustainable risk management, the Company trans-
parently quantifi es its comprehensive risk.
Fluctuations of Cargo Volume, Fleet Supply and
Freight Rates
The global shipping business, like many other industries, is great-
ly affected by trends in the global economic cycle, and is thus
subject to both macroeconomic risk, as well as business risk asso-
ciated with trends in specifi c industries. There are a multitude of
factors that are subject to change, such as fl uctuations in the
economies of individual countries, changes in trade structures,
vessel supply-demand balance, market conditions and cargo vol-
umes. Achieving the best performance hinges on objectively ana-
lyzing information so as to continually increase the probability of
generating higher earnings. With this in mind, MOL has adopted
a strategy of “diversifying operations to reduce risk” and “raising
highly stable profi ts” by aligning its fl eet to match international
marine transport demand in the transport of both raw materials
and fi nished goods. In this way, we strive to maximize returns
Fleet Composition (As of March 31, 2015)
Others
46
5%
Containerships
118
12%
Car Carriers
127
13%
LNG Carriers
67
7%
Others
178
0%
Containerships
7,091
11%
Car Carriers
2,033
3%
LNG Carriers
5,182
8%
Number of
Vessels
Deadweight
(1,000 DWT)
Dry Bulkers
411
43%
Tankers
176
19%
Dry Bulkers
35,760
53%
Tankers
16,874
25%
Underlined words are explained in the Glossary on page 74.
68 Mitsui O.S.K. Lines
and sustain profi t growth. In accordance with our internal mar-
ket risk management regulations, we appropriately reduce risks
related to fl uctuation, especially those arising from freight rates,
bunker prices, exchange rates, and interest rates. The Investment
and Finance Committee also identifi es, analyzes and evaluates
risks related to such material issues as investment in ships.
Diversifying Operations to Reduce Risk
MOL operates a “full-line marine transport group.” As of the
end of March 2015, we operated around 950 vessels, ranging
from dry bulkers, tankers, and LNG carriers to car carriers and
containerships, capable of transporting a diverse range of raw
materials and fi nished goods. Each type of ship and each type of
cargo have particular supply and demand trends, and create par-
ticular markets. While some of these markets are highly correlat-
ed with each other, others are negatively correlated depending
mainly on the economic environment, so the impact in one sec-
tor offsets the impact in another. By assessing the suitability of a
particular vessel type for medium- to long-term contracts and
market exposure the Company expects, MOL constructs an opti-
mum business portfolio, which allows the Company to pursue
higher profi ts while mitigating risks.
Building up Highly Stable Profi ts 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 fl ow that will help
reduce the risk that market fl uctuations could have on its results.
International marine transportation is expanding, but consid-
ering the ongoing glut of shipbuilding capacity, more time will
likely need to elapse before a structural turnaround is realized in
the market environment. The Company aims to conclude con-
tracts that are not largely affected by changes in the external
business environment and constitute a stable source of profi t. By
expanding these contracts from a long-term perspective, 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&A deals in growing sectors which enjoy a rela-
tively stable cash fl ow.
Exchange Rate Fluctuations
Although MOL has concluded transport contracts on a yen-
denominated basis with some Japanese clients, most transactions
in the international marine transport business are concluded on a
U.S. dollar-denominated basis. Despite our best efforts to incur
expenses in U.S. dollars, U.S. dollar-denominated revenue cur-
rently exceeds U.S. dollar-denominated expenses, so when the
yen strengthens against the U.S. dollar this can have a negative
impact on Group earnings. In fi scal 2015, we project that each
¥1-per-dollar change in the yen-U.S. dollar exchange rate will
have an impact of approximately ¥1.8 billion on consolidated
ordinary income.
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Interest Rate Fluctuations
MOL depends mainly on the issuance of corporate bonds and
funds borrowed from banks and other fi nancial 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 fl uctu-
ations. As of March 31, 2015, interest-bearing debt totaled
¥1,183.4 billion, and around 60% of that loan principal is locked
in at a fi xed interest rate. As a result, an increase of 1 percentage
point in market interest rates on both yen-denominated and U.S.
dollar-denominated interest-bearing liabilities would impact
annual consolidated ordinary income by no larger than approxi-
mately ¥4.0 billion. Although MOL has benefi ted from ultra-low
interest rates in the aftermath of the fi nancial crisis, the
Company is taking steps to mitigate the risk of a future interest
rate rise. It plans to fl exibly adjust the ratio of variable-rate and
fi xed-rate loans through interest rate swaps and other means
according to changes in fi nancial conditions, taking into consid-
eration the balance between variable- and fi xed-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
fl eet of approximately 950 vessels, whose annual fuel consump-
tion amounts to around 6 million tons of bunker. The Company
is able to pass on about 40% of the risk to customers. Therefore,
an increase of US$1 per metric ton in the average annual price of
bunker would lower earnings by approximately ¥0.19 billion (net
of hedging) at the maximum.
Sensitivity of Earnings to Exchange Rate/Interest Rate/
Bunker Price Fluctuations
Exchange Rate
(¥/US$)
A ¥1 appreciation reduces ordinary income by
approximately ¥1.8 billion
Interest Rate
(%)
A 1 point rise in both yen- and U.S. dollar-denominated
interest-bearing debt reduces ordinary income by
approximately ¥4.0 billion
Bunker Price
(US$/MT)
A US$1/MT increase reduces ordinary income by
approximately ¥0.19 billion
Average Bunker Price
(US$/MT)
800
600
400
200
0
(FY)
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
Stricter restrictions to reduce sulfur oxide emissions generated
by ships could be introduced as soon as 2020. These restrictions
would require the use of low-sulfur fuel oil containing less than
0.5% sulfur across all ocean regions, which could have an impact
on fuel costs. In the event fuel costs rise, the Company intends
to pass on these higher costs by raising freight rates and other
fees.
Vessel Operations
MOL operates a fl eet of approximately 950 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 establishment of organizations to
support safe operations.
Furthermore, MOL has arranged suffi cient insurance coverage
so that its fi nancial 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, fi re or other marine incident.
Group Company Operational Management
The MOL Group Corporate Principles serve as the basis for set-
ting regulations at MOL Group companies. Each Group company
submits required reports to MOL in a timely manner in accor-
dance with Group Company Management Regulations. After
properly ascertaining the fi nancial conditions and business risks,
the Company, as a shareholder, requests Group companies
obtain permission prior to executing important management
matters.
Natural Disaster or Similar Event
An earthquake, other natural disaster or an outbreak of an infec-
tious disease (hereinafter “disaster or similar event”) could affect
MOL-operated vessels, offi ces and facilities, as well as employ-
ees, hampering business operations.
MOL puts the highest priority on ensuring the safety of its
vessels and personnel in the event of a disaster or similar event.
The Company has formulated a business continuity plan docu-
menting procedures to enable it to continue providing 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, fi nancial
preparation, securing required personnel, and other matters.
Furthermore, for some years MOL has been conducting regular
disaster-preparedness drills on and off premise at Head Offi ce,
aboard ships and throughout the Group’s other facilities, as well
as taking other measures to ensure preparedness. By addressing
issues arising from these drills, MOL believes that it maintains a
high state of readiness. Nevertheless, in the event of a disaster or
similar event in which MOL cannot completely avoid damage,
the Company’s business performance may be affected.
Annual Report 2015 69
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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
considerations, and developing together with society sustainably
and harmoniously while earning the support and trust of stake-
holders, including shareholders, customers, business partners,
employees and local communities.
forth in the MOL Group Corporate Principles. In order to contrib-
ute to an international framework for realizing these goals, MOL
became the fi rst Japanese shipping company to participate in the
United Nations (UN) Global Compact 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.
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
Midterm Management Plan
MOL CHART
Long-term Vision
MOL Group Corporate Principles
In order to fulfi ll these responsibilities, MOL deliberates on
CSR-related policies and measures, primarily through the three
committees under the Executive Committee.
The MOL Group’s initiatives and policies regarding overall CSR
are deliberated on by the CSR and Environment Committee,
which then sets single-year, medium- and long-term targets and
conducts regular reviews.
The Operational Safety Committee discusses basic policies
and measures for ensuring safe operation of MOL Group-
operated vessels through rigorous attention to every detail. The
Compliance Committee discusses basic policies and measures for
enhancing the compliance system, dealing with compliance vio-
lations, and establishing a structure for protecting and managing
personal information.
Organizational Framework
for CSR Initiatives
CSR and Environment
Committee
Chief Executive
Offi cer
(President)
Executive
Committee
Operational Safety
Committee
Compliance Committee
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 stake-
holders worldwide and contributing to the realization of sustain-
able growth of society are vital as it seeks to realize the ideas set
70 Mitsui O.S.K. Lines
10 Principles of the Global Compact
Human Rights
Principle 1.
Business should support and respect the protection of internationally
proclaimed human rights; and
Principle 2. Make sure that they are not complicit in human rights abuses.
Labour
Principle 3.
Principle 4.
Principle 5.
Principle 6.
Businesses should uphold the freedom of association and the effective
recognition of the right to collective bargaining;
The elimination of all forms of forced and compulsory labour;
The effective abolition of child labour; and
The elimination of discrimination in respect of employment and occupation.
Environment
Principle 7.
Principle 8.
Principle 9.
Businesses should support a precautionary approach to environmental challenges;
Undertake initiatives to promote greater environmental responsibility; and
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.
The MOL Group Basic Procurement Policy
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 throughout our supply chain to observe
laws and regulations and social norms, incorporate consideration
for environmental protection 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 con-
tribute towards the realization of sustainable societies together.
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, regulations and social norms,
and pay due consideration to the protection of the environment.
2. We procure goods and/or services, including the delivery or execu-
tion of such goods and/or services, that meet high safety standards.
3. We conduct fair trade, and endeavor to establish trusting relation-
ships with contractors.
We work to make sure that our contractors understand our Basic
Procurement Policy, with the aim of contributing towards the realiza-
tion of sustainable societies together.
CSR Objective of Midterm Management Plan
1. Thoroughly implement safe operation and provide safe, secure,
stable, high-quality services.
2. Deepen initiatives to ensure thorough compliance.
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3. Strengthen initiatives on corporate governance.
4. Promote personnel training and diversity to strengthen compre-
hensive Group capabilities.
5. Make further progress on solving social issues and promoting
environment initiatives as an environmentally advanced company.
6. Actively disclose sustainability data.
7. Promote social contribution activities related to MOL’s businesses.
For more detailed CSR
information, see the
Safety, Environmental
and Social Report.
For more detailed
diversity information, see
the Safety, Environmental
and Social Report.
Initiatives on the Environment
Key Environmental Issues
In March 2014, we identifi ed the highest-priority environmental
issues and set about addressing those issues in a proactive man-
ner. To identify these priorities, we analyzed issues from interna-
tional conditions regarding environmental issues; the opinions of
stakeholders including customers, investors, and so on; as well as
our own internal viewpoints. Finally, through discussions in the
CSR and Environment Committee, we identifi ed the following
fi ve issues.
1 Comply with environmental regulations
2 Utilize technologies to reduce environmental impact
3 Disclose environmental data
4 Ensure safe operation
5 Contribute to conservation of biodiversity
Organizational Structure for Environmental Initiatives
To effectively promote environmental initiatives based on the
MOL Environmental Policy, the CSR and Environment Committee,
a sub-committee of the Executive Committee, oversees planning
and promotion of environment-related measures under the direc-
tion of the president. The CSR and Environment Committee
assesses environment-related risks and opportunities involving
MOL, identifi es the highest-priority issues in the group’s environ-
mental management, and sets environmental targets, striving to
achieve environment-friendly business activities. In March 2014,
we set new environmental targets in the midterm management
plan “STEER FOR 2020” for three years starting from FY2014.
Organizational Structure to Promote the Environmental
Executive Committee
CSR and Environment
Committee
Director responsible for environmental
management (Chairman of CSR and
Environment Committee)
Executive Offi cer of CSR and
Environment Committee (Vice-Chairman
of CSR and Environment Committee)
(Secretariat offi ce: Corporate Planning
Division, CSR and Environment Offi ce)
Environmental Management System
To precisely grasp and manage the environmental risks and
opportunities in our businesses, we established the environmen-
tal management system MOL EMS21 in April 2001, and since
then we have made ongoing efforts to improve it. Every year, the
CSR and Environment Offi ce conducts an internal audit based on
MOL EMS21.The chairman, who is responsible for environmental
management, receives the results of the internal audit and con-
fi rms whether the system is functioning effectively.
We also have a third-party audit by DNV GL Business
Assurance Japan KK every year, and a renewal audit every three
years, and have earned ISO14001 certifi cation for our environ-
mental management system. The results of our FY2014 audit
showed no non-conformity.
The MOL Group Environmental Target System
We have implemented the Group Environmental Target System,
targeting major group companies in Japan and overseas. Every
year, each company sets environmental targets to reduce the
environmental impact of our business activities based on specifi c
guidelines that are in line with midterm management plan, and
establishes action plans to achieve those targets. Along with
those targets, we collect each company’s data on its own envi-
ronmental impact (fuel consumption, electric power consump-
tion, paper usage, waste, and so on).
Ocean Shipping’s Impact on the Environment
Compared to other modes of transport, ocean shipping
can transport larger volumes of cargo at once and is an
environmentally friendly mode, with lower emissions per
ton-mile of CO2 and other air pollutants.
However, with growth of the world economy spurred
by the development of emerging markets, overall ocean
cargo traffi c continues to increase. Seaborne trade has
exceeded 10 billion tons, and we anticipate further
increases. As seaborne trade increases, CO2 emissions will
rise in step with growing energy consumption. This can
exacerbate pressing environmental issues. CO2 emissions
from merchant vessels account for about 2% of global
emissions, and the shipping industry must do more to pro-
tect the environment.
Comparison of CO2 Emissions from Aircraft, Trucks,
and Ocean Vessels (Unit: grams/ton-km)
More than 8,000 dwt
15
2,000-8,000 dwt
21
50
540
Divisions/Offi ces
Divisions/Offi ces General Manager (Personnel
responsible for environmental management)
Source: ICS & NTM, Sweden
For more detailed environmental initiatives information,
see the Safety, Environmental and Social Report.
Annual Report 2015 71
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Corporate Social Responsibility (CSR)
Schedule of Environmental Regulations by IMO, etc
Regulations
2014
2015
2016
2017
2018
2019
2020
2025
Tackling Global
Warming
GHG
emissions
EEDI*1
SEEMP*2
Phase 0
Mandatory
Phase 1
Phase 2
Phase 3
* Introduction of MRV (Monitoring, Reporting and Verifi cation of actual fuel consumption) and MBM (Market-Based Measures) is under study
toward further reduction of GHG emissions.
Preventing Air
Pollution
NoX
emissions*3
General Sea Areas
ECA*4
Tier Ⅱ
Tier Ⅱ
Tier Ⅲ
SoX
emissions*5
General Sea Areas
Sulfur limit 3.5%
Sulfur limit 0.5%*6
ECA
Sulfur limit 1.0% Sulfur limit 0.1%
Marine
Environment
Protection
Ballast Water
Management
Convention*7
General Sea Areas
(Adopted in 2004: not ratifi ed)
Expected to be mandatory
Regulation by USGC *8
(Enforced in 2012)
Mandatory
Minimizing the transfer of invasive
aquatic species by shipping*9
(Guideline adopted in 2011)
Ship Recycling Convention*10
(Adopted in 2009: not ratifi ed)
(*1) EEDI (Energy Effi ciency Design Index) is a measure of ships energy effi ciency
(g/ton-mile). The required EEDI of each Phase is as follows:Phase 0=0%,
Phase 1=10%, Phase 2=20% (Applied to new ships)
(*2) SEEMP (Ship Energy Effi ciency Management Plan) is required to be drawn up to
show optimal measures of operation that should be adjusted to the characteris-
tics of individual ships, and to be kept on board a ship. (Applied to both new and
existing ships)
(*3) The regulation for reduction of NOx in exhaust gases: Tier Ⅰ is applied to ships
laid down in 2000-2010, Tier Ⅱ to ships laid down in/after 2011, and Tier Ⅲ to
ships laid down in/after 2016.
(*4) The existing ECAs (Emission Control Areas) are: 1.Within 200 miles off the coast
of USA and Canada (NOx/SOx) 2.The USA Caribbean Sea area (NOx/SOx) 3.The
Baltic Sea and the North Sea areas (SOx)
(*5) The regulations for reduction of SOx contained in fuel oil (Applied to both new
and existing ships)
(*6) A review in 2018 on the availability of the required fuel oil may conclude to
postpone the application to 2025.
(*7) The convention shall enter in force 12 months after the following conditions are
met, and it is increasingly likely that it enters into force in 2016. (Applied to both
Environmental Investments and CO2 Reductions
new ships and, after certain grace periods, to existing ships)
Conditions: Ratifi cation by not less than 30 countries representing a combined
total G/T of more than 35% of the world’s merchant fl eet. (As of March 2015,
44 countries representing a combined total G/T of 32.86% have ratifi ed.)
(*8) Regional regulation by U.S. Coast Guard.
(*9) The guideline aimed at minimizing transfer of invasive aquatic species attaching
to the bottom of ships, recommending installation of the systems on vessels to
keep the bottom clean without marine organisms and other measures. (It
remains as a voluntary guideline during the review period.)
(*10) The convention prohibits and restricts the fi tting and use of treaty-specifi ed
hazardous materials, and requires vessels to prepare, record and update invento-
ry lists showing the quantity and location of hazardous materials on ships over a
ship's lifetime. The convention shall enter into force 24 months after the follow-
ing conditions are met:
Conditions: Ratifi cation by not less than 15 countries representing a combined
total G/T of more than 40% of the world’s merchant fl eet and an annual ship
recycling volume not less than 3% of the combined tonnage of the ratifying
countries .(As of March 2015, 3 countries have ratifi ed.)
Environmental Investments
(Billions of yen)
CO2 and Cost Reductions from Environmental Measures
Fiscal 2014
Plan for FY2014–2016
(FY)
2012
302
¥5.3
2013
279
¥5.5
2014
348
¥5.5
CO2 emissions reductions (1,000t)
Cost Reductions (¥ billions)
¥20.0
Environment-related R&D activities
Utilization and expansion of existing
environmental technologies
Responses to environmental regulations
Initiatives to save bunker fuel
Initiatives of Group companies
Total
¥0.7
2.1
0.5
0.9
0.2
¥4.3
Third-Party Evaluations
Environment Related
■ ISO 14001 Certifi cation
MOL has used its own environmental man-
agement system MOL EMS21 since April
2001, and also holds ISO 14001 certifi cation,
an international standard for environmental
management. (Since 2003)
■ ISO 50001 Certifi cation
MOL acquired ISO 50001 certifi cation for its energy management
system and ISO 14001 certifi cation for its environmental manage-
ment system. (2014)
Certifi ed companies: MOL Ship Management Co., Ltd. (2014),
72 Mitsui O.S.K. Lines
MOL Ship Management (Singapore) Pte. Ltd. (2014), MOL Ship
Management (Hong Kong) Company Ltd. (2014) and Magsaysay
MOL Ship Management, Inc. (2015)
■ Recognized by CDP as Leader in Climate Change
Transparency and in Corporate Action on Climate Change
MOL was recognized as a leader for the depth and quality of the
climate change data it has disclosed for independent assessment
through CDP, an international non-profi t organization. At the
same time, MOL earned a spot on the CDP Climate Performance
Leadership Index (CPLI) for its actions to reduce carbon emissions
and mitigate the business risks
of climate change. (2014)
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Social Contribution Activities
MOL aims to be a company that grows sus-
tainably and harmoniously with society. We
therefore carefully consider social issues to
tackle, and work to help solve them based
on three principles. Guided by these princi-
ples, we proactively undertake social contri-
bution activities that only a shipping
company with a global network can.
Global Social Contribution Activities
Three Principles of MOL’s Social Contribution Activities
I. Contribute to the UN
II. Contribute to protecting
III. Contribute to local
Millennium Development
Goals*
biodiversity and
preserving nature.
communities
* One of the common frameworks that integrates the Millennium Declaration adopted at the United Nations
Millennium Summit held in September 2000, and the International Development Goals that were adopted at
major international conference and summits in the 1990’s. The Millennium Development Goals consist of specifi c
numerical targets to be achieved by 2015 in eight fi elds, including “achieve universal primary education” and
“reduce child mortality.”
Liberia
Pledging emer-
gency support to
combat spread of
Ebola
Cambodia and
Myanmar
Transport of medical
equipment by sea
Japan
Educational support in communities affected
by the Great East Japan Earthquake
• Donation of books and book coupons to
junior high schools in affected areas
• Marine offi cers present career education lec-
ture at junior high school in affected areas
Somalia
MOL and six other companies*
provided US$1 million
in funding to the Somalia
Support Project, run by the
United Nations Development
Programme (UNDP).
* Shell, BP, Maersk, Stena, NYK,
K Line and MOL
Tanzania
Transport of
children’s
clothes by sea
Provided Somalia’s
youth with vocational
skills training
Hong Kong,
Malaysia and Japan
Coastal cleanup
Philippines
Supporting affl icted
people of typhoon
Vietnam
Transport of
wheelchairs by sea
Ghana
In-house blood
drive
South Africa
Transport of mobile libraries
by sea
Kenya
Zambia
Transport of children’s
shoes by sea
India
Supporting an orphanage
Paraguay
• Transport of children’s wheel-
chairs by sea
• Transport of fi re engines by sea
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Third-Party Evaluations
Overall CSR, including evaluation of socially responsible
investment (SRI)
■ CSR Rating by the Dow Jones Sustainability Indices (DJSI)
Since 2003, MOL has been included in the DJSI Asia Pacifi c, a des-
ignation reserved for companies capable of sustaining growth
over the long term while maintaining
excellence in environmental, social, and
investor relations programs.
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■ The Morningstar Socially Responsible Investment Index (MS-SRI)
Since 2003, MOL has been selected by
Morningstar Japan K.K. for superior social
responsibility and included in the MS-SRI.
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■ The Global 100 Top Sustainable Companies
In 2011, MOL was selected for inclusion in the Global 100 Index pub-
lished every year by the Canadian company Corporate Knights Inc.
■ CSR Rating by 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.
■ SMBC Sustainability Assessment Loan
In 2013, MOL became the fi rst company to receive an SMBC
Sustainability Assessment Loan from Sumitomo
Mitsui Banking Corporation (SMBC), winning
specifi c praise for timely and accurate disclosure
of environmental, social, and governance (ESG)
issues and for its initiatives on sustainability.
Annual Report 2015 73
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(cid:2) Yamal LNG Project
This project will use the world’s fi rst ice class LNG carriers to
transport LNG from the Yamal LNG Terminal located in the Arctic
Circle on the Yamal Peninsula of Russia. The plan is to export
16.5 million tons of LNG every year—the highest volume of LNG
exports from Russia. Operations are slated to begin in 2018. It is
forecasted that about 15 ice class LNG carriers will be necessary,
three of which are contracted with MOL.
The Kara Sea, which adjoins the Yamal LNG Terminal, com-
pletely freezes over in winter as the average temperature drops
to around minus 30 degrees Celsius. This has proved a challenge
for transporting LNG and long prevented development of the
area. With this project, however, the introduction of ice class
LNG carriers has resolved the persistent transportation issues,
allowing development to fi nally begin.
View a video introducing
"Yamal LNG Project"
Winter Route
Arctic Ocean
Summer Route
Russia
Sea of Okhotsk
(cid:2) Yield management
In the containership business, this refers to a management tech-
nique to maximize profi tability for the round-trip voyage of each
container. Freight rates are set and sales activities conducted to
maximize net proceeds (gross profi ts calculated by deducting
direct costs from freight revenues) rather than freight rates
themselves. Direct costs include loading and unloading costs,
feeder costs, and the costs of returning empty containers (calcu-
lated to refl ect the aspect of surplus and shortage of containers
at each point).
Glossary (In alphabetical order)
(cid:2) Ballast voyage
Sailing to the next port of call without any cargo loaded.
(cid:2) Baltic Dry Index
Baltic Dry Index (BDI) is calculated by The Baltic Exchange as an
arithmetic average of the drybulker markets of the four different
vessel types.(1/4/1985=1,000)
(cid:2) FPSO (Floating Production, Storage and Offl oading system)
A fl oating facility for producing oil offshore. The oil is stored in
tanks in the facility and directly offl oaded to tankers for direct
transport to the destination.
(cid:2) FSRU (Floating Storage and Re-gasifi cation Unit)
A fl oating facility for storing and regasifi cation of LNG offshore,
which is then pressurized and piped ashore. Plans to introduce
FSRUs in regions around the world are making steady progress as
they can be set up in less time and less cost than conventional
onshore receiving terminals.
(cid:2) Ice class LNG carrier
The world’s fi rst LNG carrier capable of breaking through sea ice.
Normally on the Northern Sea Route, an escort ship breaks up
the ice to open a channel. But the ice class LNG carriers to be
deployed for the Yamal LNG Project will possess the same ice-
breaking capabilities as the Antarctic research vessel Shirase,
enabling it to break through sea ice of up to 2.1 meters thick on
its own.
(cid:2) Market exposure
Vessels operating under contracts of less than two years, which
are owned or mid-and long-term chartered vessels. (Includes ves-
sels that combine multiple customers’ cargoes.)
(cid:2) Pool arrangement
Ship operators and owners pool certain ships to conduct joint
operations.
(cid:2) Shuttle tanker
A specialized tanker that shuttles from offshore oil plants to
onshore terminals to transport crude oil, which has been extract-
ed from offshore oil wells.
(cid:2) Ton-mile
Transporting one ton of cargo one mile. Expressing the volume
of cargo calculated by multiplying transported weight and trans-
ported mile together. As opposed to just reporting cargo weight
without reference to distance, ton-mile provides a complete pic-
ture of total transport activity, refl ecting the demand fulfi lled by
vessels or other transport modes.
(cid:2) Unit cost
The fi xed cost of transporting one TEU on a containership. Fixed
costs include vessel costs (depreciation and interest, or charter
rates) and ship operation expenses (bunker costs, port costs and
so on).
74 Mitsui O.S.K. Lines
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Financial Section
Contents
76 Consolidated Balance Sheets
78 Consolidated Statements of Income and Consolidated Statements
of Comprehensive Income
79 Consolidated Statements of Changes in Net Assets
80 Consolidated Statements of Cash Flows
81 Notes to Consolidated Financial Statements
111 Independent Auditor’s Report
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Annual Report 2015 75
Consolidated Balance Sheets
Mitsui O.S.K. Lines, Ltd. March 31, 2015 and 2014
ASSETS
Current assets:
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Cash and cash equivalents (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred and prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥128,802
178,845
(1,538)
49,026
75,937
2,107
78,617
¥180,126
146,787
$1,071,832
1,488,267
(697)
59,349
73,285
1,629
73,161
(12,799)
407,972
631,913
17,533
654,215
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
511,796
533,640
4,258,933
Vessels, property and equipment (Notes 7 and 13):
Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,527,590
1,434,505
12,711,908
Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vessels and other property under construction . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net vessels, property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
319,171
94,157
221,993
173,279
2,336,190
(838,162)
1,498,028
281,720
76,228
215,610
148,972
2,157,035
(777,790)
1,379,245
2,655,996
783,532
1,847,324
1,441,949
19,440,709
(6,974,802)
12,465,907
Investments and other assets:
Investment securities (Notes 3, 4 and 7) . . . . . . . . . . . . . . . . . . . . . .
128,416
111,061
1,068,619
Investments in and advances to unconsolidated subsidiaries and affi liated
companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term loans receivable (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible fi xed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net defi ned benefi t assets (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative fi nancial assets (Notes 3 and 6) . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total investments and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
141,304
124,303
1,175,868
74,959
37,068
3,954
24,063
182,523
21,939
614,226
37,519
29,385
3,769
21,200
89,641
34,932
451,810
623,775
308,463
32,903
200,241
1,518,873
182,567
5,111,309
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥2,624,050
¥2,364,695
$21,836,149
See accompanying notes.
76 Mitsui O.S.K. Lines
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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) . . . . . . . . . . . .
Directors’ and corporate auditors’ retirement benefi ts . . . . . . . . . . . . . .
Reserve for periodic drydocking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net defi ned benefi t liabilities (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingent liabilities (Note 8)
Net assets (Note 9):
Owners’ equity
Common stock;
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 income
Unrealized holding gains on available-for-sale securities, net of tax . . . .
Unrealized gains on hedging derivatives, net of tax . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . .
Remeasurements of defi ned benefi t plans, net of tax . . . . . . . . . . . . . .
Total accumulated other comprehensive income . . . . . . . . . . . . . . . . . .
Share subscription rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
¥74,203
5,500
79,703
105,186
15,000
120,186
167,002
36,280
7,639
593
93,944
505,347
688,332
270,185
958,517
1,803
15,803
109,043
13,660
127,442
1,226,268
1,731,615
65,400
44,469
533,485
(6,823)
636,531
44,261
68,770
27,673
5,322
146,026
2,553
107,325
892,435
¥14,697
$617,484
—
14,697
90,492
45,000
135,492
143,196
37,696
6,909
1,716
90,339
430,045
740,038
180,500
920,538
1,852
14,191
81,130
12,936
120,454
1,151,101
1,581,146
45,768
663,252
875,310
124,823
1,000,133
1,389,715
301,906
63,568
4,935
781,759
4,205,268
5,727,985
2,248,357
7,976,342
15,004
131,505
907,406
113,672
1,060,514
10,204,443
14,409,711
65,400
44,517
502,833
(6,982)
605,768
32,810
39,711
(315)
1,186
73,392
2,391
101,998
783,549
544,229
370,051
4,439,419
(56,778)
5,296,921
368,320
572,273
230,282
44,287
1,215,162
21,245
893,110
7,426,438
Total liabilities and net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥2,624,050
¥2,364,695
$21,836,149
Annual Report 2015 77
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Consolidated Statements of Income and
Consolidated Statements of Comprehensive Income
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2015 and 2014
(Consolidated Statements of Income)
Shipping and other revenues (Note 14) . . . . . . . . . . . . . . . . . . . . . . . .
Shipping and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income (expenses):
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings (losses) of affi liated companies, net . . . . . . . . . . . . . .
Others, net (Notes 10 and 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes and minority interests . . . . . . . . . . . . . .
Income taxes (Note 15):
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
¥1,817,070
1,683,795
133,275
116,025
17,250
¥1,729,452
$15,120,829
1,587,902
141,550
100,458
41,092
14,011,775
1,109,054
965,507
143,547
9,625
(12,556)
4,930
39,083
41,082
58,332
(12,440)
2,577
48,469
(6,113)
9,341
(12,583)
(1,234)
35,094
30,618
71,710
(13,796)
4,526
62,440
(5,046)
80,095
(104,485)
41,025
325,230
341,865
485,412
(103,520)
21,445
403,337
(50,870)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 42,356
¥ 57,394
$ 352,467
(Consolidated Statements of Comprehensive Income)
Income before minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 48,469
¥ 62,440
$ 403,337
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Other comprehensive income (Note 18):
Unrealized holding gains on
available-for-sale securities, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gains on hedging derivatives, net of tax . . . . . . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . .
Remeasurements of defi ned benefi t plans, net of tax . . . . . . . . . . . . . .
Share of other comprehensive income (loss) of associates
accounted for using equity method . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,892
46,674
20,802
4,134
(9,981)
74,521
8,847
32,725
31,158
—
19,285
92,015
107,281
388,400
173,105
34,401
(83,057)
620,130
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥122,990
¥154,455
$1,023,467
Comprehensive income
Comprehensive income attributable to owners of the parent . . . . . . . . . . .
Comprehensive income attributable to minority interests . . . . . . . . . . . . . .
¥114,990
8,000
¥144,892
$ 956,894
9,563
66,573
(Amounts per share of common stock)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted net income (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends applicable to the year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Yen
U.S. dollars (Note 1)
¥35.42
32.98
7.00
¥47.99
47.97
5.00
$0.295
0.274
0.058
See accompanying notes.
78 Mitsui O.S.K. Lines
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Consolidated Statements of Changes in Net Assets
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2015 and 2014
Millions of yen
Unrealized
holding gains
on available-
for-sale
securities,
net of tax
Unrealized
gains (losses)
on hedging
derivatives,
net of tax
Remeasure-
ments
of defi ned
benefi t
plans,
net of tax
Foreign
currency
translation
adjustments
Treasury
stock,
at cost
Share
subscription
rights
Minority
interests
Total
net assets
Common
stock
Capital
surplus
Retained
earnings
Balance at April 1, 2013 . . . . . . .
¥65,400
¥44,483 ¥447,830
¥(6,998) ¥24,753
¥ (196) ¥(39,849)
¥ — ¥2,115 ¥ 81,955
¥619,493
Due to change in
consolidated subsidiaries . . . . . .
Net income . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . .
Disposal of treasury stock . . . . . .
Dividends paid . . . . . . . . . . . . . .
Net changes of items other than
owner’s equity during the year . .
Balance at
March 31 and April 1, 2014 . . .
Cumulative effects of changes in
accounting policies . . . . . . . . . .
—
—
—
—
—
—
—
1
— 57,394
—
34
—
—
— (2,392)
—
—
—
—
(62)
78
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
57,394
(62)
112
(2,392)
8,057
39,907
39,534
1,186
276
20,043
109,003
¥65,400
¥44,517 ¥502,833
¥(6,982) ¥32,810
¥39,711 ¥ (315)
¥1,186
¥2,391 ¥101,998
¥783,549
—
— (4,567)
—
—
—
—
—
—
—
(4,567)
Restated balance . . . . . . . . . . . .
¥65,400
¥44,517 ¥498,266
¥(6,982) ¥32,810
¥39,711
¥(315)
¥1,186
¥2,391 ¥101,998
¥778,982
Issuance of new shares - exercise
of subscription rights to shares .
Due to change in consolidated
subsidiaries . . . . . . . . . . . . . . . .
Due to change in affi liated companies
accounted for by the equity method
Net income . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . .
Disposal of treasury stock . . . . . .
Dividends paid . . . . . . . . . . . . . .
Net changes of items other than
owner's equity during the year .
—
—
—
—
—
—
—
—
—
—
—
—
205
(121)
— 42,356
—
(48)
—
(49)
— (7,172)
19
—
—
—
(56)
196
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(19)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
205
(121)
42,356
(56)
99
(7,172)
—
—
— 11,451
29,059
27,988
4,136
181
5,327
78,142
Balance at March 31, 2015 . . . .
¥65,400
¥44,469 ¥533,485
¥(6,823) ¥44,261
¥68,770
¥27,673
¥5,322
¥2,553 ¥107,325
¥892,435
Thousands of U.S. dollars (Note 1)
Unrealized
holding gains
on available-
for-sale
securities,
net of tax
Unrealized
gains (losses)
on hedging
derivatives,
net of tax
Remeasure-
ments
of defi ned
benefi t
plans,
net of tax
Foreign
currency
translation
adjustments
Treasury
stock,
at cost
Share
subscription
rights
Minority
interests
Total
net assets
Common
stock
Capital
surplus
Retained
earnings
Balance at April 1, 2014 . . . . . .
$544,229 $370,450 $4,184,347 $(58,101) $273,030 $330,457
$(2,621)
$9,869
$19,897 $848,781 $6,520,338
Cumulative effects of changes in
accounting policies . . . . . . . . . .
—
— (38,004)
—
—
—
—
—
—
—
(38,004)
Restated balance . . . . . . . . . . . .
$544,229 $370,450 $4,146,343 $(58,101) $273,030 $330,457
$(2,621)
$9,869
$19,897 $848,781
$6,482,334
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Issuance of new shares - exercise
of subscription rights to shares .
Due to change in consolidated
subsidiaries . . . . . . . . . . . . . . . .
Due to change in affi liated companies
accounted for by the equity method
Net income . . . . . . . . . . . . . . . .
Purchases of treasury stock . . . .
Disposal of treasury stock . . . . . .
Dividends paid . . . . . . . . . . . . . .
Net changes of items other than
owner's equity during the year .
—
—
—
—
—
—
—
—
—
158
—
—
—
1,706
(1,007)
—
—
—
— 352,467
—
(399)
—
(466)
(408)
1,631
— (59,682)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(158)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,706
(1,007)
352,467
(466)
824
(59,682)
95,290
241,816
232,903
34,418
1,506
44,329
650,262
Balance at March 31, 2015 . . . .
$544,229 $370,051 $4,439,419 $(56,778) $368,320 $572,273 $230,282
$44,287
$21,245 $893,110
$7,426,438
See accompanying notes.
Annual Report 2015 79
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Consolidated Statements of Cash Flows
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2015 and 2014
Cash fl ows from operating activities:
Income before income taxes and minority interests . . . . . . . . . . . . . . . . . .
Adjustments to reconcile income before income taxes and minority interests
to net cash provided by operating activities
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in losses (earnings) of affi liated companies, net . . . . . . . . . . . . . .
Various provisions (reversals) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (Increase) in net defi ned benefi t assets . . . . . . . . . . . . . . . . . .
Increase (Decrease) in net defi ned benefi t liabilities . . . . . . . . . . . . . . . .
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale and disposal of vessels, property and equipment . . . . . . . .
Exchange loss (gain), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received for interest and dividends . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for corporate income tax, resident tax and enterprise tax . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash fl ows from investing activities:
Purchase of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of investment securities . . . . . . . . . . . . . . . . . . . . . .
Payments for purchase of vessels and other tangible and intangible fi xed assets . . .
Proceeds from sale of vessels and other tangible and intangible fi xed assets . . .
Proceeds from sale of investments in subsidiaries . . . . . . . . . . . . . . . . . .
Net decrease (increase) in short-term loans receivables . . . . . . . . . . . . .
Disbursements for long-term loans receivables . . . . . . . . . . . . . . . . . . .
Collections of long-term loans receivables . . . . . . . . . . . . . . . . . . . . . . .
Purchase of shares of subsidiaries resulting in change in scope of
consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash fl ows from fi nancing activities:
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 (used in) fi nancing activities . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash and equivalents . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . .
Net cash increase from new consolidation/de-consolidation of subsidiaries . .
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
¥ 58,332
¥ 71,710
$ 485,412
87,804
10,198
(4,930)
2,356
(1,560)
377
(9,625)
12,556
(13,380)
(24,801)
(28,223)
11,750
19,756
(11,878)
108,732
12,411
(13,107)
(15,541)
92,495
(14,594)
1,770
(186,317)
74,184
8,706
(4,526)
(59,942)
27,957
(6,258)
(131)
(159,151)
59,030
5,500
107,951
(203,117)
95,280
(45,000)
(57)
68
(7,177)
(3,959)
(2,008)
6,511
8,006
(52,139)
180,126
815
83,984
6,448
1,234
(13,899)
(19,536)
13,035
(9,341)
12,583
(391)
(15,671)
5,042
1,046
(3,875)
(27,584)
104,785
13,346
(13,167)
(10,708)
94,256
(22,888)
7,318
(183,888)
78,267
9,676
359
(13,939)
4,585
-
639
(119,871)
(31,725)
(2,000)
159,602
(117,237)
15,000
(25,000)
(62)
13
(2,408)
(1,321)
(1,956)
(7,094)
10,582
(22,127)
200,636
1,617
730,665
84,863
(41,025)
19,606
(12,982)
3,137
(80,095)
104,485
(111,342)
(206,383)
(234,859)
97,778
164,400
(98,842)
904,818
103,279
(109,071)
(129,325)
769,701
(121,445)
14,729
(1,550,445)
617,325
72,447
(37,663)
(498,810)
232,645
(52,076)
(1,089)
(1,324,382)
491,221
45,768
898,319
(1,690,247)
792,877
(374,470)
(474)
566
(59,724)
(32,945)
(16,709)
54,182
66,622
(433,877)
1,498,927
6,782
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . .
¥ 128,802
¥ 180,126
$ 1,071,832
See accompanying notes.
80 Mitsui O.S.K. Lines
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Notes to Consolidated Financial Statements
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2015 and 2014
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated fi nancial 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 princi-
ples generally accepted in Japan (together “Japanese GAAP”), which are different in certain respects as to application and disclo-
sure requirements of International Financial Reporting Standards.
The accounts of overseas subsidiaries are adjusted according to ASBJ PITF No. 18. The accompanying consolidated fi nancial
statements have been restructured and translated into English (with some expanded descriptions) from the consolidated fi nancial
statements of Mitsui O.S.K. Lines, Ltd. (the “Company”) prepared in accordance with Japanese GAAP and fi led with the appropri-
ate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. Some supplemen-
tary information included in the statutory Japanese language consolidated fi nancial statements, but not required for fair
presentation, is not presented in the accompanying consolidated fi nancial statements.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan,
using the prevailing exchange rate at March 31, 2015, which was ¥120.17 to U.S. $1.00. 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) PRINCIPLES OF CONSOLIDATION
The consolidated fi nancial statements include the accounts of the Company and 371 subsidiaries for the year ended March 31,
2015 (357 subsidiaries for the year ended March 31, 2014). All signifi cant inter-company balances, transactions and all material
unrealized profi t within the consolidated group have been eliminated in consolidation.
Investments in unconsolidated subsidiaries and affi liated companies are accounted for by the equity method. Companies
accounted for using the equity method include 70 affi liated companies for the year ended March 31, 2015, and 73 affi liated com-
panies for the year ended March 31, 2014. Investments in other subsidiaries and affi liated companies were stated at cost since total
revenues, total assets, the Company’s equity in net income and retained earnings and others in such companies were not material.
In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion attributable to
minority 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
principally 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 income.
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 lia-
bilities in foreign currencies into the currency used for fi nancial reporting in accordance with accounting principles generally
accepted in their respective countries.
All the items in fi nancial 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 fl ows, cash on hand, readily-available deposits and short-term highly liquid invest-
ments with maturities not exceeding three months at the time of purchase are considered to be cash and cash equivalents.
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Annual Report 2015 81
(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 classifi ed 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 affi liated compa-
nies, or (d) for all other securities that are not classifi ed 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 fl uctuations 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 consid-
ered not collectible. Equity securities issued by subsidiaries and affi liated 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 affi liated com-
panies not on the equity method, and available-for-sale securities, declines signifi cantly, 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 affi liated 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 corresponding charge in the statements of income in the event net assets value declines signifi cantly. 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 profi tability of assets).
(7) DEPRECIATION AND AMORTIZATION
Depreciation of vessels and buildings is computed mainly by the straight-line method. Depreciation of other property and equip-
ment is computed mainly by the declining-balance method. Amortization of intangible assets is computed by the straight-line
method. Computer software is amortized by the straight-line method based principally on the length of period it can be used inter-
nally (fi ve years).
Depreciation of fi nance lease that transfer ownership to lessees is computed mainly by the identical to depreciation method
applied to self-owned non-current assets. Depreciation of fi nance 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 fi nance lease that do not transfer ownership for which the starting date for the lease transaction is prior to March 31,
2008, they are continuously 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 signifi cant, such inter-
est expenses are capitalized as a part of the acquisition cost which amounted to ¥5,139 million ($42,764 thousand) for the year
ended March 31, 2015 and ¥2,802 million for the year ended March 31, 2014.
(10) ALLOWANCE FOR DOUBTFUL ACCOUNTS
Allowance for doubtful accounts is provided in an amount suffi cient to cover probable losses on collection. It consists of the esti-
mated uncollectible amount with respect to certain identifi ed doubtful receivables and an amount calculated using the actual per-
centage of the Company’s collection losses.
(11) DIRECTORS’ AND CORPORATE AUDITORS’ RETIREMENT BENEFITS
The domestic subsidiaries of the company recognize liabilities for retirement benefi ts for directors and corporate auditors at an
amount required in accordance with the internal regulations.
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(12) EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITS
The Company and its consolidated subsidiaries (the “Group”) recognized net defi ned benefi t assets and net defi ned benefi t liabili-
ties for employees’ severance and retirement benefi ts and retirement benefi ts based on the estimated amounts of projected benefi t
obligation and the fair value of the plan assets at end of the year. Projected benefi t obligations are attributed to each period by the
straight-line method.
Actuarial gains and losses are recognized in the statements of income using the straight-line method over the average of the
estimated remaining service lives of mainly 10 years commencing with the following period. Past service costs are chiefl y accounted
for as expenses in lump-sum at the time of occurrence.
(13) RESERVE FOR PERIODIC DRYDOCKING
Reserve for periodic drydocking is based on the estimated amount of expenditures for periodic drydocking in the future.
(14) INCOME TAXES
The Group recognizes tax effects of temporary differences between the fi nancial statement basis and the tax basis of assets and lia-
bilities. The provision for income taxes is computed based on the pretax income included in the consolidated statements of income.
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences.
(15) AMOUNTS PER SHARE OF COMMON STOCK
Net income 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.
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.
(16) DERIVATIVES AND HEDGE ACCOUNTING
Companies are required to state derivative fi nancial instruments at fair value and to recognize changes in the fair value as gains or
losses unless derivative fi nancial instruments are used for hedging purposes.
If derivative fi nancial instruments are used as hedging instruments and meet certain hedging criteria, the Group defers recogni-
tion of gains or losses resulting from changes in fair value of derivative fi nancial 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 cur-
rency assets and liabilities are translated at the rate of these contracts (“allocation method”).
The following summarizes hedging derivative fi nancial 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 by comparing the cumulative changes in cash fl ows from or the changes in fair
value of hedged items and the cumulative changes in cash fl ows from or the changes in fair value of hedging instruments.
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Annual Report 2015 83
(17) RECLASSIFICATIONS
Certain prior year amounts have been reclassifi ed to conform to the 2015 presentation.
(18)CHANGES IN ACCOUNTING POLICIES
Application of accounting standards for retirement benefi ts
The Group adopted article 35 of the Accounting Standard for Retirement Benefi ts (ASBJ Statement No.26, May 17, 2012
(“Statement No.26”) and article 67 of the Guidance on Accounting Standard for Retirement Benefi ts (ASBJ Guidance No.25,
March 26, 2015 (“Guidance No.25”) from the year ended March 31, 2015, and have changed the determination of retirement
benefi t obligations and current service costs.
In accordance with article 37 of Statement No.26, the effect of changing the determination of retirement benefi t obligations
and current service costs has been recognized in retained earnings at the beginning of the year. As a result of the application, net
defi ned benefi t assets decreased by ¥4,570 million ($38,029 thousand), net defi ned benefi t liabilities decreased by ¥5 million ($42
thousand), and retained earnings decreased by ¥4,567 million ($38,004 thousand) at the beginning of the year ended March 31,
2015.
The effect of this change on the consolidated statement of income is immaterial.
(19)ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIED
Revised Accounting Standard for Business Combinations (ASBJ Statement No.21, September 13, 2013), Revised Accounting
Standard for Consolidated Financial Statements (ASBJ Statement No.22, September 13, 2013), Revised Accounting Standard for
Business Divestitures (ASBJ Statement No.7, September 13, 2013), Revised Accounting Standard for Earnings Per Share (ASBJ
Statement No.2, September 13, 2013), Revised Guidance on Accounting Standard for Business Combinations and Accounting
Standard for Business Divestitures (ASBJ Guidance No.10, September 13, 2013) and Revised Guidance on Accounting Standard for
Earnings Per Share (ASBJ Guidance No.4, September 13, 2013).
1. Summary
The above standards and guidance have been revised primarily to account for:
I. How the changes of the shares in subsidiaries, over which the Company continues to maintain control, should be treated by the
Company when additional stock of a subsidiary is acquired.
II. Treatment of acquisition related costs.
III. Presentation of current net income and the change of shareholder’s equity from minority interests to non-controlling interests.
IV. Provisional application of accounting treatments.
2. Effective dates
These standards will be effective from the beginning of the year ending March 31, 2016. Provisional application of the accounting
standards is scheduled to begin for business combinations effective after the beginning of the fi scal year ending March 31, 2016.
3. Effect of application of the standard
The Group is currently assessing the effects of these new standards on the consolidated fi nancial statements.
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3. FINANCIAL INSTRUMENTS
(1) Qualitative information on fi nancial instruments
I. Policies for using fi nancial instruments
We raise capital investment funds to acquire vessels and other fi xed assets primarily through bank loans and corporate bonds. In
addition, we secure short-term operating funds primarily through bank loans. Furthermore, we have established commitment line
with Japanese banks to maintain a suffi cient amount of working capital and prepare supplementary liquidity for emergency situa-
tions. 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 fi nancial 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 regula-
tions. 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 fl uctuation 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 bank 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 fi xed with the use of interest rate swaps.
Long-term bank 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 fl uctuation 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 (16) to the consolidated fi nancial statements.
Derivative transactions are executed and managed in accordance with our internal regulations and dealt only with highly rated
fi nancial institutions to mitigate credit risks.
On the other hand, as trade payables, loan payables, bonds, and commercial papers are exposed to the risk of fi nancing for
repayment, we manage the risk by planning cash management program monthly, having established commitment lines with several
fi nancial institutions, and adjusting the funding period (balancing short-term/long-term combination), in consideration of market
circumstances.
III. Supplemental information on fair value
Fair value of fi nancial instruments that are actively traded in organized fi nancial 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
transactions mentioned in following (2) do not indicate the market risk of such derivatives.
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Annual Report 2015 85
(2) Fair Values of fi nancial instruments
Book values and fair values of the fi nancial instruments on the consolidated balance sheet at March 31, 2015 were the following;
Millions of yen
Book Value
Fair Value
Difference
Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 128,802
¥ 128,802
¥ —
Time deposits with a maturity of more than three months . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities
Available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term loans receivable(*1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
Liabilities
2,821
178,845
5,556
120,583
76,265
2,821
178,845
5,556
120,583
82,282
¥ 512,872
¥ 518,889
—
—
—
—
6,017
¥ 6,017
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 167,002
¥ 167,002
¥ —
Short-term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds(*2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term bank loans(*3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74,203
5,500
285,185
793,518
74,203
5,500
288,298
807,099
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,325,408
¥1,342,102
Derivative fi nancial instruments(*4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 153,519
¥ 153,082
—
—
3,113
13,581
¥16,694
¥ (437)
Thousands of U.S. dollars (Note 1)
Book Value
Fair Value
Difference
Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,071,832
$ 1,071,832
$ —
Time deposits with a maturity of more than three months . . . . . . . . . . . . . . . .
23,475
23,475
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,488,267
1,488,267
Short-term loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,235
46,235
Investment securities
Available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,003,437
1,003,437
—
—
—
—
Long-term loans receivable(*1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
634,643
684,713
50,070
Total
Liabilities
$ 4,267,889
$ 4,317,959
$ 50,070
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,389,715
$ 1,389,715
$ —
Short-term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds(*2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term bank loans(*3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
617,484
45,768
2,373,180
6,603,295
617,484
45,768
2,399,085
6,716,310
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$11,029,442
$11,168,362
Derivative fi nancial instruments(*4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1,277,515
$ 1,273,879
—
—
25,905
113,015
$138,920
$ (3,636)
*1 The book value of long-term loans receivable includes current portion amounting to ¥1,306 million ($10,868 thousand).
*2 The book value of bonds includes current portion amounting to ¥15,000 million ($124,823 thousand).
*3 The book value of long-term bank loans includes current portion amounting to ¥105,186 million ($875,310 thousand).
*4 Amounts of derivative fi nancial instruments are net of asset and liability. Negative amount stated with ( ) means that the net amount is liability.
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Book values and fair values of the fi nancial instruments on the consolidated balance sheet at March 31, 2014 were the following;
Millions of yen
Book Value
Fair Value
Difference
Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 180,126
¥ 180,126
¥ —
Time deposits with a maturity of more than three months . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities
Available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term loans receivable(*1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
Liabilities
1,023
146,787
1,445
103,417
41,015
1,023
146,787
1,445
103,417
46,748
¥ 473,813
¥ 479,546
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 143,196
¥ 143,196
Short-term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds(*2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term bank loans(*3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,697
225,500
830,530
14,697
230,953
833,094
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,213,923
¥1,221,940
Derivative fi nancial instruments(*4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 83,295
¥ 82,895
—
—
—
—
5,733
¥5,733
¥ —
—
5,453
2,564
¥8,017
¥ (400)
*1 The book value of long-term loans receivable includes current portion amounting to ¥3,496 million.
*2 The book value of bonds includes current portion amounting to ¥45,000 million.
*3 The book value of long-term bank loans includes current portion amounting to ¥90,492 million.
*4 Amounts of derivative fi nancial instruments are net of asset and liability. Negative amount stated with ( ) means that the net amount is liability.
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.
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 eval-
uated at market prices at stock exchange or provided by fi nancial 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 book value because the interest rate refl ects
the market rate in the short term and their fair value is almost equal to the book value, unless the creditworthiness of the borrower
has changed signifi cantly since the loan origination. The fair value of long-term loans receivable with fi xed 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 rate
corporate bonds without market price is evaluated at the book value because the interest rate refl ects the market rate in the short
term and there has been no signifi cant change in the Company’s creditworthiness before and after the issue.
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Long-term bank loans
The fair value of long-term bank loans with variable interest rates is evaluated at book value because the interest rate refl ects the
market rate in the short term and there has been no signifi cant change in the Company’s creditworthiness before and after such
bank loans were made. The fair value of long-term bank loans with fi xed 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
currency swap is evaluated at the book value because such bank loans were deemed as the variable interest rate bank loans
and the interest rate refl ects the market rate in the short term.
Derivative fi nancial instruments
Please refer to Note 6 to the consolidated fi nancial statements.
The following table summarizes fi nancial instruments whose fair value is extremely diffi cult to estimate.
Unlisted stocks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Thousands of
U.S. dollars (Note 1)
Book Value
Book Value
Book Value
2015
2014
¥7,821
11
¥7,832
¥7,627
17
¥7,644
2015
$65,083
92
$65,175
The above items are not included in the amount presented under the line “Investments securities” in the table summarizing fair
value of fi nancial instruments, because the fair value is extremely diffi cult to estimate as they have no quoted market price and the
future cash fl ow cannot be estimated.
At March 31, 2015, 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
Available-for-sale securities
(Governmental/municipal bonds) . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities
(Corporate bonds) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . .
Within a year
¥128,802
2,821
178,845
5,556
—
—
1,306
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥317,330
Millions of yen
After one year
through fi ve
years
¥ —
—
After fi ve years
through ten
years
¥ —
—
After ten years
¥ —
—
—
—
10
200
—
—
—
—
—
—
—
—
44,390
¥44,600
2,805
¥2,805
27,764
¥27,764
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits with a maturity of more than three months . . .
Thousands of U.S. dollars (Note 1)
After one year
through fi ve
years
$ —
—
After fi ve years
through ten
years
$ —
—
Within a year
$1,071,832
23,475
After ten years
$ —
—
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,488,267
Short-term loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . .
46,235
Marketable securities and investments securities
Available-for-sale securities
(Governmental/municipal bonds) . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities
(Corporate bonds) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
10,868
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,640,677
—
—
83
1,664
369,393
$371,140
—
—
—
—
—
—
—
—
23,342
$23,342
231,040
$231,040
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At March 31, 2014, 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
Available-for-sale securities
(Governmental/municipal bonds) . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities
(Corporate bonds) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term loans receivable . . . . . . . . . . . . . . . . . . . . . . . . . .
Within a year
¥180,126
1,023
146,787
1,445
10
—
3,496
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥332,887
Millions of yen
After one year
through fi ve
years
¥ —
—
After fi ve years
through ten
years
¥ —
—
After ten years
¥ —
—
—
—
—
—
—
—
—
—
—
—
23,134
¥23,134
200
6,745
¥6,945
—
7,640
¥7,640
4. SECURITIES
A. The following tables summarize acquisition costs, book values and fair values of securities with available fair values at March 31,
2015 and 2014.
Available-for-sale securities:
Securities with book values exceeding acquisition costs at March 31, 2015
Type
Millions of yen
Acquisition cost
Book Value
Difference
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥48,766
¥115,824
¥67,058
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
200
215
15
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥48,966
¥116,039
¥67,073
Type
Thousands of U.S. dollars (Note 1)
Acquisition cost
Book Value
Difference
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$405,809
$963,835
$558,026
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,664
1,789
125
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$407,473
$965,624
$558,151
Securities with book values exceeding acquisition costs at March 31, 2014
Type
Millions of yen
Acquisition cost
Book Value
Difference
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥41,698
¥93,782
¥52,084
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
210
226
16
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥41,908
¥94,008
¥52,100
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Securities with book values not exceeding acquisition costs at March 31, 2015
Type
Millions of yen
Acquisition cost
Book Value
Difference
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥5,456
10
¥5,466
¥4,534
10
¥4,544
¥(922)
0
¥(922)
Type
Thousands of U.S. dollars (Note 1)
Acquisition cost
Book Value
Difference
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$45,402
$37,730
$(7,672)
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
83
83
0
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$45,485
$37,813
$(7,672)
Securities with book values not exceeding acquisition costs at March 31, 2014
Type
Millions of yen
Acquisition cost
Book Value
Difference
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥11,545
¥9,409
¥(2,136)
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥11,545
¥9,409
¥(2,136)
B. Total sales of available-for-sale securities sold in the years ended March 31, 2015 and 2014 and the related gains and losses
were as follows:
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross realized losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
¥290
134
—
¥3,880
1,200
214
$2,413
1,115
—
C. Impairment losses of securities
No impairment loss on the securities was recognized for the year ended March 31, 2015.
For the year ended March 31, 2014, the Company reduced the book value on the securities and booked the reductions as
impairment losses of ¥106 million.
With regard to the impairment losses, the Company principally reduces the book value on the securities to the amount which is
considered the recoverability etc. in the event the fair market value declines more than 50% in comparison with the acquisition cost.
5. INVENTORIES
Inventories as of March 31, 2015 and 2014 consisted of the following:
Fuel and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
¥48,030
996
¥49,026
2014
¥58,211
1,138
¥59,349
2015
$399,684
8,288
$407,972
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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 fl uctuations, 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 fi nancial derivatives of the Group at March 31,
2015 and 2014, for which hedge accounting has not been applied.
(1) Currency related:
Forward currency exchange contracts
Sell (U.S. dollar):
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buy (U.S. dollar):
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buy (Others):
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
¥ —
—
¥467
1
¥ 24
0
¥15,438
(1)
¥ 25
0
¥ 22
1
$ —
—
$3,886
8
$ 200
0
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
(2) Interest related
Interest rate swaps
Receive fl oating, pay fi xed
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥40,183
(1,213)
¥39,046
$334,385
(1,966)
(10,094)
Note: Fair values are measured based on forward exchange rates prevailing at the end of the year and information provided by fi nancial institutions, etc.
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II. Hedge accounting applied
The following tables summarize the outstanding contract amounts and fair values of fi nancial derivatives of the Group at March 31,
2015 and 2014, for which hedge accounting has been applied.
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
(1) Deferral hedge accounting
a. Forward currency exchange contracts to hedge the risk for the
foreign currency transactions
Sell (U.S. dollar):
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ —
¥ 16,386
$ —
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(415)
—
Buy (U.S. dollar):
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ —
¥ 18,661
$ —
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
4,460
—
b. Currency swaps contracts to hedge the risk for charterages
Sell (U.S. dollar):
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 7,669
¥ 8,022
$ 63,818
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,664)
(435)
(13,847)
Buy (U.S. dollar):
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥453,024
182,171
¥507,607
$3,769,859
88,264
1,515,944
c. Interest rate swaps to hedge the risk for the long-term bank loans
and charterages
Receive fl oating, pay fi xed
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥290,387
¥228,282
$2,416,468
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(21,451)
(7,133)
(178,505)
Receive fi xed, pay fl oating
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ —
¥ 5,810
$ —
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
136
—
d. Commodities futures to hedge the risk for the fuel oil
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 11,907
¥ 23,486
$ 99,085
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,324)
461
(35,982)
e. Freight futures to hedge the risk for the freight
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ —
¥ 649
$ —
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(77)
—
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
(2) Special treatment
Interest rate swaps to hedge the risk for the long-term bank loans
Receive fl oating, pay fi xed
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥20,550
¥18,687
$171,008
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(437)
(400)
(3,637)
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
(3) Allocation method
Currency swaps to hedge the risk for the foreign bonds and long-term bank loans
Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥31,781
¥31,788
$264,467
Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
Notes: 1. Fair values are measured based on forward exchange rates prevailing at the end of the year and information provided by fi nancial
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.
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7. SHORT-TERM DEBT AND LONG-TERM DEBT
(1) SHORT-TERM DEBT
Short-term debt amounting to ¥79,703 million ($663,252 thousand) and ¥14,697 million at March 31, 2015 and 2014, respec-
tively, were principally unsecured. The average interest rates on short-term debt were 0.52% and 0.56%, respectively.
(2) LONG-TERM DEBT
Long-term debt at March 31, 2015 and 2014 consisted of the following:
Bonds:
1.278% yen bonds due 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ —
¥ 30,000
$ —
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
1.590% yen bonds due 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.296% yen bonds due 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.573% yen bonds due 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.070% yen bonds due 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.106% yen bonds due 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.461% yen bonds due 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.000% U.S. dollars bonds due 2018* . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.999% yen bonds due 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.670% yen bonds due 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.400% yen bonds due 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.000% U.S. dollars bonds due 2020* . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.361% yen bonds due 2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.650% yen bonds due 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.139% yen bonds due 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.070% yen bonds due 2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.850% yen bonds due 2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.970% yen bonds due 2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.803% yen bonds due 2025. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term bank loans due within one year:
—
15,000
10,000
15,000
20,000
20,000
36,051
18,500
10,000
15,000
24,034
17,800
5,000
9,200
10,000
15,000
29,600
15,000
15,000
15,000
10,000
15,000
20,000
20,000
—
18,500
10,000
15,000
—
17,800
5,000
9,200
10,000
15,000
—
—
—
124,823
83,215
124,823
166,431
166,431
300,000
153,949
83,215
124,823
200,000
148,124
41,608
76,558
83,215
124,823
246,319
124,823
Long-term bank loans due within one year at average interest rate of 0.64%
and 0.70% at March 31, 2015 and 2014, respectively.. . . . . . . . . . . . . . . . .
105,186
90,492
875,310
Long-term bank loans due after one year:
Long-term bank loans due through 2034 at average interest rate of 1.20%
and 0.98% at March 31, 2015 and 2014, respectively.. . . . . . . . . . . . . . . . .
688,332
740,038
1,078,703
1,056,030
Amount due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
120,186
135,492
5,727,985
8,976,475
1,000,133
¥ 958,517
¥ 920,538
$7,976,342
*Zero coupon convertible bonds, details are as follows.
(1) Exercise period
(2) Conversion price
The 2018 Bonds
The 2020 Bonds
From May 8,2014 to April 10, 2018
U.S.$ 5.34 per share
From May 8, 2014 to April 9, 2020
U.S.$ 4.80 per share
At March 31, 2015, the aggregate annual maturity of long-term debt was as follows:
Year ending March 31
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
¥ 120,186
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 and thereafter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
136,850
115,864
148,095
80,220
477,488
Thousands of
U.S. dollars (Note 1)
$1,000,133
1,138,803
964,167
1,232,379
667,555
3,973,438
¥1,078,703
$8,976,475
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(3) ASSETS PLEDGED AND SECURED DEBT
At March 31, 2015, the following assets were pledged as collateral for short-term debt and long-term debt.
Assets pledged
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥202,454
¥177,092
$1,684,729
Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vessels and other property under construction . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured debt
—
90,908
73,811
136
72,953
60,148
—
756,495
614,222
¥367,173
¥310,329
$3,055,446
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 10
¥ 50
$ 83
Long-term debt due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt due after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,759
156,237
11,906
132,540
114,496
1,300,133
¥170,006
¥144,496
$1,414,712
8. COMMITMENTS AND CONTINGENT LIABILITIES
(A) COMMITMENT
At March 31, 2015 and 2014, the Company had loan commitment agreements with certain affi liated companies. The nonexercised
portion of loan commitments was as follows:
Total loan limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loan executions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
¥15,622
—
2014
2015
¥14,409
$130,000
—
—
The nonexercised portion of loan commitments . . . . . . . . . . . . . . . . . . . . . . . .
¥15,622
¥14,409
$130,000
(B) CONTINGENT LIABILITIES
At March 31, 2015 and 2014, 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 ¥112,360 million ($935,009 thousand) and
¥78,169 million, respectively.
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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 desig-
nated 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 divi-
dend 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 additional paid-in-capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accom-
panying consolidated balance sheets.
Under the Act, appropriations (legal earnings reserve and additional paid-in-capital could be used to eliminate or reduce a defi -
cit or could be capitalized ) generally require a resolution of the shareholders’ meeting.
(A) SHARES ISSUED AND OUTSTANDING
Changes in number of shares issued and outstanding during the years ended March 31, 2015 and 2014 were as follows:
Balance at April 1, 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares of common
stock (Thousands)
1,206,286
Shares of treasury
stock (Thousands)
10,502
—
—
145
(274)
Balance at March 31 and April 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,206,286
10,373
Increase during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
150
(337)
Balance at March 31, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,206,286
10,186
(B) SHARE SUBSCRIPTION RIGHTS
Share subscription rights at March 31, 2015 and 2014 consisted of the following:
Stock options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(C) DIVIDENDS
(1) Dividends paid for the year ended March 31, 2015 were as follows:
Millions of yen
2015
2014
¥2,553
¥2,553
¥2,391
¥2,391
Thousands of
U.S. dollars (Note 1)
2015
$21,245
$21,245
Approved at the shareholders’ meeting held on June 24, 2014 . . . . . . . . . . . . . . . . . . . . . . . . .
Approved at the board of directors held on October 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
¥3,588
Thousands of
U.S. dollars (Note 1)
$29,858
¥3,588
¥7,176
$29,858
$59,716
(2) Dividends included in the retained earnings at March 31, 2015 and to be paid in subsequent periods were as follows:
Approved at the shareholders’ meeting held on June 23, 2015 . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
¥4,784
Thousands of
U.S. dollars (Note 1)
$39,810
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥4,784
$39,810
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Annual Report 2015 95
10. IMPAIRMENT LOSS
For the year ended March 31, 2015, the Group recorded an impairment loss on the following asset group.
Assets to be disposed of by sale
Application
Type
Vessels and Other
Millions of yen
¥10,198
Thousands of
U.S. dollars (Note 1)
$84,863
For the year ended March 31, 2014, the Group recorded an impairment loss on the following asset group.
Application
Assets to be disposed of by sale
Assets for operations
Type
Vessels and Other
Vessels
Millions of yen
¥ 498
5,950
The Group grouped operating assets based on management accounting categories, and also grouped assets to be disposed of
by sale and idle assets by structure.
For the years ended March 31, 2015 and 2014, 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 impair-
ment 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.
For the year ended March 31, 2014, since profi tability of the overseas consolidated subsidiary’s assets for operations signifi -
cantly deteriorated, the Group reduced the book value on these assets to recoverable amounts and booked the reductions as
impairment losses.
The recoverable amount for this asset group is evaluated based on the value in use. The value in use is calculated from the
projected future cash fl ows discounted at a rate of 7%.
11. OTHER INCOME (EXPENSES): OTHERS, NET—BREAKDOWN
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Others, net:
Exchange gain, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 25,523
¥11,392
$212,391
Gain on sale of vessels, property, equipment and others. . . . . . . . . . . . . . . . .
Loss on sale and disposal of vessels, property, equipment and others . . . . . . .
Loss arising from marine accident . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16,225
(2,853)
—
Impairment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10,198)
Gain on change in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sundries, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,867
6,519
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 39,083
7,095
(6,702)
(2,397)
(6,448)
164
31,990
¥35,094
135,017
(23,741)
—
(84,863)
32,179
54,247
$325,230
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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, 2015 of
fi nance 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment,
mainly
containers
¥2,425
2,401
¥ 24
Millions of yen
Others
Total
¥190
162
¥ 28
¥2,615
2,563
¥ 52
Thousands of U.S. dollars (Note 1)
Equipment,
mainly
containers
$20,180
19,980
$ 200
Others
$1,581
1,348
$ 233
Total
$21,761
21,328
$ 433
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A summary of assumed amounts of acquisition cost, accumulated depreciation and net book value at March 31, 2014 of
fi nance 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, 2015 and 2014
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
¥16,243
15,855
¥ 388
Millions of yen
Others
¥190
144
¥ 46
Total
¥16,433
15,999
¥ 434
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
¥123
13
¥136
¥1,221
122
¥1,343
$1,024
108
$1,132
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
¥1,340
385
41
2014
¥2,234
796
49
2015
$11,151
3,204
341
(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 equiva-
lents and is allocated to each period using the interest method.
(6) Impairment loss
There was no impairment loss on fi nance lease accounted for as operating leases.
(B) FUTURE LEASE PAYMENTS UNDER OPERATING LEASES FOR ONLY NON-CANCELABLE CONTRACTS AT MARCH 31, 2015
AND 2014:
Amount due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount due after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
¥ 54,586
264,331
¥318,917
2014
2015
¥ 48,825
$ 454,240
256,912
2,199,642
¥305,737
$2,653,882
98 Mitsui O.S.K. Lines
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AS LESSOR:
(A) FUTURE LEASE INCOME UNDER OPERATING LEASES FOR ONLY NON-CANCELABLE CONTRACTS AT MARCH 31, 2015 AND
2014:
Amount due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount due after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
¥13,212
46,912
¥60,124
2014
¥13,021
40,325
¥53,346
2015
$109,944
390,381
$500,325
13. RENTAL PROPERTIES
The Company and some of its consolidated subsidiaries own real estate for offi ce 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:
For the year ended March 31
Book value
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Balance at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥280,120
¥279,130
$2,331,031
Changes during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,898
317,018
432,440
990
307,048
280,120
381,024
2,638,079
3,598,569
Notes: 1. Book value is calculated as the amount equivalent to the cost for acquisition deducting accumulated depreciation.
2. Fair value is mainly based on the amount appraised by outside independent real estate appraisers.
3. Of changes during the year ended March 31, 2015,the primary increase was mainly due to completion of the Shin-Daibiru
Building (¥20,822 million ($173,271 thousand)), acquisition of the CornerStone Building (¥11,135 million ($92,660 thou-
sand)), and the acquisition of land near Akihabara Station from the Tokyo Metropolitan Government (¥7,151 million
($59,507 thousand)), while the primary decrease was mainly due to the depreciation of existing properties (¥6,176 million
($51,394 thousand)).
In addition, information for rental revenue and expense from rental properties was as follows:
Rental revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Difference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
¥27,058
16,041
¥11,017
2014
¥26,992
15,447
¥11,545
2015
$225,164
133,486
$ 91,678
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”.
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Annual Report 2015 99
14. SEGMENT AND RELATED INFORMATION
(A) SEGMENT INFORMATION:
For the year ended March 31, 2015:
Bulkships
Reportable segment
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Total
Adjustment
Consolidated
Millions of yen
1. Revenues:
(1) Revenues from customers,
unconsolidated subsidiaries and
affi liated companies . . . . . . . . . .
¥ 857,290
¥787,068
¥56,032
¥108,389
¥1,808,779
¥ 8,291
¥1,817,070
¥ — ¥1,817,070
(2) Inter-segment revenues . . . . . . . .
526
2,063
272
39,775
42,636
5,920
48,556
(48,556)
—
Total revenues . . . . . . . . . . . . . . .
¥ 857,816
¥789,131
¥56,304
¥148,164
¥1,851,415
¥ 14,211
¥1,865,626
¥ (48,556)
¥1,817,070
Segment income (loss) . . . . . . . .
¥ 54,105
¥ (24,147)
¥ 4,462
¥ 10,925
¥ 45,345
¥ 4,183
¥ 49,528
¥ 1,802
¥ 51,330
Segment assets . . . . . . . . . . . . . .
¥1,719,714
¥496,487
¥40,535
¥426,130
¥2,682,866
¥346,183
¥3,029,049
¥(404,999)
¥2,624,050
2. Others
(1) Depreciation and amortization . .
¥ 59,234
¥ 16,109
¥ 2,279
¥ 8,511
¥ 86,133
¥ 283
¥ 86,416
¥ 1,388
¥ 87,804
(2) Amortization of goodwill, net . . .
(3) Interest income . . . . . . . . . . . . . .
(4) Interest expenses. . . . . . . . . . . . .
(307)
2,019
10,632
(5) Equity in earnings of
affi liated companies, net . . . . . . .
3,286
(6) Investment in affi liates . . . . . . . .
110,452
17
261
2,314
1,096
4,873
45
3
170
225
1,694
130
62
1,780
269
1,971
(115)
2,345
14,896
(9)
(124)
1,390
723
3,735
15,619
—
(1,030)
(3,063)
(124)
2,705
12,556
4,876
54
4,930
118,990
1,967
120,957
—
—
4,930
120,957
(7) Tangible/intangible fi xed assets
increased . . . . . . . . . . . . . . . . . .
138,059
21,783
3,193
32,341
195,376
182
195,558
587
196,145
For the year ended March 31, 2015:
Bulkships
Reportable segment
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Total
Adjustment
Consolidated
Thousands of U.S. dollars (Note 1)
1. Revenues:
(1) Revenues from customers,
unconsolidated subsidiaries and
affi liated companies . . . . . . . . . .
$ 7,133,977
$6,549,621
$466,273 $ 901,964
$15,051,835 $ 68,994
$15,120,829
$ — $15,120,829
(2) Inter-segment revenues . . . . . . . .
4,377
17,167
2,264
330,989
354,797
49,264
404,061
(404,061)
—
Total revenues . . . . . . . . . . . . . . .
$ 7,138,354
$6,566,788
$468,537 $1,232,953
$15,406,632 $ 118,258
$15,524,890
$ (404,061)
$15,120,829
Segment income (loss) . . . . . . . .
$ 450,237
$ (200,940) $ 37,130 $ 90,913
$ 377,340 $ 34,809
$ 412,149
$ 14,996
$ 427,145
Segment assets . . . . . . . . . . . . . .
$14,310,676
$4,131,539
$337,314 $3,546,060
$22,325,589 $2,880,777
$25,206,366
$(3,370,217)
$21,836,149
2. Others
(1) Depreciation and amortization . .
$ 492,918
$ 134,052
$ 18,965 $ 70,825
$ 716,760 $ 2,355
$ 719,115
$ 11,550
$ 730,665
(2) Amortization of goodwill, net . . .
(3) Interest income . . . . . . . . . . . . . .
(4) Interest expenses. . . . . . . . . . . . .
(5) Equity in earnings of
affi liated companies, net . . . . . . .
(6) Investment in affi liates . . . . . . . .
(7) Tangible/intangible fi xed assets
increased . . . . . . . . . . . . . . . . . .
(2,554)
16,801
88,475
141
2,172
374
25
1,082
516
(957)
19,514
19,256
1,415
14,812
123,958
(75)
11,567
6,016
(1,032)
31,081
—
(8,571)
(1,032)
22,510
129,974
(25,489)
104,485
27,345
919,131
9,120
1,872
40,551
14,097
2,239
16,402
40,576
449
41,025
990,181
16,368
1,006,549
—
—
41,025
1,006,549
1,148,864
181,268
26,571
269,127
1,625,830
1,515
1,627,345
4,884
1,632,229
100 Mitsui O.S.K. Lines
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For the year ended March 31, 2014:
Bulkships
Reportable segment
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Total
Adjustment
Consolidated
Millions of yen
1. Revenues:
(1) Revenues from customers,
unconsolidated subsidiaries and
affi liated companies . . . . . . . . . .
¥ 836,409
¥713,503
¥55,603
¥116,599
¥1,722,114
¥ 7,338
¥1,729,452
¥ — ¥1,729,452
(2) Inter-segment revenues . . . . . . . .
588
1,887
202
20,608
23,285
7,246
30,531
(30,531)
—
Total revenues . . . . . . . . . . . . . . .
¥ 836,997
¥715,390
¥55,805
¥137,207
¥1,745,399
¥ 14,584
¥1,759,983
¥ (30,531)
¥1,729,452
Segment income (loss) . . . . . . . .
¥ 57,122
¥ (14,554)
¥ 2,236
¥ 11,146
¥ 55,950
¥ 4,577
¥ 60,527
¥ (5,541)
¥ 54,986
Segment assets . . . . . . . . . . . . . .
¥1,501,313
¥449,725
¥35,089
¥386,852
¥2,372,979
¥325,937
¥2,698,916
¥(334,221)
¥2,364,695
2. Others
(1) Depreciation and amortization . .
¥ 55,546
¥ 15,014
¥ 3,303
¥ 8,623
¥ 82,486
¥ 326
¥ 82,812
¥ 1,172
¥ 83,984
(2) Amortization of goodwill, net . . .
(3) Interest income . . . . . . . . . . . . . .
(4) Interest expenses. . . . . . . . . . . . .
(5) Equity in earnings (losses) of
affi liated companies, net . . . . . . .
(6) Investment in affi liates . . . . . . . .
(7) Tangible/intangible fi xed assets
increased . . . . . . . . . . . . . . . . . .
(619)
1,565
9,837
(3,009)
97,802
18
172
2,454
1,404
3,385
305
6
204
179
1,777
105
75
(191)
1,818
1,935
14,430
1
1,191
743
(190)
3,009
—
(690)
(190)
2,319
15,173
(2,590)
12,583
193
(1,233)
(1)
(1,234)
1,506
104,470
2,308
106,778
—
—
(1,234)
106,778
140,189
28,511
1,424
10,484
180,608
146
180,754
5,395
186,149
(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, 2015:
Japan
North America
Europe
Asia
Others
Consolidated
Revenues . . . . . . . . . . . . . . . . . . . . . .
¥1,538,042
Tangible fi xed assets. . . . . . . . . . . . . .
¥1,229,237
¥25,044
¥42,750
¥37,939
¥ 4,055
¥215,453
¥197,392
¥ 592
¥24,594
¥1,817,070
¥1,498,028
Millions of yen
For the year ended March 31, 2015:
Japan
North America
Europe
Asia
Others
Consolidated
Revenues . . . . . . . . . . . . . . . . . . . . . .
$12,798,885
$208,405
$315,711
$1,792,902
$ 4,926
$15,120,829
Tangible fi xed assets. . . . . . . . . . . . . .
$10,229,151
$355,746
$ 33,744
$1,642,606
$204,660
$12,465,907
Thousands of U.S. dollars (Note 1)
For the year ended March 31, 2014:
Japan
North America
Europe
Asia
Others
Consolidated
Revenues . . . . . . . . . . . . . . . . . . . . . .
¥1,496,846
Tangible fi xed assets. . . . . . . . . . . . . .
¥1,220,942
¥19,559
¥33,589
¥43,094
¥ 3,940
¥169,890
¥113,904
¥ 63
¥6,870
¥1,729,452
¥1,379,245
Millions of yen
(2) Information about impairment loss by reportable segment:
For the year ended March 31, 2015:
Bulkships
Millions of yen
Reportable segment
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Adjustment
and elimination
Consolidated
Impairment loss . . . . . . . . . . . . . . . .
¥10,049
¥ —
¥50
¥ —
¥10,099
¥ —
¥99
¥10,198
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For the year ended March 31, 2015:
Bulkships
Thousands of U.S. dollars (Note 1)
Reportable segment
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Adjustment
and elimination
Consolidated
Impairment loss . . . . . . . . . . . . . . . .
$83,623
$ —
$416
$ —
$84,039
$ —
$824
$84,863
For the year ended March 31, 2014:
Bulkships
Millions of yen
Reportable segment
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Adjustment
and elimination
Consolidated
Impairment loss . . . . . . . . . . . . . . . .
¥6,368
¥ —
¥80
¥ —
¥6,448
¥ —
¥ —
¥6,448
(3) Information about goodwill (negative goodwill) by reportable segment:
For the year ended March 31, 2015:
Bulkships
Millions of yen
Reportable segment
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Adjustment
and elimination
Consolidated
Goodwill (Negative goodwill) at
the end of current year . . . . . . . . . .
¥128
¥364
¥ —
¥2,508
¥3,000
¥1
¥ —
¥3,001
For the year ended March 31, 2015:
Bulkships
Thousands of U.S. dollars (Note 1)
Reportable segment
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Adjustment
and elimination
Consolidated
Goodwill (Negative goodwill) at
the end of current year . . . . . . . . . .
$1,065
$3,029
$ — $20,871
$24,965
$8
$ —
$24,973
For the year ended March 31, 2014:
Bulkships
Millions of yen
Reportable segment
Container-
ships
Ferry &
Domestic
transport
Associated
business
Sub Total
Others
Adjustment
and elimination
Consolidated
Goodwill (Negative goodwill) at
the end of current year . . . . . . . . . .
¥(379)
¥(1)
¥398
¥1,554
¥1,572
¥1
¥ —
¥1,573
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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
approximately 31.75% for the year ended March 31, 2015 and 34.25% for the year ended March 31, 2014.
(A) Signifi cant components of deferred tax assets and liabilities at March 31, 2015 and 2014 were as follows:
Deferred tax assets:
Excess bad debt expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,011
¥ 787
$ 8,413
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Reserve for bonuses expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net defi ned benefi t liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement allowances for directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-down of securities and other investments . . . . . . . . . . . . . . . . . . . . . .
Accrued business tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating loss carried forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain on sale of fi xed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 benefi t trust . . . . . . .
Revaluation reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings of consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gains on hedging derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,546
2,386
526
1,861
450
53,557
1,548
661
4,300
67,846
(61,414)
6,432
1,590
2,726
655
1,791
410
12,865
19,855
4,377
15,486
3,745
54,982
445,677
1,675
1,351
5,003
70,970
(64,817)
6,153
12,882
5,501
35,783
564,584
(511,060)
53,524
(1,897)
(1,920)
(15,786)
(555)
(760)
(4,618)
(22,760)
(2,809)
(15,436)
(10,073)
(53,880)
(2,597)
(19,391)
(3,667)
(14,566)
(11,591)
(31,373)
(333)
(83,601)
(189,398)
(23,375)
(128,451)
(83,823)
(448,366)
(21,612)
(915,429)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(110,007)
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(103,575)
¥(77,448)
$(861,905)
On March 31, 2015, amendments to the Japanese tax regulations were enacted into law. Based on the amendments, the statutory
income tax rates utilized for the measurement of deferred tax assets and liabilities expected to be settled or realized from April 1,
2015 to March 31, 2016 and on or after April 1, 2016 are changed from 31.75% for the year ended March 31, 2015 to 29.75%
and 29.50%, respectively, as of March 31, 2015.
Due to these changes in statutory income tax rates, net deferred tax liabilities (after deducting the deferred tax assets)
decreased by ¥7,269 million ($60,489 thousand) as of March 31, 2015, deferred income tax expense recognized for the fi scal year
ended March 31, 2015 decreased by ¥1,155 million ($9,611 thousand), unrealized holding gains on available-for-sale securities
increased by ¥1,819 million ($15,137 thousand), unrealized gains on hedging derivatives increased by ¥4,164 million
($34,651 thousand) and remeasurements of defi ned benefi t plans increased by ¥132 million ($1,098 thousand).
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(B) Reconciliation of the statutory tax rate to the effective tax rate for the years ended March 31, 2014 and 2015, were as
follows:
Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . .
Non-deductible expenses . . . . . . . . . . . . . . .
Tax exempt revenues . . . . . . . . . . . . . . . . . .
Effect on tonnage tax system . . . . . . . . . . . .
Effect on elimination of dividend income . . .
Equity in earnings of unconsolidated
subsidiaries and affi liated companies . . . . . .
Effect on elimination of loss on valuation of
stocks of subsidiaries and affi liates . . . . . . .
Effect on difference of effective tax rate for
consolidated subsidiaries . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . .
2015
31.8%
0.5%
(7.8)%
(12.2)%
22.9%
2014
Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . .
34.3 %
Non-deductible expenses . . . . . . . . . . . . . . .
Tax exempt revenues . . . . . . . . . . . . . . . . . .
Effect on tonnage tax system . . . . . . . . . . . .
0.5 %
(4.3)%
(6.6)%
Effect on net loss carried forward . . . . . . . . .
(18.3)%
(2.3)%
Effect on elimination of dividend income . . .
10.6 %
(5.0)%
Effect on elimination of loss on valuation of
stocks of subsidiaries and affi liates . . . . . . .
(2.6)%
(10.3)%
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.7)%
(0.7)%
16.9%
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . .
12.9 %
16. EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITS
(A) OUTLINE OF EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITS
The Group have funded and un-funded defi ned benefi t pension plans and defi ned contribution pension plans.
The defi ned benefi t corporate pension plans provide for a lump-sum payment or annuity payment determined by reference to
the current rate of pay and the length of service.
The Company has a retirement benefi t trust.
The retirement lump-sum plans provide for a lump-sum payment, as employee retirement benefi ts, determined by reference to
the current rate of pay and the length of service.
Certain consolidated subsidiaries calculate liabilities for retirement benefi t and retirement benefi t expenses, for the defi ned
benefi t corporate pension plans and the retirement lump-sum plans based on the amount which would be payable at the year end
if all eligible employees terminated their services voluntarily (a “simplifi ed method”).
(B) DEFINED BENEFIT PLANS
(1) MOVEMENTS IN RETIREMENT BENEFIT OBLIGATIONS EXCEPT PLAN APPLIED SIMPLIFIED METHOD
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Balance at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥41,743
¥42,258
$347,366
Cumulative effect of changes in accounting policies . . . . . . . . . . . . . . . . . . . .
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefi ts paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,565
1,723
497
(733)
(2,294)
—
1,484
837
(326)
(2,510)
37,988
14,338
4,136
(6,100)
(19,090)
Balance at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥45,612
¥41,743
$379,562
(2) MOVEMENTS IN PLAN ASSETS EXCEPT PLAN APPLIED SIMPLIFIED METHOD
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Balance at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥59,906
¥56,636
$498,510
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions paid by the employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,198
5,845
1,293
Benefi ts paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,073)
1,133
3,191
1,189
(2,243)
9,969
48,639
10,760
(17,250)
Balance at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥66,169
¥59,906
$550,628
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(3) MOVEMENTS IN NET LIABILITY FOR RETIREMENT BENEFITS BASED ON THE SIMPLIFIED METHOD
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Balance at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 9,899
¥10,918
$82,375
Retirement benefi t costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefi ts paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions paid by the employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,824
(267)
(1,192)
1,237
(1,473)
(783)
15,178
(2,222)
(9,919)
Balance at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥10,264
¥ 9,899
$85,412
(4) RECONCILIATION FROM RETIREMENT BENEFIT OBLIGATIONS AND PLAN ASSETS TO LIABILITY (ASSET) FOR
RETIREMENT BENEFITS INCLUDING PLAN APPLIED SIMPLIFIED METHOD
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Funded retirement benefi t obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 53,665
¥ 49,534
$ 446,576
Plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unfunded retirement benefi t obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net liability (asset) for retirement benefi ts at end of the year . . . . . . . . . . .
Asset for retirement benefi ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(75,930)
(22,265)
11,862
(10,403)
13,660
(68,750)
(19,216)
10,952
(8,264)
12,936
(631,855)
(185,279)
98,710
(86,569)
113,672
Liability for retirement benefi ts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net liability (asset) for retirement benefi ts at end of the year . . . . . . . . . . .
(24,063)
¥ (10,403)
(21,200)
¥ (8,264)
(200,241)
$ (86,569)
(5) RETIREMENT BENEFIT COSTS
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,723
¥ 1,484
$14,338
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net actuarial loss amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement benefi t costs calculated by the simplifi ed method. . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
497
(1,198)
(715)
1,476
157
837
(1,133)
(1,111)
1,237
287
Total retirement benefi t costs for the fi scal year . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,940
¥ 1,601
4,136
(9,969)
(5,950)
12,283
1,306
$16,144
(6) REMEASUREMENTS OF DEFINED BENEFIT PLANS
Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(5,863)
¥—
$(48,789)
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
(7) ACCUMULATED REMEASUREMENTS OF DEFINED BENEFIT PLANS
Unrecognized actuarial differences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(7,626)
¥(1,763)
$(63,460)
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
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(8) PLAN ASSETS
1. Plan assets comprise
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jointly invested assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement benefi t trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015
2014
47%
22%
18%
13%
0%
100%
37%
54%
22%
17%
6%
1%
100%
36%
2. Long-term expected rate of return
Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered in
determining the long-term expected rate of return.
(9) ACTUARIAL ASSUMPTIONS
The discount rates ware mainly 0.6%~1.2% for the year ended March 31, 2015 and 2.0% for the year ended March 31, 2014.
Also, the rates of expected return on plan assets were mainly 2.0% for the years ended March 31, 2015 and 2014.
(C) DEFINED CONTRIBUTION PLANS
The estimated amounts of contributions to defi ned contribution plans were ¥747 million ($6,216 thousand) at March 31, 2015 and
¥855 million at March 31, 2014.
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17. STOCK OPTIONS
(A) EXPENSED AMOUNT
Expensed amounts on stock options for the years ended March 31, 2015 and 2014 were as follows:
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
¥195
¥195
¥275
¥275
$1,623
$1,623
(B) TERMS AND CONDITIONS
The following table summarizes terms and conditions of stock options for the years when they were granted:
Number of grantees
2004
2005
2006
2007
Directors: 11
Executive offi cers: 16
Employees: 32
Presidents of the Company’s
domestic consolidated
subsidiaries: 34
Directors: 11
Executive offi cers: 17
Employees: 38
Presidents of the Company’s
domestic consolidated
subsidiaries: 34
Directors: 11
Executive offi cers: 17
Employees: 34
Presidents of the Company’s
domestic consolidated
subsidiaries: 37
Directors: 11
Executive offi cers: 20
Employees: 33
Presidents of the Company’s
domestic consolidated
subsidiaries: 36
Number of stock options
Common stock 1,570,000
Common stock 1,650,000
Common stock 1,670,000
Common stock 1,710,000
Grant date
August 5, 2004
August 5, 2005
August 11, 2006
August 10, 2007
Vesting conditions
Service period
Exercise period
No provisions
No provisions
No provisions
No provisions
No provisions
No provisions
No provisions
No provisions
From June 20, 2005 to
June 24, 2014
From June 20, 2006 to
June 23, 2015
From June 20, 2007 to
June 22, 2016
From June 20, 2008 to
June 21, 2017
Number of grantees
2008
2009
2010
2011
Directors: 11
Executive offi cers: 20
Employees: 38
Presidents of the Company’s
domestic consolidated
subsidiaries: 36
Directors: 11
Executive offi cers: 20
Employees: 33
Presidents of the Company’s
domestic consolidated
subsidiaries: 35
Directors: 10
Executive offi cers: 21
Employees: 36
Presidents of the Company’s
domestic consolidated
subsidiaries: 33
Directors: 10
Executive offi cers: 22
Employees: 34
Presidents of the Company’s
domestic consolidated
subsidiaries: 33
Number of stock options
Common stock 1,760,000
Common stock 1,640,000
Common stock 1,710,000
Common stock 1,720,000
Grant date
August 8, 2008
August 14, 2009
August 16, 2010
August 9, 2011
Vesting conditions
Service period
Exercise period
No provisions
No provisions
No provisions
No provisions
No provisions
No provisions
No provisions
No provisions
From July 25, 2009 to
June 24, 2018
From July 31, 2011 to
June 22, 2019
From July 31, 2012 to
June 21, 2020
From July 26, 2013 to
June 22, 2021
Number of grantees
2012
2013
2014
Directors: 9
Executive offi cers: 22
Employees: 33
Presidents of the Company’s
domestic consolidated
subsidiaries: 30
Directors: 9
Executive offi cers: 18
Employees: 38
Presidents of the Company’s
domestic consolidated
subsidiaries: 33
Directors: 9
Executive offi cers: 19
Employees: 33
Presidents of the Company's
domestic consolidated
subsidiaries: 32
Number of stock options
Common stock 1,640,000
Common stock 1,600,000
Common stock 1,480,000
Grant date
August 13, 2012
August 16, 2013
August 18, 2014
Vesting conditions
Service period
Exercise period
No provisions
No provisions
No provisions
No provisions
No provisions
No provisions
From July 28, 2014 to
June 21, 2022
From August 2, 2015 to
June 20, 2023
From August 2, 2016 to
June 23, 2024
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Annual Report 2015 107
(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
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Balance at March 31, 2014 . . . . . .
Options granted during the year .
Options expired during the year . .
Options vested during the year . .
Balance at March 31, 2015 . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 1,640,000 1,600,000
—
—
—
—
—
— 1,640,000
— 1,480,000
—
—
—
—
—
— 1,600,000 1,480,000
Vested stock options
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Balance at March 31, 2014 . . . . . . 286,000 878,000 1,443,000 1,680,000 1,750,000 1,630,000 1,710,000 1,720,000
—
Options vested during the year . .
Options exercised during the year .
—
—
Options expired during the year . . 286,000
—
—
—
—
—
—
—
—
—
10,000
20,000
20,000
—
—
—
—
—
—
— 1,640,000
— 283,000
—
—
Balance at March 31, 2015 . . . . . .
— 878,000 1,433,000 1,660,000 1,730,000 1,630,000 1,710,000 1,720,000 1,357,000
—
—
—
—
—
—
—
—
—
—
(2) Unit prices of stock options exercised during the year
Exercise price
¥644
¥762
¥841
¥1,962
¥1,569
¥639
¥642
¥468
¥277
¥447
¥412
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Average market price of share
at exercise . . . . . . . . . . . . . . . . . .
Fair value per stock option
at grant date. . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
¥390
—
—
¥219
¥ 352
¥ 217
¥136
¥208
¥ 87
¥ 67
¥172
¥132
(D) KEY FIGURES FOR FAIR VALUE PER STOCK OPTION
The Company utilized the Black Scholes Model for calculating fair value per stock option. Key fi gures of the calculation were as
follows:
Stock price volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46.3%
Expected remaining term of the option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 years and 11 months
Expected dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥5 per share
0.19%
2014
108 Mitsui O.S.K. Lines
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18. COMPREHENSIVE INCOME
For the years ended March 31, 2015 and 2014, the amounts reclassifi ed to net income (loss) that were recognized in other compre-
hensive income and tax effects for each component of other comprehensive income were as follows:
Unrealized holding gains on available-for-sale securities, net of tax:
Increase during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 16,331
¥13,764
$ 135,899
Millions of yen
Thousands of
U.S. dollars (Note 1)
2015
2014
2015
Reclassifi cation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total, before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gains on hedging derivatives, net of tax:
Increase during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassifi cation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments of acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total, before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments:
Increase during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassifi cation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Remeasurements of defi ned benefi t plans:
Increase during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassifi cation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total, before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*Remeasurements of defi ned benefi t plans is disclosed from the current term.
(57)
16,274
(3,382)
12,892
97,875
(18,834)
(9,136)
69,905
(23,231)
46,674
20,635
167
20,802
6,578
(715)
5,863
(1,729)
4,134
(780)
12,984
(4,137)
8,847
48,719
(9,896)
3,425
42,248
(9,523)
32,725
31,158
—
31,158
—
—
—
—
—
(474)
135,425
(28,144)
107,281
814,471
(156,728)
(76,025)
581,718
(193,318)
388,400
171,715
1,390
173,105
54,739
(5,950)
48,789
(14,388)
34,401
Share of other comprehensive income of associates
accounted for using equity method:
Increase (Decrease) during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12,827)
Reclassifi cation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments of acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,680
(834)
(9,981)
Total other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 74,521
14,039
5,654
(408)
19,285
¥92,015
(106,740)
30,623
(6,940)
(83,057)
$ 620,130
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Annual Report 2015 109
19. RELATED PARTY TRANSACTIONS
For the year ended March 31, 2015
There are no applicable matters to report.
For the year ended March 31, 2014
Millions
of yen
Category
Affi liated
company
Name of
company
Daiichi Chuo
Kisen Kaisha
Address
Chuo-ku,
Tokyo
Paid-in
capital
¥28,958 Marine
Business
description
transportation
Millions of yen
Transactions during
the year ended
March 31, 2014
Balance at
March 31, 2014
Ratio of
the Group’s
voting rights
Directly
26.96%
Relation
with related
party
Interlocking
directorate
Ship chartering
Description of
transaction
Underwriting
of capital
increase
Transacted
amount
¥15,000
Account
—
Amount
—
Notes: 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. Consumption taxes are not included in transacted amount.
20. SUBSEQUENT EVENT
There is no applicable matter.
21. OTHERS
The Group is subject to investigations by overseas competition law authorities including those of the U.S. and Europe for violation
of competition laws of those countries regarding price control negotiations for ocean transport services of completely built-up vehi-
cles. In addition, a class-action lawsuit was fi led in the U.S. and other countries against the Group for damage claims and for a
cease and desist order for the questioned conduct. Meanwhile, the effect of these investigations and lawsuit on the fi nancial results
of the Group is uncertain as its fi nancial impact is not estimable at this stage.
110 Mitsui O.S.K. Lines
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Independent Auditor’s Report
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Annual Report 2015 111
The MOL Group Mitsui O.S.K. Lines, Ltd. March 31, 2015
■ Consolidated Subsidiaries
▲ Affi liated Companies Accounted for by the Equity Method
Bulkships
Containerships
■ BGT Ltd.
■ BLNG Inc.
■ Chugoku Shipping Agencies Ltd.
■ El Sol Shipping Ltd. S.A.
■ Euro Marine Carrier B.V.
■ Euro Marine Logistics N.V.
■ Lakler S.A.
■ MCGC International Ltd.
■ Mitsui O.S.K. Bulk Shipping (Asia Oceania) Pte. Ltd.
■ Mitsui O.S.K. Bulk Shipping (Europe) Ltd.
■ Mitsui O.S.K. Bulk Shipping (USA), LLC
■ Mitsui O.S.K. Kinkai, Ltd.
■ MOG LNG Transport S.A.
■ MOL Bridge Finance S.A.
■ MOL Bulk Carriers Pte. Ltd.
■ MOL Cape (Singapore) Pte. Ltd.
■ MOL LNG Transport Co., Ltd.
■ MOL Netherlands Bulkship B.V.
■ MOL-NIC Transport Ltd.
■ Nissan Carrier Europe B.V.
■ Nissan Motor Car Carrier Co., Ltd.
■ Phoenix Tankers Pte. Ltd.
■ Samba Offshore S.A.
■ Shining Shipping S.A.
■ Tokyo Marine Asia Pte Ltd
■ Tokyo Marine Co., Ltd.
■ Unix Line Pte Ltd.
■ World Logistics Service (U.S.A.), Inc.
■ Shipowner/Chartering companies (205 companies) in Panama, Marshall Islands,
Liberia, Hong Kong, Cayman Islands, Singapore, Indonesia, Isle of Man and Malta
■ Others (2 companies)
▲ Aramo Shipping (Singapore) Pte Ltd.
▲ Asahi Tanker Co., Ltd.
▲ Carioca MV27 B.V.
▲ Cernambi Norte MV26 B.V.
▲ Cernambi Sul MV24 B.V.
▲ Daiichi Chuo Kisen Kaisha
▲ Gearbulk Holding Ltd.
▲ LNG Fukurokuju Shipping Corporation
▲ LNG Jurojin Shipping Corporation
▲ M.S.Tanker Shipping Ltd.
▲ T.E.N. Ghana MV25 B.V.
▲ Trans Pacifi c Shipping 2 Ltd.
▲ Viken MOL AS
▲ Viken Shuttle AS
▲ Shipowner/Chartering companies (47 companies) in Panama, Marshall Islands, Hong
Kong, Liberia, Cayman Islands, Bahamas, Malta, Cyprus and Singapore
■ Asia Utoc Pte. Ltd.
■ Bangkok Container Service Co., Ltd.
■ Bangpoo Intermodal Systems Co., Ltd.
■ Chiba Utoc Corporation
■ Hong Kong Logistics Co., Ltd.
■ International Container Transport Co., Ltd.
■ International Transportation Inc.
■ Mitsui O.S.K. Lines (Australia) Pty. Ltd.
■ Mitsui O.S.K. Lines (Japan) Ltd.
■ Mitsui O.S.K. Lines (Nigeria) Ltd.
■ Mitsui O.S.K. Lines (SEA) Pte Ltd.
■ Mitsui O.S.K. Lines (Thailand) Co., Ltd.
■ MOL (America) Inc.
■ MOL (Brasil) Ltda.
■ MOL (China) Co., Ltd.
■ MOL (Europe) B.V.
■ MOL (Europe) Central Support Unit SP. Zoo
■ MOL (Europe) Ltd.
■ MOL (Ghana) Ltd.
■ MOL (Singapore) Pte. Ltd.
■ MOL Consolidation Service Ltd.
■ MOL Consolidation Service Ltd. (China)
■ MOL Container Center (Thailand) Co., Ltd.
■ MOL Cote D’ivoire S.A.
■ MOL Egypt for Maritime Services Ltd.
■ MOL Liner, Ltd.
■ MOL Logistics (Deutschland) Gmbh
■ MOL Logistics (Europe) B.V.
■ MOL Logistics (H.K.) Ltd.
■ MOL Logistics (Japan) Co., Ltd.
■ MOL Logistics (Netherlands) B.V.
■ MOL Logistics (Singapore) Pte. Ltd.
■ MOL Logistics (Taiwan) Co., Ltd.
■ MOL Logistics (Thailand) Co., Ltd.
■ MOL Logistics (UK) Ltd.
■ MOL Logistics (USA) Inc.
■ MOL Logistics Holding (Europe) B.V.
■ MOL South Africa (Pty) Ltd.
Registered
Offi ce
MOL's Voting Rights
(%)*
Paid-in Capital
(Thousands)
Liberia
U.S.A.
Japan
Panama
Netherlands
Belgium
Uruguay
Bahamas
Singapore
U.K.
U.S.A.
Japan
Panama
Panama
Singapore
Singapore
Japan
Netherlands
Liberia
Netherlands
Japan
Singapore
Panama
Panama
Singapore
Japan
Singapore
U.S.A.
Singapore
Japan
Netherlands
Netherlands
Netherlands
Japan
Bermuda
Bahamas
Bahamas
Hong Kong
Netherlands
Bahamas
Norway
Norway
Singapore
Thailand
Thailand
Japan
Hong Kong
Japan
U.S.A.
Australia
Japan
Nigeria
Singapore
Thailand
U.S.A.
Brazil
China
Netherlands
Poland
U.K.
Ghana
Singapore
Hong Kong
China
Thailand
Ivory Coast
Egypt
Hong Kong
Germany
Netherlands
Hong Kong
Japan
Netherlands
Singapore
Taiwan
Thailand
U.K.
U.S.A.
Netherlands
South Africa
100.00
75.00
100.00
100.00
75.50
50.00
100.00
80.10
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
75.00
100.00
70.01
100.00
100.00
100.00
100.00
100.00
100.00
100.00
50.00
24.75
20.60
20.60
20.60
16.99
49.00
30.00
30.00
50.00
20.00
20.00
50.00
50.00
100.00
100.00
74.62
100.00
100.00
51.00
51.00
100.00
100.00
100.00
100.00
47.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.60
100.00
49.00
100.00
100.00
100.00
100.00
75.06
100.00
100.00
100.00
98.00
100.00
100.00
100.00
100.00
US$5
US$1
¥10,000
US$10
€91
€900
US$91,401
US$1
S$2,350
US$8,402
—
¥660,000
¥0
US$8
US$3,500
US$51,752
¥40,000
€18
US$13,061
€195
¥640,000
US$379,311
US$10
US$10
S$138,018
¥100,000
US$344
US$200
US$20,743
¥600,045
€100
€100
€162,160
¥28,958,411
US$61,225
¥1,000
¥1,000
HK$2,000
€100
¥3,961,100
US$18
US$338
S$200
THB10,000
THB130,000
¥90,000
HK$58,600
¥100,000
US$0
A$1,000
¥100,000
NGN25,000
S$200
THB20,000
US$6
BRL2,403
US$1,960
€456
PLN2,000
£1,500
US$50
S$5,000
HK$1,000
RMB8,000
THB10,000
XOF5,000
EGP750
HK$40,000
€537
€414
HK$3,676
¥756,250
€3,049
S$700
NT$7,500
THB20,000
£400
US$9,814
€19
ZAR3,000
112 Mitsui O.S.K. Lines
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Registered
Offi ce
MOL's Voting Rights
(%)*
Paid-in Capital
(Thousands)
■ Shanghai Huajia International Freight Forwarding Co., Ltd.
■ Shosen Koun Co., Ltd.
■ Thai Intermodal Systems Co., Ltd.
■ Trapac, LLC.
■ Trapac Jacksonville, LLC
■ Utoc Corporation
■ Utoc Engineering Pte Ltd.
■ Utoc Logistics Corporation
■ Utoc Stevedoring Corporation
■ Shipowner companies (15 companies) in Panama, Marshall Islands, Hong Kong and
China
Japan
Thailand
U.S.A.
U.S.A.
Japan
Singapore
Japan
Japan
Ferry & Domestic
Transport
Associated
Business
Others
Liberia
■ Others (8 companies)
▲ Shanghai Kakyakusen Kaisha, Ltd.
▲ Shanghai Longfei International Logistics Co., Ltd.
▲ Other (1 company)
■ Blue Highway Express Kyushu Co., Ltd
■ Blue Highway Service K.K.
■ Blue Sea Network Co., Ltd.
■ Ferry Sunfl ower Ltd.
■ MOL Coastal Shipping, Ltd.
■ MOL Ferry Co., Ltd.
■ Shipowner companies (2 companies) in Panama
■ Others (7 companies)
▲ Meimon Taiyo Ferry Co., Ltd.
▲ Other (1 company)
■ Daibiru Corporation
■ Daibiru Facility Management Ltd.
■ Green Kaiji Kaisha, Ltd.
■ Green Shipping, Ltd.
■ Hokuso Kohatsu K.K.
■ 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 Ltd.
■ Kitanihon Tug-boat Co., Ltd.
■ Kobe Towing Co., Ltd.
■ Kosan Kanri Service Co., Ltd.
■ Kosan Kanri Service West Co.,Ltd.
■ Kusakabe Maritime Engineering Co., Ltd.
■ M.O. Tourist Co., Ltd.
■ Mitsui O.S.K. Kosan Co., Ltd.
■ Mitsui O.S.K. Passenger Line, Ltd.
■ MOL Career Support, Ltd.
■ MOL Kaiji Co., Ltd.
■ MOL Techno-Trade, Ltd.
■ Nihon Tug-Boat Co., Ltd.
■ Saigon Tower Co., Ltd.
■ Tanshin Building Service Co., Ltd.
■ Ube Port Service Co., Ltd.
■ Vibank-Ngt Co. Ltd.
■ White Lotus Properties Ltd.
■ Chartering company (1 company) in Panama
▲ Shinyo Kaiun Corporation
▲ South China Towing Co., Ltd.
▲ Tan Cang-Cai Mep Towage Services Co., Ltd.
■ Euromol B.V.
■ Linkman Holdings Inc.
■ Mitsui Kinkai Kisen Co., Ltd.
■ Mitsui O.S.K. Holdings (Benelux) B.V.
■ MM Holdings (Americas), Inc
■ MOL Accounting Co., Ltd.
■ MOL Adjustment, Ltd.
■ MOL Engineering Co., Ltd.
■ MOL FG, Inc.
■ MOL Information Systems, Ltd.
■ MOL Manning Service S.A.
■ MOL Marine Co., Ltd.
■ MOL Ocean Expert Co., Ltd.
■ MOL Ship Management Co., Ltd.
■ MOL Ship Tech Inc.
■ MOL SI, Inc.
■ MOL Treasury Management Pte. Ltd.
■ Shipowner/Chartering companies (4 companies) in Panama
▲ Minaminippon Shipbuilding Co., Ltd.
*MOL includes MOL and its subsidiaries
Japan
China
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
British Virgin
Islands
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Vietnam
Japan
Japan
Vietnam
British Virgin
Islands
Japan
Hong Kong
Vietnam
Netherlands
Liberia
Japan
Netherlands
U.S.A.
Japan
Japan
Japan
U.S.A.
Japan
Panama
Japan
Japan
Japan
Japan
U.S.A.
Singapore
Japan
76.00
79.98
100.00
100.00
100.00
67.55
100.00
100.00
100.00
31.98
22.05
100.00
100.00
100.00
99.00
100.00
100.00
US$1,720
¥300,000
THB77,500
—
—
¥2,155,300
S$2,000
¥50,000
¥50,000
¥100,000
US$1,240
¥50,000
¥30,000
¥54,600
¥100,000
¥650,000
¥1,577,400
38.73
¥880,000
51.07
100.00
100.00
100.00
100.00
100.00
86.27
100.00
100.00
95.25
100.00
62.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
87.26
100.00
100.00
99.39
99.00
100.00
36.00
25.00
40.00
100.00
100.00
80.42
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
24.00
¥12,227,847
¥17,000
¥95,400
¥172,000
¥50,000
¥26,500
¥99,960
¥236,000
¥60,000
¥32,000
US$0
¥50,000
¥50,000
¥20,000
¥14,400
¥200,000
¥250,000
¥300,000
¥100,000
¥100,000
¥95,000
¥490,000
¥134,203
VND48,166,000
¥20,000
¥14,950
VND349,000,000
¥6,910,000
¥100,000
HK$12,400
US$4,500
€8,444
US$3
¥350,000
€17,245
US$200
¥30,000
¥10,000
¥20,000
US$20
¥100,000
US$135
¥100,000
¥100,000
¥50,000
¥50,000
US$100
US$2,000
¥200,000
Annual Report 2015 113
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Worldwide Offi ces
Japan
Mitsui O.S.K. Lines, Ltd.
Head Offi ce (Tokyo):
Nagoya Branch:
Kansai Branch:
Hiroshima Branch:
Kyushu Branch:
Tel: 81-3-3587-6224
Tel: 81-52-564-7020
Tel: 81-6-6446-6522
Tel: 81-82-252-6020
Tel: 81-92-262-0701
Fax: 81-3-3587-7734
Fax: 81-52-564-7047
Fax: 81-6-6446-6513
Fax: 81-82-254-0876
Fax: 81-92-262-0720
Mitsui O.S.K. Lines (Japan), Ltd.
Head Offi ce (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 Offi ce (Chicago):
Atlanta:
Long Beach:
New Jersey:
San Francisco:
Seattle:
MOL (Canada) Inc.
Head offi ce (Toronto):
Tel: 1-630-812-3700
Tel: 1-678-855-7700
Tel: 1-562-983-6200
Tel: 1-732-512-5200
Tel: 1-925-603-7200
Tel: 1-206-444-6905
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: 1-206-444-6909
Tel:1-905-629-5925
FAX: 1-905-629-5914
Mitsui O.S.K. Bulk Shipping (USA) LLC.
Head Offi ce (New Jersey): Tel: 1-201-395-5800
Tel: 1-832-615-6470
Houston:
Tel: 1-562-528-7500
Long Beach:
Tel: 1-954-861-1034
Miami:
Fax: 1-201-395-5820
Fax: 1-832-615-6480
Fax: 1-562-528-7515
MOL Logistics (USA) Inc.
Head Offi ce (New York):
Los Angeles:
Tel: 1-516-403-2100
Tel: 1-310-787-8351
Fax: 1-516-626-6092
Fax: 1-310-787-8168
Central and South America
MOL (Brasil) Ltda.
Head Offi ce (Sao Paulo):
Tel: 55-11-3145-3980 Fax: 55-11-3145-3946
MOL (Chile) Ltda.
Head Offi ce (Santiago):
MOL (Panama) Inc.
Head Offi ce (Panama):
MOL (PERU) S.A.C.
Head Offi ce (Lima):
Tel: 56-2-2630-1950
Fax: 56-2-2231-5622
Tel: 11-507-300-3200 Fax: 11-507-300-3212
Tel: 51-1-611-9400
Fax: 51-1-611-9429
Corporativo MOL de Mexico S.A. de C.V.
Head Offi ce (Mexico City): Tel: 52-55-5010-5200 Fax: 52-55-5010-5220
Mitsui O.S.K. Bulk Shipping (USA) LLC.
Mexico City:
Sao Paulo:
Tel: 52-55-5550-1612 Fax: 52-55-5089-2280
Tel: 55-11-3145-3980 Fax: 55-11-3145-3946
MOL Logistics (Mexico) S. de R. L. de C.V.
Head Offi ce (Monterrey):
Tel: 52-81-8134-2400 Fax: 52-81-8134-2200
Europe
MOL (Europe) B.V.
Head Offi ce (Rotterdam):
Genoa:
Hamburg:
Le Havre:
Vienna:
Basel:
Fax: 31-10-201-3158
Fax: 39-10-5960450
Fax: 49-40-352506
Tel: 31-10-201-3200
Tel: 39-10-2901711
Tel: 49-40-356110
Tel: 33-2-32-74-24-00 Fax: 33-2-32-74-24-39
Tel: 43-1-877-6971
Tel: 41-61-716-8001
Fax: 43-1-876-4725
Fax: 41-61-716-8070
MOL (Europe) Ltd.
Head Offi ce (Southampton): Tel: 44-2380-714500
Fax: 44-2380-714519
Mitsui O.S.K. Bulk Shipping (Europe) Ltd.
Head Offi ce (London):
Hamburg:
Moscow:
Tel: 44-20-3764-8000 Fax: 44-20-3764-8393
Tel: 49-40-3609-7410 Fax: 49-40-8430-6105
Tel: 7-495-369-90-58
MOL Logistics (Deutschland) GmbH
Head Offi ce (Dusseldorf): Tel: 49-211-418830
Fax: 49-211-4188340
MOL Logistics (Netherlands) B.V.
Head Offi ce (Tilburg):
Tel: 31-13-537-33-73
Fax: 31-13-5373-575
MOL Logistics (U.K.) Ltd.
Head Offi ce (London):
Tel: 44-1895-459700
Fax: 44-1895-449600
114 Mitsui O.S.K. Lines
Africa
MOL South Africa (Pty) Ltd.
Head Offi ce (Cape Town): Tel: 27-21-441-2200
Fax: 27-21-419-1040
Mitsui O.S.K. Lines (Nigeria) Ltd.
Head Offi ce (Lagos):
Tel: 234-1-2806556
Fax: 234-1-2806559
MOL (Ghana) Ltd.
Head Offi ce (Tema):
Tel: 233-22-212084
Fax: 233-22-210807
Middle East
Mitsui O.S.K. Lines Ltd. Middle East Headquarters
Dubai:
Tel: 971-4-3573566
Fax: 971-4-3573066
MOL (UAE) L.L.C.
Head Offi ce (Dubai):
Tel: 971-4-3573566
Fax: 971-4-3573066
Mitsui O.S.K. Bulk Shipping (Asia, Oceania) Pte. Ltd.
Doha:
Muscat:
Tel: 974-4-836541
Tel: 968-2440-0950
Fax: 974-4-836563
Fax: 968-2440-0953
MOL Egypt for Shipping Agencies S.A.E.
Head Offi ce (Cairo):
Tel: 20-22-456-8900
Fax: 20-22-259-5857
Oceania
Mitsui O.S.K. Lines (Australia) Pty. Ltd.
Head Offi ce (Sydney):
Tel: 61-2-9320-1600
Fax: 61-2-9320-1601
Mitsui O.S.K. Lines (New Zealand) Ltd.
Head Offi ce (Auckland):
Tel: 64-9-300-5820
Fax: 64-9-309-1439
Mitsui O.S.K. Bulk Shipping (Asia, Oceania) Pte. Ltd.
Melbourne:
Perth:
Sydney:
Tel: 61-3-9691-3224
Tel: 61-8-9278-2499
Tel: 61-2-9320-1629
Fax: 61-3-9691-3223
Fax: 61-8-9278-2727
Fax: 61-2-9320-1601
Asia
MOL Liner Ltd.
Head Offi ce (Hong Kong): Tel: 852-2823-6800
Fax: 852-2865-0906
Mitsui O.S.K. Lines (India) Private Limited
Head Offi ce (Mumbai):
Tel: 91-22-4054-6300 Fax: 91-22-4054-6301
Mitsui O.S.K. Lines Lanka (Private) Ltd.
Head Offi ce (Colombo):
Tel: 94-11-2304721
Fax: 94-11-2304730
MOL (Singapore) Pte. Ltd.
Head Offi ce (Singapore):
Tel: 65-6225-2811
Fax: 65-6225-6096
Mitsui O.S.K. Lines (Malaysia) Sdn. Bhd.
Head Offi ce (Kuala Lumpur): Tel: 60-3-5623-9666
Fax: 60-3-5623-9600
MOL Myanmar Limited
Head Offi ce (Yangon):
Tel: 95-9-7318-9815
Fax: 95-9-5137-7174
P.T. Mitsui O.S.K. Lines Indonesia
Head Offi ce (Jakarta):
Tel: 62-21-5288-0008 Fax: 62-21-5292-0920
Mitsui O.S.K. Lines (Thailand) Co., Ltd.
Head Offi ce (Bangkok):
Tel: 66-2-234-6252
Fax: 66-2-237-9021
MOL Philippines, Inc.
Head Offi ce (Manila):
Tel: 632-888-6531
Fax: 632-884-1766
Mitsui O.S.K. Lines (Vietnam) Ltd.
Head Offi ce (Ho Chi Minh): Tel: 84-83-8219219
Mitsui O.S.K. Lines (Cambodia) Co., Ltd.
Head Offi ce (Phnom Penh): Tel: 855-23-223-036
Mitsui O.S.K. Lines Pakistan (Pvt.) Ltd.
Head Offi ce (Karachi):
Tel: 92-21-35205397
Fax: 84-83-8219317
Fax: 855-23-223-040
Fax: 92-21-35202559
MOL (China) Co., Ltd.
Head Offi ce (Shanghai):
Beijing:
Tianjin:
Shenzhen:
MOL (Taiwan) Co., Ltd.
Head Offi ce (Taipei):
Tel: 86-21-2320-6000 Fax: 86-21-2320-6331
Tel: 86-10-8529-9121 Fax: 86-10-8529-9126
Tel: 86-22-8331-1331 Fax: 86-22-8331-1318
Tel: 86-755-8400-7900 Fax: 86-755-8400-7901
Tel: 886-2-2537-8000 Fax: 886-2-2537-8098
Mitsui O.S.K. Bulk Shipping (Asia, Oceania) Pte. Ltd.
Head Offi ce (Singapore):
Bangkok:
Kuala Lumpur:
Seoul:
Mumbai:
Chennai:
Tel: 65-6323-1303
Tel: 66-2-634-0807
Tel: 60-3-5623-9772
Tel: 82-2-567-2718
Tel: 91-22-4071-4560 Fax: 91-22-4071-4557
Tel: 91-44-4208-1020 Fax: 91-44-4208-1020
Fax: 65-6323-1305
Fax: 66-2-634-0806
Fax: 60-3-5623-3107
Fax: 82-2-567-2719
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Shareholder Information
Capital:
Head offi ce:
¥65,400,351,028
1-1, Toranomon 2-chome, Minato-ku,
Tokyo 105-8688, Japan
Number of MOL employees:
890
Number of MOL Group employees:
(The parent company and consolidated subsidiaries)
10,508
Total number of shares authorized:
3,154,000,000
Number of shares issued:
1,206,286,115
Number of shareholders:
104,192
Shares listed in:
Tokyo, Nagoya
Share transfer agent:
(Contact information)
Sumitomo Mitsui Trust Bank, Limited
Stock Transfer Agency Business Planning Department
8-4, Izumi 2-chome, Suginami-ku, Tokyo 168-0063, Japan
Communications materials:
Annual Report (English/Japanese)
Investor Guidebook (English/Japanese)
Market Data (English/Japanese)
News Releases (English/Japanese)
Website (English/Japanese)
Safety, Environmental and Social Report (English/Japanese)
(As of March 31, 2015)
Stock Price Range (Tokyo Stock Exchange) and Volume of Stock Trade
(¥)
800
700
600
500
400
300
200
100
0
Fiscal 2012 High ¥369
¥177
Low
Fiscal 2013 High ¥482
¥287
Low
Fiscal 2014 High ¥450
¥308
Low
12
/4 5 6 7 8 9 10 11 12
13
/1 2 3 4 5 6 7 8 9 10 11 12
14
/1 2 3 4 5 6 7 8 9 10 11 12
15
/1 2
6543
700
600
500
400
300
200
100
0
(Million shares)
800
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Annual Report 2015 115
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5
For further information, please contact:
Investor Relations Offi ce
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)-certifi ed paper made of wood from responsibly managed forests.
It was also printed using vegetable oil inks.
Printed in Japan
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