Mitsui O.S.K. Lines Ltd. Annual Report 2016

FY2016 Annual Report · Mitsui O.S.K. Lines Ltd.
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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/

Reinvent

Annual Report 2016

Year ended March 31, 2016

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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Reinvent

MOL GROUP 
CORPORATE PRINCIPLES

[Dry Bulker] 
Capesize Bulker: VEGA DREAM

[Tanker]
VLCC: OMEGA TRADER

[LNG Carrier]
GRAND MEREYA

[Car Carrier]
VALIANT ACE

[Containership]
MOL MODERN

As a multi-modal transport group, we will:

[Terminal] 
Los Angeles Container Terminal

MOL

ASSOCIATED BUSINESSES

6%

FERRY & DOMESTIC 
TRANSPORT

3%

CONTAINERSHIPS

42%

FY2015 Revenues
¥1,712.2 Billion

BULKSHIPS

49%

Dry Bulkers
21%

Tankers
10 %

LNG Carriers/
Offshore Businesses
4 %

Car Carriers
14 %

(cid:129)   actively contribute to global economic growth and development, anticipating 

the needs of our customers and the challenges of this new era

(cid:129)   strive to maximize corporate value through creativity, operating efﬁ ciency and 

promotion of ethical and transparent management

(cid:129)   nurture and protect the natural environment by maintaining the highest 

   standards of operational safety and navigation

Others

2%

Containerships
11%

Car Carriers
13%

LNG
Carriers
8%

Tankers
20%

[Ferry]
SUNFLOWER SAPPORO

[Cruise ship] NIPPON MARU

Number of 
ships
(883)

Dry Bulkers
46%

Containerships

10%

Car Carriers
3%
LNG
Carriers
9%

Tankers
26%

Dead weight 
tons
(63 Million)

Dry Bulkers
52%

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                             Business Activities

Year in Review

Performance (¥ billions)

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Dry Bulkers

With one of the world’s largest ﬂ eets, MOL 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.

Tankers

With one of the world’s largest ﬂ eets, MOL is expanding activities globally. Our ﬂ eet 
includes crude oil tankers; product tankers that carry naphtha, gasoline and other 
reﬁ ned petroleum products; chemical tankers that carry liquid chemical products; 
and LPG tankers that carry liqueﬁ ed petroleum gas. 

LNG Carriers/
Offshore 
Businesses

With one of the world’s largest LNG carrier ﬂ eets, 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.

Car Carriers

MOL is stably expanding transport services to meet the changing needs of auto-
makers as they move production to optimal sites around the world. We operate 
globally with specialized car carriers 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, auto-
motive 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 terminal and logistics businesses—parts of the container ship-

ping 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 coastal shipping business, connecting important domestic sites and transporting large 
amounts of raw materials and energy for industry. The coastal bulker business was transferred under the 
bulkship business in ﬁ scal 2016, and the name of the segment was subsequently changed to Ferries & 
Coastal RoRo Ships. (RoRo: Roll-on/Roll-off)

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 ship (the NIPPON 
MARU), and trading.

75

50

25

0

120

90

60

30

0

[Dry Bulker] 
Capesize Bulker: VEGA DREAM

[Tanker]
VLCC: OMEGA TRADER

Dry Bulkers

We worked to secure proﬁ ts from long-term ﬁ xed-rate freight contracts 
for carriers of iron ore, woodchips, steaming coal and others. Efforts 
continued to improve operation efﬁ ciency and cut costs. Nevertheless, 
performance in the dry bulker division signiﬁ cantly deteriorated due to 
the stagnant spot market and factors such as decreased Chinese 
imports of coal, resulting in an ordinary loss for the ﬁ scal year.

900

600

300

Tankers

Crude oil tanker and product tanker markets were strong overall, with 
demand remaining high. Ocean transport beneﬁ tted from growth in 
actual demand and increases of China’s strategic reserves. Ordinary 
income rose considerably also underpinned by efforts to cut costs and 
improve operation efﬁ ciency by setting up pools with other operators.

LNG Carriers/Offshore Businesses

The LNG carrier division continued to secure ﬁ rm proﬁ ts through long-
term transport contracts, leading to a year-on-year improvement in 
ordinary income.

0

15/3
14/3
Revenues (left scale) 
Ordinary income (loss) (right scale)

16/3

[LNG Carrier]
GRAND MEREYA

Car Carriers

[Car Carrier]
VALIANT ACE

[Containership]
MOL MODERN

[Terminal] 
Los Angeles Container Terminal

[Ferry]
SUNFLOWER SAPPORO

[Cruise ship] NIPPON MARU

Transport of completed cars to the U.S., where economic conditions 
remained strong, was ﬁ rm. Meanwhile, transport weakened to emerg-
ing countries and resource-producing countries as falling crude oil prices 
slowed these economies. As a result, ordinary income in the car carrier 
division decreased despite efforts to improve operation efﬁ ciency in 
response to changing trade patterns.

On Trans-Paciﬁ c routes, although cargo volumes from Asia were ﬁ rm 
overall, the supply-demand balance weakened because of the increase 
in vessels, and the freight market signiﬁ cantly fell on routes to both the 
west and east coasts of North America. Cargo volumes from Asia to 
Europe weakened signiﬁ cantly and despite efforts to reduce capacity 
with fewer sailings, the gap between supply and demand could not be 
closed and the freight market maintained record-lows throughout the 
ﬁ scal year. The freight markets on Intra-Asia routes also slumped on 
weak cargo volumes. Under this business environment, despite our 
efforts to implement various rationalization measures for each route and 
cut operation costs, the division’s loss increased year on year.

800

600

400

200

0

Volumes of passengers and cargo decreased on the Eastern Japan route 
after a vessel was removed from service for repairs following a vehicle 
deck ﬁ re in July 2015. However, volumes on other routes were ﬁ rm for 
both passengers and cargo. Cargo volume for steel materials remained 
weak reﬂ ecting inventory adjustments. As a result, although revenue 
from the ferry and domestic transport businesses decreased overall, a 
fall in the bunker price and other factors made it possible to secure 
proﬁ ts at almost the same level as the previous ﬁ scal year.

Daibiru Corporation, the core of the real estate business, maintained 
stable sales, but ordinary income decreased year on year due mainly to 
an increase in temporary costs associated with Shin-Daibiru which was 
completed in March 2015. Sales from the trading businesses fell and 
proﬁ tability deteriorated in some parts of the construction business. On 
the other hand, the tugboat business showed ﬁ rm performance, though 
ordinary income for the segment decreased year-on-year.

Underlined words are explained in the Glossary on page 18.

14/3

15/3

16/3

-30

Revenues (left scale) 
Ordinary income (loss) (right scale)

60

40

20

0

14/3
Revenues (left scale) 
Ordinary income (loss) (right scale)

16/3

15/3

120

90

60

30

0

14/3
Revenues (left scale) 
Ordinary income (loss) (right scale)

16/3

15/3

6

4

2

0

12

9

6

3

0

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                             Performance (¥ billions)

Business Environment

FY2015

Revenues
¥838.8 billion

2% Increase YoY

Ordinary income
¥54.8 billion

1% Increase YoY

Dry Bulker Market (BDI*1)

(Jan 4, 1985=1,000)

1,600

1,200

800

400

Long-Term Vision

To develop the MOL Group into 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
Honesty
A ccountability

Do the right thing

Commit to acting with
a sense of ownership

Gain the trust of customers

R eliability
Teamwork

Build a strong team

Ordinary income

Net gearing ratio

Total assets

MOL’s ﬂ eet
(number of vessels)

¥1,712.2 billion
¥36.2 billion
¥2,219.5 billion
¥646.9 billion

Equity ratio

24.4%
164%
883

0

14/4

15/4

16/4

Source: MOL internal calculation based on TDS and others
*1 Baltic Dry Index

VLCC*2 Market (World Scale*3) (AG - Japan)

(WS)

150

100

50

FY2015 Performance

0

14/4

15/4

16/4

WS for 2014/2015 has been translated by the Flat Rate of 2016.
Source: Researched by MOL

*2 Very large crude carrier (300,000-DWT class)
*3 The most-widely used freight index for tankers

Shipping and
other revenues

Containership Market (CCFI*4)

(Jan 1, 1998=1,000)

Europe Trade

U.S. West Coast Trade

U.S. East Coast Trade

South America Trade

0

14/4

Source: SSE
*4 China Containerized Freight Index

15/4

16/4

Net assets

FY2015

Revenues
¥719.1 billion

9% Decrease YoY

Ordinary loss
¥(29.8) billion

—

FY2015
Revenues
¥49.6 billion
11% Decrease YoY

Ordinary income
¥4.4 billion
Constant YoY

FY2015
Revenues
¥96.6 billion
11% Decrease YoY

Ordinary income
¥10.1 billion
7% Decrease YoY

1,800

1,200

600

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(cid:129)Business Structural Reforms

(cid:129)Single-year Management Plan

(cid:129)Business Portfolio

MOL implemented a new round of Business Structural Reforms for dry 

bulkers and containerships in ﬁ scal 2015, recording ¥179.3 billion in 

related expenses. We simultaneously formulated a single-year manage-

ment plan for ﬁ scal 2016 that includes the successful completion of the 

Business Structural Reforms and are currently focusing all our energies 

on this. Over the next few pages, we will detail the Business Structural 

Reforms and the single-year management plan while also explaining 

MOL’s business portfolio, which is designed to achieve sustainable 

growth amid protracted severe market conditions.

4   Mitsui O.S.K. Lines

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1

Question

Can you tell us about the content 
of the Business Structural Reforms and 
the background behind them?

Answer

1
¥179.3Billion

Fiscal 2015 Business Structural Reform Expenses:

In ﬁ scal 2015, MOL recorded steady proﬁ ts from many divisions, including 

car carriers, ferries, and tankers (which beneﬁ tted from a strong market), 

in addition to about ¥60.0 billion in proﬁ ts from long-term contracts and 

highly stable businesses (highly stable proﬁ ts). Nevertheless, there were 

businesses that sharply cut into these proﬁ ts. Basically, the market and 

freight rates for dry bulkers (spot operations) and containerships 

remained at unprecedented lows. We decided to reform these two divi-

sions despite incurring large expenses, and with the current Business 

Structural Reforms, we aim to return to a growth trajectory.

6   Mitsui O.S.K. Lines

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MOL’s Earnings Structure and the Necessity of 
the Business Structural Reforms

Content of the Business 
Structural Reforms

Fiscal 2015 Ordinary Proﬁ t:

¥36.2

Billion

Highly Stable Proﬁ ts:

Other proﬁ ts

The dry bulker market and 
containership freight rates remained 
at historic lows in ﬁ scal 2015.

About

¥60.0

Billion

Dry Bulkers (Business Structural Reform Expenses ¥117.4 Billion)

Greatly downsize market exposure 
(redeliver chartered vessels and sell owned vessels)

Reduce vessel costs on our remaining core ﬂ eet of small and 
medium-sized vessels down to a level in line with the current market

Market Exposure

0

March 31, 
2016

March 31, 
2017 (plan)

100%

43%

26%

Losses Recorded

Owned or mid- and long-term 
chartered vessels with mid- 
and long-term contracts

Owned or mid- and long-term 
chartered vessels with short-term 
contracts (= Market exposure)

Short-term chartered vessels 
with short-term contracts
(= Vessels with market tolerability)

(cid:129) Dry Bulkers

(cid:129) Tankers

 (medium- to long-term contracts)

 (spot operations)

(cid:129) Tankers

 (medium- to long-term contracts)

(cid:129) LNG Carriers
(cid:129) Offshore Businesses
(cid:129) Real Estate

(cid:129) Car Carriers
(cid:129) Terminals
(cid:129) Logistics
(cid:129) Ferries
(cid:129) Coastal Shipping

Return to proﬁ tability in ﬁ scal 2016 
due to the Business Structural Reforms

Dry Bulkers
(spot operations) Containerships

Containerships (Business Structural Reform Expenses ¥61.9 Billion)

•   In addition to highly stable proﬁ ts mainly from long-term contracts, there were 
other business, such as car carriers and ferries, that posted proﬁ ts, but the loss-
es from dry bulkers (the spot operation portion) and containerships sharply cut 
into them.

•   We do not currently foresee a full recovery for either the dry bulker market or 
containership freight rates. Implementing sweeping measures for these busi-
nesses is one of our top priorities.

Conduct impairment loss on vessels owned by MOL

Dispose of surplus vessels after rationalization of routes

Due to the further worsening of containership 
freight rates, the division is unlikely to improve its 
proﬁ tability in ﬁ scal 2016, but MOL will 
greatly eliminate its structural inferiority.

8   Mitsui O.S.K. Lines

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Underlined words are explained in the Glossary on page 18.

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2

Question

Can you go over the single-year 
management plan for us?

Answer

2
Onward

While we will continue to promote the Three Innovations outlined in our 

midterm management plan “STEER FOR 2020,” which has ﬁ scal 2016 as 

its last year, we expect to miss our proﬁ t and ﬁ nancial targets by wide 

margins. We have formulated a single-year management plan to priori-

tize the successful completion of the Business Structural Reforms in ﬁ scal 

2016 and are currently carrying it out.

10   Mitsui O.S.K. Lines

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Progress Made in the Midterm 
Management Plan “STEER FOR 2020”

Steady progress made in Innovation of Business Portfolio

Signiﬁ cant progress in Innovation of Business Model by implementing the 
Business Structural Reforms

Going forward, we will accelerate Innovation of Business Domain

s
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Business 
Portfolio

Concentrate investment in businesses with long-term highly 
stable proﬁ ts, such as LNG carriers and offshore businesses

Business
Model

Evolve to a ﬂ eet composition 
with high market tolerability 
and competitiveness

Implement 
Business 
Structural 
Reforms

Business
Domain

Create a value chain by expanding marine transport business 
domain to both upstream and downstream

1.   Miss proﬁ ts and ﬁ nancial targets by a wide margin due 

to weakness in dry bulkers and containerships

2.   Prioritize the completion of Business Structural Reforms 

in ﬁ scal 2016

Continue to promote the Three Innovations, 
but formulate and execute a single-year management plan 
instead of a midterm management plan

Implementation of the Single-
Year Management Plan

Successfully complete Business Structural Reforms

Strengthen sales capabilities

Accelerate Innovation of Business Domain

Dry Bulkers
1

2

3

Optimize ﬂ eet size
Reduce vessel costs
Focus on cargo transport based on long-term, stable 
relationships with customers

Containerships (bring down vessel costs)
1

Rationalize routes and optimize ﬂ eet size
Enhance yield management

2

Accelerate Innovation of Business Domain
Distribute management resources to ferries and other domestic 
transport businesses as well as logistics, terminals and real estate 
businesses in key strategic areas

Strengthen Sales Structure to Meet 
Customer Needs
(cid:129)Establish the Energy Transport Business Unit
  Unify sales policies for energy-related customers

(cid:129)Strengthen interdivisional and global cooperation
  Leverage chief executive representatives and chief 
  country representatives

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12   Mitsui O.S.K. Lines

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Underlined words are explained in the Glossary on page 18.

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3

Question

Although you predict 
the dry bulker market and 
containership freight rates will 
remain troubled for the time being, 
do you forecast sustainable 
growth for MOL?

3

Answer

In regard to dry bulkers and containerships, which needed the 

Business Structural Reforms, we currently expect it will take some 

time for the markets to make a full recovery. However, MOL still cur-

rently has a business portfolio that serves as a sufﬁ cient base for sta-

ble growth. Through the Business Structural Reforms and the single-

year management plan, we will work to further optimize our business 

portfolio and return to a sustainable growth trajectory.

Realigned,
Resilient,
Reliable MOL

14   Mitsui O.S.K. Lines

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Our Fleet

As of March 31, 
2016

As of March 31, 
2017 (Forecast)

Number of vessels

Number of vessels

Dry bulkers
(including steaming coal carriers and coastal bulkers)

Tankers

LNG carriers (including ethane carriers)

Offshore businesses (FPSO)

Car carriers

Containerships

Ferries & coastal RoRo ships

Cruise ships

Others

Total

403

175

69 

3 

120 

95 

15 

1 

2 

883 

351

168

81

5

118

87

17

827

Note. Figures include short-term chartered vessels (ﬁ ve years or less) and vessels owned by joint ventures.

The MOL Group’s Business Portfolio

Highly Specialized

Ferries & Coastal
RoRo Ships

Chemical Tankers

Offshore Businesses 
(medium-to long-
term contracts)

LNG Carriers 
(medium- to long-
term contracts)

Methanol
Tankers

Associated
Businesses
(maritime-related)

Terminals &
Logistics

Associated
Businesses
(real estate)

Wood Chip
Carriers

Steaming Coal
Carriers

Crude Oil Tankers

Capesize Bulkers
(medium- to long-
term contracts)

F
i
r

m
P
r
o
f
i
t
s

Car Carriers

LPG
Tankers

Product Tankers

Heavy Lifters and
General Cargo Carriers

Capesize Bulkers
(spot operations)

V
a
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i
a
b
l
e

P
r
o
f
i
t
s

Small and
Medium-Sized 
Bulkers (medium- to 
long-term 
contracts)

Small and Medium-
Sized Bulkers
(spot operations)

Containerships

*  In plotting the vertical axis (highly to less specialized), each business was considered comprehensively 

after taking account of the following perspectives.

Less Specialized

• Niche or mass market   • Competitive environment
• MOL’s relative superiority   • Versatility of vessel type

Implement the Business Structural Reforms

Small and Medium-Sized Bulkers (spot operations)

Basically withdraw from spot operations with no speciﬁ ed cargo

Capesize Bulkers (spot operations)

Downsize the number of vessels on spot operations

Containerships

• Greatly reduce owned vessel costs
•   Dispose of surplus vessels from rationalization of routes
•   Aim to stabilize proﬁ ts by enhancing the synergies with the 

terminal and logistics businesses

16   Mitsui O.S.K. Lines

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Glossary (In alphabetical order)

Ballast Voyage
Sailing to the next loading port without any cargo loaded.

Ballast Water
Ocean water that is taken in by the vessel to maintain ideal 
buoyancy and control the vessel when not fully loaded with 
cargo. Usually, ballast water is taken on when cargo is unload-
ed, and is discharged when cargo is loaded.

Ethane Carriers
Ethane is the second most abundant component of natural 
gas after methane. Depending on the ﬁ eld, ethane can com-
prise 5–20% of natural gas. Ethane has a heating value about 
1.75 times higher per volume than methane and is a gas at 
standard temperature and pressure. At present, it is used 
mainly as a raw material for reﬁ ning the important basic 
chemical ethylene. Ethane carriers are specialized for trans-
porting liqueﬁ ed ethane, which has been cooled to around 
minus 92 degrees Celsius, and equipped with reliquefaction 
system. LNG carriers transport cargo at minus 162 degrees, 
and LPG tankers transport cargo at minus 42 degrees, so eth-
ane carriers fall somewhere between the two.

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.

[Offshore Business] FPSO: Cidade de Angra dos Reis MV22
 (photo: MODEC, INC.)

FSRU (Floating Storage and Re-gasiﬁ cation Unit)
A ﬂ oating facility for storing and regasiﬁ cation of LNG off-
shore, 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.

Highly Stable Proﬁ ts
Proﬁ ts that are ﬁ xed, from contracts of two years or more, and 
projected proﬁ ts from highly stable business. Highly stable 
proﬁ ts are currently provided by the following segments: Dry 
bulkers, Tankers, and LNG carriers/Offshore businesses under 
mid- and long-term contracts (two years or more), Associated 
businesses and Others. 

Market Exposure
Vessels operating under contracts of less than two years, 
which are owned or mid-and long-term chartered vessels.
These vessels are subject to spot markets ﬂ uctuations.

Pool Arrangement
Ship operators and owners pool certain ships to conduct joint 
operations.

Roll-on Roll-off (RoRo) Ships
Featuring a ramp, these ships have a vehicle deck to hold 
trucks, trailers and other vehicles. Cranes and other loading 
equipment are not used in loading; instead vehicles are driven 
onto the ship. In general, while ferries transport passengers 
and personal-use automobiles in addition to freight vehicles, 
RoRo ships mainly transport freight vehicles.

Ton-mile
Transporting one ton of cargo one mile. Expressing the volume 
of cargo calculated by multiplying transported weight and 
transported mile together. As opposed to just reporting cargo 
weight without reference to distance, ton-mile provides a 
complete picture of total transport activity, reﬂ ecting the 
demand fulﬁ lled by vessels or other transport modes.

Yield Management
In the containership business, this refers to a management 
technique to maximize proﬁ tability for the round-trip voyage 
of each container. Freight rates are set and sales activities con-
ducted 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 (calculated to reﬂ ect the aspect of surplus 
and shortage of containers at each point).

Contents

Management Strategy

Management Foundation Underpinning MOL

20

25

30

32

34

46

Message from the CEO

The CEO and Analyst Dialogue

MOL’s History: “Spirit of 
Challenge and Innovation”

Market Position in the Industry

Overview of Operations

56

58

60

64

67

69

Board of Directors, Audit & Supervisory 
Board Members and Executive Ofﬁ cers

Message from an Outside Director

Corporate Governance

Safe Operation

Risk Management

Corporate Social Responsibility (CSR)

Feature: Expanding MOL Group’s 
Business in Asian Growth Markets

Financial Section

48

Financial and Non-Financial Highlights

73

Financial Section

50

Key Indicators

52

Message from the CFO

110

The MOL Group

112

Worldwide Ofﬁ ces

113

Shareholder Information

Editorial Policy
In this annual report, we have included a main feature to help readers understand the Business Structural 
Reforms that MOL implemented in the fourth quarter of ﬁ scal 2015 and the single-year management plan 
to be implemented in 2016. We have also included an additional feature about our focus on business devel-
opment in Asia. With the smooth, steady implementation of these measures, we will accelerate back 
toward a growth trajectory.

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 21, 2016 unless otherwise speciﬁ ed.

[Offshore Business] FSRU: (CG image)
 (photo: ENGIE)

18   Mitsui O.S.K. Lines

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2016/07/27   16:12

　
Message from the CEO

Junichiro Ikeda  President & CEO

20   Mitsui O.S.K. Lines

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We aim to successfully 
carry out Business Structural 
Reforms through our single-year 
management plan and 
swiftly return to 
a growth trajectory.

Progress Made in the First Two Years of 
the Midterm Management Plan 

The three-year medium-term management plan “STEER FOR 2020” began in April 2014 and out-
lined “three innovations” MOL needs to advance: Innovation of Business Portfolio, Innovation of 
Business Model, and Innovation of Business Domain. Two years have since passed. In regard to the 
ﬁ rst two innovations, we were able to achieve major accomplishments as evidenced by the secur-
ing of long-term contracts in LNG carriers and offshore businesses. We have also made steady 
progress with Innovation of Business Domain, where we began various initiatives, including 
strengthening the logistics and terminal businesses. However, with signiﬁ cant shifts in trade and 
the global economy, it is essential that we accelerate these initiatives. Despite these shifts, our 
overall strategy remains sound and centers on successfully carrying out the three innovations out-
lined in “STEER FOR 2020.” This alone, however, is no longer sufﬁ cient.
  Historically low market conditions for dry bulkers and containerships have forced us to make 
large revisions to the proﬁ t and ﬁ nancial targets of the medium-term management plan. We are 
still headed in the right direction over the medium- to long-term, but short-term earnings for the 
period have diverged greatly from the plan’s targets, making it virtually impossible to achieve the 
plan’s ﬁ nal targets. This is the assessment we reached looking back on the ﬁ rst three quarters of 
ﬁ scal 2015. Then in the fourth quarter of ﬁ scal 2015, with the aim of improving earnings from 
ﬁ scal 2016 onwards, we pressed ahead with the Business Structural Reforms, recording a total 
extraordinary loss of ¥179.3 billion: ¥117.4 billion related to dry bulkers and ¥61.9 billion related 
to containerships.

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2016/07/27   16:12

Message from the CEO

Business Structural Reforms in light of Global Shift from 
Resource-Driven Economies

The gap between vessel supply and vessel demand has given rise to the historic market stagnation facing dry 
bulkers and containerships. Behind this gap, however, lies a more profound shift from resource-driven econo-
mies. This can be seen in the deceleration of emerging economies due to falling crude oil, iron ore and other 
resource prices, as well as slowing growth in China. Realizing that these structural changes were not tempo-
rary, but actually marked an inﬂ ection point in the global economy, we knew the weakening business envi-
ronment would not end in just one or two years. This was a major reason we carried out the Business 
Structural Reforms.

The end of resource-driven economies does not mean that needs for resources will disappear. It means 
that we can no longer expect the same dramatic growth as when China, a mega consumer and producer, 
was integrated into the global economy between the 1990s and the mid-2010s. Fleets expanded in the 
marine transport industry to meet that exponential growth. But now, with China largely integrated into the 
global economy, we cannot expect the same kind of extraordinary growth that marked most of the last two 
decades. Without another country to replace China as the dynamo of the global economy, we have deter-
mined it is necessary to adjust the management of marine transport operations in line with the prevailing 
stable or low growth environment.

In the current round of Business Structural Reforms, which is based on the abovementioned assumptions, 
we will signiﬁ cantly reduce our dry bulker ﬂ eet engaged in spot cargo transport by selling vessels or terminat-
ing charter-in contracts to withdraw from free vessel operations in markets unsupported by cargo demand. 
We are going to shrink our ﬂ eet in line with the number of cargo contracts we have been able to stably 
secure. And as for our remaining core ﬂ eet, we will lower vessel costs to a level in line with the current mar-
ket. As for containerships, due mainly to the historic stagnant market conditions and the high number of 
outstanding orders for new deliveries, we cannot foresee a full-scale recovery for the time being. Because of 
this, we have recorded an impairment loss on ﬁ xed assets, mainly mid-size containerships, while selling and 
redelivering ships made unnecessary by the rationalization of unproﬁ table routes. We launched a single-year 
management plan to provide the time to fully implement the Business Structural Reforms and to prudently 
assess the business environment after completing these top priority reforms.

Launch of the Single-Year Management Plan

Foremost, what we aim for in this single-year plan is the successful implementation of the Business Structural 
Reforms. In regard to quickly redelivering surplus vessels, we will continue to negotiate and reach agreements 
with chartered vessel owners and other relevant parties. In the dry bulker business, we will greatly reduce the 
number of vessels vulnerable to the market exposure of free vessel operations while focusing management 
resources on business with long-term, stable customers and bringing about a shift toward sustainable busi-
nesses. In containerships, we will steadily reduce surplus vessels and further promote rationalization of 
unproﬁ table routes. In addition, we will revitalize the sales capabilities lost from past excessive cost reductions 
and fully reassess MOL’s yield management, which controls the container imbalance in round-trip voyages.
In addition, to establish a platform promoting stronger Companywide sales capabilities, we implemented 
organizational reforms. At our head ofﬁ ce, we moved dry bulkers, tankers, LNG carriers and offshore business-
es, which are all included in bulkships, to a business unit system. The newly established Dry Bulk Business Unit is 
to optimize the dry bulker ﬂ eet portfolio, which includes a range of sizes from Capesize to Small Handy, and to 
promote more efﬁ cient use of management resources. Aiming to unify MOL’s sales policy toward energy-related 
customers, we also established the Energy Transport Business Unit to precisely meet customer needs for pro-
curement amid diversifying energy sources, including crude oil, LNG and steaming coal.

In terms of global organizational reforms, to strengthen partnerships in each region and unleash the 

Group’s collective capabilities, from the latter half of 2015, we established a chief executive representative at 

three locations around the world and, under these general representatives, we established country represen-
tatives for select countries in Asia, the Middle East and Oceania. With this representative system, we concen-
trate the best of each sales department, in other words the competitive strengths that differentiate us, to 
precisely meet customer needs with just one contact point. In the end, when someone thinks logistics, we 
want MOL to be the ﬁ rst company that comes to mind.

In response to the environmental changes I’ve already touched on, we will accelerate Innovation of 

Business Domain while maintaining the marine transport industry as the core of our business.

Path Back to a Growth Trajectory

The world economy will undoubtedly continue to grow as will seaborne trade. However, we have to realize 
that this growth will be gradual. Looking at it in a positive light, you could say that it is stable. More pessimis-
tically, however, this means there will be persistent low growth. In addition, we have to admit that it is 
currently difﬁ cult to predict which marine ﬁ elds can expect strong growth. Under these conditions, I think 
it’s important that MOL effectively manage its business portfolio.

Looking at global marine transport companies, it’s safe to say that there are only a very small number of full-line 

marine transport groups like MOL. Looking back at the severe business environment of ﬁ scal 2015, it’s clear that 
managing our business portfolio as a full-line marine transport group dampened the negative impact.

Simply stated, the tanker business, which had been struggling for the past ﬁ ve or six years, was able to 
post results this ﬁ scal year that offset the poor performance of dry bulkers and underpinned the proﬁ ts of the 
whole Group. LNG carriers and offshore businesses produced ﬁ rm proﬁ ts, and we predict earnings for these 
businesses will really boom in the next two or three years. And while car carriers saw proﬁ t decline this ﬁ scal 
year, they were still able to secure ﬁ rm proﬁ ts. MOL’s diverse business ﬁ elds, including Group companies MOL 
Ferry and Daibiru, contribute to consolidated earnings in various ways. In ﬁ scal 2015, we recorded a net loss 
due to Business Structural Reforms but were in the black for operating income and ordinary income. This was 
also attributable to having a range of departments ﬁ rmly augment the weaker ones by managing a range of 
businesses in our business portfolio. Of course, this does not mean that we should just operate all kinds of 
different businesses and wait for a growth ﬁ eld to spontaneously appear. In each business ﬁ eld, we need to 
clearly deﬁ ne the factors that differentiate us, reinforce our sales capabilities and then prepare for a new 
order going forward.

I think it’s important 
that MOL effectively 
manage its 
business portfolio.

22   Mitsui O.S.K. Lines

Underlined words are explained in the Glossary on page 18.

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Message from the CEO

The CEO and Analyst Dialogue

In the 2000s, our Capesize bulker ﬂ eet posted large proﬁ ts and was perceived as MOL’s star business. And 

in more recent years LNG carriers, for which it could be said MOL has relative superiority, were able to con-
clude many long-term contracts. While this shows that we had star businesses in each era, it could also sug-
gest that we merely beneﬁ tted from the special circumstances arising from exceptional events, such as 
China’s commodity import boom and the U.S. shale revolution. Reaching the end of resource-driven econo-
mies, it’s now difﬁ cult to expect the emergence of another massive star business segment.
  On the other hand, customers certainly do have various transport needs, and there are ﬁ elds where stable 
growth is expected. For example, we can identify several promising niche business ﬁ elds, including methanol 
and chemical tankers. MOL boasts high competitiveness in these ﬁ elds, holding the No. 1 and No. 3 posi-
tions. I believe we still have potential for greater growth in these areas.

In addition, as for our domestic ferry business, the modal shift is fully underway due to the shortage of 
truck drivers and heightened environmental awareness of customers, and we expect this business to remain 
stable going forward.

Furthermore, we have been focusing on expanding the container terminal business, which we also expect 

to maintain comparatively ﬁ rm earnings. We have actively expanded this business, including a strategic alli-
ance with Brookﬁ eld Asset Management, a global asset manager with a remarkable track record in the infra-
structure business; an automated terminal at the Port of Los Angeles; the start of operations of a large-scale 
automated terminal at Rotterdam Port; and the establishment of our independent terminal at Cai Mep Port, 
Vietnam. In ﬁ scal 2018, another container terminal in Vietnam is slated to begin operations at Lach Huyen 
Port, steadily advancing the Innovation of Business Domain.
  Opportunities abound. In ﬁ elds expected to grow, MOL continues to invest resources to stimulate busi-
nesses where MOL is highly competitive. If we hold steady, I ﬁ rmly believe we will be able to effectively adapt 
to the new global structure. For that reason, we need to carefully analyze a wide range of information while 
polishing our business intelligence.

Implementing the Business Structural Reforms has strengthened our foundation. Although the container-

ship business needs more time to return to the black, we are discovering ways to ensure our highly stable 
proﬁ ts. Going forward, I hope to further strengthen the long-term relationships of trust we have established 
over many years by accurately responding to our increasingly globalized customers and their increasingly 
complex and varied transport needs. We have already started to build the necessary framework for this under 
the single-year management plan and will continue to work to steadily enhance this framework.

In Closing

Our greatest duty in ﬁ scal 2016 is to successfully implement the Business Structural Reforms through the sin-
gle-year management plan and rebuild the foundation needed to outperform our global competition. 
Through its efforts and ingenuity, MOL has overcome many large undulations in the past. To this day, we have 
managed to keep growing. Going forward, each of us, executives and employees alike, will continue to work 
to swiftly return to a growth trajectory. And we will aim to fully meet the expectations of our stakeholders.

MOL’s Transformation:

What will MOL look like after the Business Structural Reforms?

Junichiro Ikeda

Masato Sakaguchi

Hajime Hitotsuyanagi

Presidesnt & CEO

Analyst, Asset Management Division
Mitsubishi UFJ Trust and Banking Corporation

Senior Analyst, Equity Research Dept.
Daiwa Securities Co. Ltd.

Question1

What rationale lies behind launching this new round of Business Structural 
Reforms so closely on the heels of the ﬁ scal 2012 reforms?

Hitotsuyanagi: First, I would like to ask about 
the reason and background behind launching 
the current round of Business Structural 
Reforms not even ﬁ ve years after the Business 
Structural Reforms conducted in ﬁ scal 2012.

Ikeda: MOL conducted Business Structural Reforms 
for the dry bulker division in ﬁ scal 2012 and record-
ed a large loss. Afterward, in this short time frame, 
we again had to implement the current round of 
Business Structural Reforms and record another 
loss. For this, I would like to sincerely apologize to 
our shareholders.

The main point of the previous set of Business 

Structural Reforms was to reshape our business 
model by moving our base for spot operations of 
dry bulkers to the main hub of Singapore and 
securing cargo contracts to reduce market expo-
sure. In that sense, the current round of Business 
Structural Reforms aims to accelerate that move to 
thoroughly minimize market exposure.

This time, however, the outlook for the market 
is strikingly different. During the previous round of 

reforms we thought the dry bulker market would 
recover in two to three years. However as seen in 
ﬁ scal 2015, we faced a steep market downturn 
that deﬁ ed our initial predictions. Ultimately, I 
believe the cause of this downturn is the broader, 
structural problem posed by the end of resource 
driven economies. We realized that the dramatic 
growth in transport demand that had been sup-
porting the dry bulker market—that is to say the 
demand growth coinciding with the integration of 
China into the global economy—is over and that 
there will now instead be persistently low growth. 
We determined that it will be extremely difﬁ cult for 
the market to fully recover for the time being.

Since structural factors were at the root of the 
market stagnation, we absolutely needed to reform 
our business structure once again. We couldn’t rely 
on the same business model as ﬁ ve years ago when 
we maintained ﬂ eet size in anticipation of a certain 
degree of market recovery. That is why this time we 
decided to be more thorough and vastly shrink our 
ﬂ eet size. We will again transform our business 
model, focusing on the core area where we have 

Underlined words are explained in the Glossary on page 18.

24   Mitsui O.S.K. Lines

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The CEO and Analyst Dialogue

expertise and maintain stable business based on 
long-term relationships with customers. This is how 
we arrived at this round of Business Structural 
Reforms.

H: I see. So you’ve considerably revised the 
ﬂ eet portfolio. When this current ﬁ scal year is 
over, to what extent will MOL resemble the 
company you envision?

I: How rapidly we can reduce the size of our ﬂ eet 
depends on talks concerning redelivering the ves-
sels with the ship owners of chartered vessels. 
Right now, we are committed to achieving our 
goals in the current ﬁ scal year and are in the midst 
of earnest negotiations. If we can reach an agree-
ment on redelivering vessels, the market exposure 
of our dry bulkers will be reduced. In addition, the 
vessel costs associated with MOL’s remaining core 

ﬂ eet will be reduced to current market levels, so 
even if current market conditions persist, the core 
ﬂ eet will not generate a loss.
  On the other hand, some issues remain in the 
composition of our containership ﬂ eet. In the cur-
rent round of Business Structural Reforms, we 
disposed of surplus containerships, recording 
impairment losses mainly related to owned vessels. 
Unlike dry bulkers, however, we were unable to 
completely transform the ﬂ eet. But I do feel that 
we have now come signiﬁ cantly closer to the 
industry average in terms of cost competitiveness. 
Unfortunately, we are not yet at a level where we 
can outperform all of our competitors so I cannot 
say that we have attained our ideal position. Going 
forward, we will continue to comprehensively 
restructure the containership business, focusing 
especially on strengthening our sales capabilities.

Question2

What is the basic strategy for the containership business 
after the Business Structural Reforms?

Sakaguchi: Can I take this to mean that even 
after the Business Structural Reforms have 
been carried out, there will be no change in 
the basic strategy for containerships.

I: The basic strategy remains largely unchanged. 
There is no change in our goal of ranking in the top 
third of the industry in terms of cost competitive-
ness, and we are working hard to reach that goal. 
However, one issue in terms of earnings is our sales 
capabilities. In ﬁ scal 2012, we felt that our sales 
capabilities simply couldn’t be beat by our competi-

tors. Entering ﬁ scal 2015, it became apparent that 
our performance, even among the three largest 
shipping companies in Japan, was inferior. We 
came to the conclusion that one of the causes 
behind this was our sales capabilities. For example, 
our slot utilization rates have continued to slide in 
comparison with our competitors, and this situation 
has become more pronounced. During the previous 
year, we seriously analyzed this. Based on what we 
learned, we are currently about midway in our 
efforts to reinforce our sales capabilities.

S: Looking at containerships from a medium-
term perspective, if we assume that the exter-
nal environment remains unchanged, how 
long do you think it will take for MOL to 
return to the black through its own efforts?

I: The current market conditions are such that the 
entire industry is bleeding red ink. At this rate, the 
industry itself may be at an unsustainable level, so I 
think this trend will reverse in some way. However, 
MOL is not just anticipating a market recovery; it is 
also still advancing initiatives to enhance its cost 
competitiveness. Fully leveraging the 20,000 TEU 
vessels slated for delivery from 2017 onwards will 
also play a part.

Underlined words are explained in the Glossary on page 18.

26   Mitsui O.S.K. Lines

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In addition, we can also expect the terminal and 

logistics businesses in the containerships segment 
to provide greater contributions to earnings. 
Automation is proceeding smoothly at our contain-
er terminal in Los Angeles, which is expected to 
begin lowering costs in full from the latter half of 
2016 and to enhance proﬁ tability by winning over 

new customers. Moreover, we can expect our ter-
minal in Cai Mep, Vietnam and other locations to 
also accumulate proﬁ ts. Add to this the steadily 
growing logistics business, and we expect to return 
to the black in around two to three years if we 
forecast a moderate market recovery.

Question3

How do debates with outside directors improve outcomes?

S: MOL is seen as one of the pioneering compa-
nies in Japan for corporate governance, due in 
part to its introduction of an outside director 
system in 2000. Nevertheless, the Company was 
again forced to implement Business Structural 
Reforms resulting in a large loss in ﬁ scal 2015 
Can you tell me what kind of discussions took 
place with outside directors at the Board of 
Directors meetings leading to the implementa-
tion of Business Structural Reforms this time?

I: As you point out, we introduced outside directors 
at a relatively early stage. I feel we have also been 
leaders in fostering an open atmosphere conducive 
to earnest discussion. At Board of Directors meet-
ings, we welcome frank comments and questions 
from outside directors based on their backgrounds 
and experiences. These include questions spanning 
a range of previously unconsidered angles, often 
addressing the basics of whether a business deci-
sion was indeed fundamentally sound. They have a 
broad, comprehensive view of the global economy, 
trade structures, and the future investment climate. 
When we decide on an investment, we have 
received truly eye-opening remarks from outside 
directors in areas previously overlooked despite inci-
sive deliberation, such as the outlook for crude oil 

and energy demand going forward or how environ-
mental issues will pan out.
  MOL’s Board of Directors typically meets for 
three hours, with one hour of each meeting set 
aside for the Deliberation on Corporate Strategy 
and Vision. This is not a deliberation on individual 
agenda items but rather a free-form discussion with 
a set theme about our business strategies going 
forward. Here, too, the outside director’s remarks 
serve as an invaluable resource. Speciﬁ cally, when 
we discussed the expansion of offshore businesses, 
we received a comment that went to the core of 
the issue, asking how we felt about the fact that 
this is a large investment and would mean making 
a bold entry into a very different ﬁ eld from our 
existing marine transport business model. This com-
ment made a lasting impression.
  And in regard to containerships, we have also 
received comments about whether this segment 
can even survive as a business. There was a consis-
tently harsh exchange when we were coming up 
with ideas about how to improve the situation in 
relation to the Business Structural Reforms. The 
outside directors would always talk about relative 
inferiority. They’d ask where the problem is, if we 
had done a careful analysis and, if not, insist one 
be done. The matter that was the most difﬁ cult to 
perceive was the problem surrounding our sales 
capabilities. Admitting to ourselves that we were 
lacking in our sales capabilities was a tall mental 
hurdle to overcome. To a large degree, I think it 
was an outside director’s strict admonition in ﬁ scal 
2015 that brought us to the point where we could 
make this realization. In determining the current 
round of Business Structural Reforms, we have also 
beneﬁ ted from the counsel of the outside directors.

Annual Report 2016   27

2016/08/02   13:36
2016/08/02   13:36

 
The CEO and Analyst Dialogue

S: In last year’s annual report, you said, “we 
are currently working to reinforce total risk 
control.” If everything turns out as hoped, I 
believe MOL will be able to minimize losses 
even if the market experiences a downswing 
again in the near future. Please tell us about 
whether MOL has established a system capa-
ble of dealing with future market troubles and 
the status of these efforts.

I: Total risk control involves comparing the largest 
possible loss we could incur against our risk-free 
assets. There are both market risks and asset risks. 
We periodically assess whether we have an appro-
priate level of market exposure, looking at market 
risks in terms of how the market has historically 
evolved over the long term past and asset risks in 
terms of how asset prices of vessels have ﬂ uctuat-
ed. While monitoring our present position, we 
decide whether we can or cannot take on more 
risk. On the other hand, timing is also an important 
factor in making investments. We can’t just say shy 

away from all investment in a particular year 
because we don’t want to assume any additional 
risk at all. These competing demands are weighed 
and decided by the Board of Directors through vig-
orous debate. In the past, there were situations 
where we had to make investments intuitively 
based on experience as we did not have any kind 
of formal system in place. Now, however, we make 
extensive use of quantitative analysis and I feel the 
process has become more transparent.

Question4

Are there beneﬁ ts to being a full-line marine transport group?

H: Based on our talk so far, I really want to ask 
about how the board members feel about MOL 
being a full-line marine transport group. Do 
they feel MOL should stay this course? Can you 
tell me about the debate regarding the issue?

I: Quite frankly, the debate did not begin with the 
assumption that MOL should remain a full-line 
marine transport group. Nobody thinks MOL has to 
be a full-line marine transport group so therefore it 
must retain the containership business. We have 
always tried to ascertain how meaningful a contri-
bution each business will make to the Group. By 
doing this, we were in the end, able to accumulate 
enough businesses to constitute a full-line marine 
transport group. However, I do think that our port-
folio management has been a clear strength in the 
current market, enabling us to hedge our risks.
  Anyway, there was no assumption that MOL 
must remain a full-line marine transport group. 
Instead, debate obviously focused on whether or 
not we saw a path forward in the containership 
business. I feel that there undoubtedly is enduring 
value in the business and industry, as well as 
growth potential. Even now, though, we continue 
to regularly debate MOL’s current strengths, namely 
whether it can achieve solid returns on its business 
assets and competitive strengths.

Underlined words are explained in the Glossary on page 18.

Question5

What will MOL look like in a few years time?

S: What do you think will be different about 
MOL in three or ﬁ ve years from now?

I: Looking beyond the next three or ﬁ ve years, 
MOL’s unchanging challenge is laid out in the 
Company’s long-term vision “To make the MOL 
Group an excellent and resilient organization that 
leads the world shipping industry.”

I’d like to explain the speciﬁ c changes of our 
business metaphorically, borrowing from baseball. 
As MOL entered the 2000s, the Capesize bulker 
business was a homerun slugger. Capesize bulkers 
consistently hit the ball out of the park, driving up 
our score. 

Though the glory days of Capesize bulkers have 
passed, they continue to hold the key place in our 
batting order due to their long-term contracts. But 
you probably want to know who our up and com-
ing new players are. They are the LNG carriers and 
offshore businesses, which are growing and after 
two or three years, will be solid batters in our cen-
tral lineup.
  However, these solid batters are not homerun 
sluggers or power hitters at the height of their glory 
days like Capesize bulkers, but rather reliable batters 
with stable batting averages. In the long term, we 
would like to ﬁ nd another star batter to replace 
Capesize bulkers, but I think it will be a while before 
this new star enters the lineup. Basically, I think we 
should assume that the business environment will 
not be like it had been before.
  On the other hand, MOL already has many busi-
nesses that are hitting respectably, in the range of 
average hitters. Several ﬁ elds that we had relegated 
somewhat to the periphery—such as terminals, 
logistics, ferries, domestic transport and real 
estate—have already grown to the point of each 
pulling in several billion yen annually. In addition, 
several niche businesses have also started making 
steady contributions to earnings. One example is 
specialized methanol tankers, for which MOL has 
the No. 1 market share globally. We should contin-
ue to invest resources in these businesses and work 
to add polish to their competitive strengths. Then 

we might achieve a strong baseball team uniﬁ ed 
through great teamwork and reliable batting.
  Moreover, we have opportunities in new ﬁ elds, 
while planting a pivot foot in the marine transport 
industry. Our options include M&A when we see an 
opportunity to utilize our core competence and 
break into new ﬁ elds. Furthermore, in regard to 
environmental regulations, which control the fate 
of the marine transport industry, I believe we must 
showcase our strengths to our customers and 
adopt a proactive stance toward environmental 
measures. In the IT ﬁ eld, we will continue to invest 
human resources as we need to achieve break-
throughs in these ﬁ elds using AI and other technol-
ogies. I think this basically covers our game plan for 
the next three or ﬁ ve years.

S: Since becoming President, I’m sure you’ve 
met with many shareholders and investors. 
What stands out most from these conversa-
tions?

I: That would have to be the advice to be brutally 
honest, to provide the unembellished truth. Given a 
certain topic, how can you speak most objectively 
about it? You need to earn trust and show how 
you’re responsive. When asked during a conversa-
tion, most people cannot help but to try to empha-
size the positive. At this point, I think it is necessary 
to provide information to shareholders and inves-
tors while being very careful about not misleading 
them. I have been asked very pointed questions, 
but these turned out to be great opportunities to 
discipline myself for which I am very grateful.

H & S: We are also glad to hear that. Thank 
you for your time today.

I: Thank you.

28   Mitsui O.S.K. Lines

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MOL’s History: Spirit of Challenge and Innovation

1884

The Birth of Osaka Shosen Kaisha (OSK Line)

The founding of MOL can be traced back to Osaka 
Shosen Kaisha (OSK Line), which was established in 
1884 by 55 ship owners of Seto Inland Sea area in 
Western Japan and their in-kind contributions of 93 
vessels.

Osaka Shosen Kaisha (OSK Line)

1973

1985

Competitiveness of Japanese Flagged Vessels 
Challenged by the Yen’s Sharp Appreciation Following 
the Plaza Accord and Floating Exchange Rates

In 1973, Japan switched from a ﬁ xed exchange rate system 
where one U.S. dollar equaled ¥360 to a ﬂ oating exchange rate 
system. With the signing of the Plaza Accord in 1985, the yen 
appreciated sharply from around ¥240 per U.S. dollar to about 
¥120. This caused the competitiveness of Japanese ﬂ agged ves-
sels to nosedive. MOL began promoting mixed crews of Japanese 
and foreign national seafarers, and reduced a large number of 
Japanese seafarers as part of its restructuring process.

1995

Commenced First Alliance in Containership Services
 (The Global Alliance)

In containerships, massive investments are required for vessel construc-
tion, operating a number of sea routes and other aspects of the busi-
ness. MOL commenced the industry’s ﬁ rst global alliance with 
container shipping companies based in the United States, Europe and 
Hong Kong, to augment each other’s network of trade routes. The 
allied companies also worked to enhance customer service by sharing 
space on containerships and increasing the ports of call and the fre-
quency of stops.

2004
Daibiru Corporation becomes a 
consolidated subsidiary of MOL.

2010
The ﬁ rst participation 
in FPSO

2013
Japan’s ﬁ rst participa-
tion in FSRU project

1999
New Mitsui O.S.K. Lines is 
established by the merger of 
MOL and Navix Line.

1996
MOL acquires a share in chemical tanker 
operator Tokyo Marine

2012
The world’s ﬁ rst hybrid car carrier, 
the EMERALD ACE, is launched.

1989
Navix Line is established by the merger of 
Japan Line and Yamashita-Shinnihon Steamship.

Early

2000

s

AMERICA MARU (700TEU)

1964
Mitsui O.S.K. Lines 
(MOL) is founded by a 
merger of OSK Line and 
Mitsui Steamship.

1968
Full containership 
service commenced. 

1942
Mitsui & Co., Ltd. spins off its 
shipping department to create 
Mitsui Steamship Co., Ltd.

1961
World’s ﬁ rst automated ship, 
the KINKASAN MARU, is launched.

1945 1970

1983
Japan’s ﬁ rst specialized 
methanol tanker, the 
KOHZAN MARU is launched.

1984

The Devastation and Recovery of Japan’s Merchant Fleets from World War II

Japan’s private merchant shipping ﬂ eets were conscripted into military transport, losing a 
total of around 2,400 vessels and over 30,000 seafarers. While recovering from its defeat 
in the war, Japan becomes a major trading country that imports iron ore, petroleum and 
other resources while exporting automobiles, electrical appliances and other products. 
Growing in tandem with the rebounding Japanese economy, MOL provides much needed 
marine transport, promoting diversiﬁ cation and specialization of its businesses to ultimately 
develop into a full-line marine transport group boasting a wide range of vessel types.

1965
Japan’s ﬁ rst specialized 
car carrier, the OPPAMA 
MARU, is launched.

Launched the SENSHU MARU, an LNG Carrier

Demand, mainly from electric power companies, increased for imports 
of liqueﬁ ed natural gas (LNG), an energy source with a low environ-
mental burden. Requiring transport at minus 162 degrees Celsius, LNG 
is technically challenging to transport. MOL rose to the challenge, 
entering the LNG transport ﬁ eld in 1983. Since then, MOL’s ﬂ eet of 
LNG carriers has expanded to a world-leading 92 (including outstand-
ing orders) as of March 31, 2016.

The History of Our 
“Spirit of Challenge and Innovation”

Throughout its more than 130 years of history, MOL has grown into one of the world’s largest full-line 
marine transport groups 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 innovation”. Going forward, we will nurture this spirit and maintain course into the next 130 years.

Aggressive Investment in Resource and Energy 
Transport

After the 1999 merg-
er with Navix Lines, 
which was particularly 
strong in transporting 
natural resources and 
energy, MOL aggres-
sively invested in 
these ﬁ elds, predict-
ing China’s economic 
development and 
increased demand for resources. We continued to scale 
up our ﬂ eet of LNG carriers, crude oil tankers, and dry 
bulkers which transport iron ore, coal, etc.

2007
The World’s largest iron ore carrier, 
the BRASIL MARU, is launched.

Mid

2000

s

2015

China’s Commodity Import Boom Surges and 
Wanes

MOL’s aggressive investment in the ﬁ eld of natural 
resource and energy transport was successful. With the 
unprecedented marine transport boom brought about 
by China’s commodity import boom, we recorded histor-
ic proﬁ ts in ﬁ scal 2007. However, amid slowing econom-
ic growth worldwide and the oversupply of vessels 
following the economic crisis in 2008, the marine trans-
port market stumbled and has continued to struggle 
with ongoing stagnation. To respond to this vastly differ-
ent business environment, MOL implemented two major 
reforms: one in ﬁ scal 2012 and one in ﬁ scal 2015. In ﬁ s-
cal 2016, we will steadily implement the single-year 
management plan and sail past these rough seas.

30   Mitsui O.S.K. Lines

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Underlined words are explained in the Glossary on page 18.

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Market Position in the Industry

MOL operates a balanced oceangoing ﬂ eet. In terms of its total ﬂ eet size 
and presence in individual market categories, MOL ranks among the world’s 
top class shipping companies.

World Major Carriers’ Fleets (All Vessel Types)

(Number of vessels)

0

200

400

600

800

1,000

1,200

63

883

China COSCO (China)

NYK (Japan)

MOL (Japan)

K Line (Japan)

APM-Maersk (Denmark)

Oldendorff (Germany)

MSC (Switzerland)

Fredriksen (Norway)

China Merchants (China)

CMA-CGM (France)

Teekay (Canada)

Swiss Marine (Switzerland)

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 2016)

Car Carriers

(Number of vessels)

Global Major Carriers’ Fleet Composition (by DWT)

20

40

60

80

100

52

26 9 3 10

Source: MOL (March 2016)
Note: Excluding spot-chartered vessels

Containerships

(Thousand TEU)

(%)
0

Global Seaborne Trade

MOL

NYK

K Line

APM-Maersk

China COSCO

Evergreen

Teekay

Frontline

Paciﬁ c Basin

■ Dry Bulker  ■ Tanker  ■ LNG Carrier  ■ Car Carrier  ■ Containership

Source:  World seaborne trade = MOL estimates based on Clarkson data and others  Fleet composition = MOL estimated based 
on each company’s published data and Clarkson/MDS (Excluding passenger ships, ferries and tugs)

Source: Alphaliner  (April 2016)

NYK

MOL

K Line

EUKOR

GLOVIS

HOEGH

Maersk

MSC

CMA-CGM

China COSCO

Evergreen

Hapag-Lloyd

Hamburg-Sud

Hanjin

OOCL

UASC

MOL

APL

Yang Ming

NYK

Hyundai

K Line

Dry Bulkers

(Thousand deadweight tons)

0

NYK

Oldendorff

China COSCO

MOL

K Line

10,000

20,000

30,000

40,000

50,000

32,719

Source: Companies’ published data 
and Clarkson (March 2016)

Swiss Marine

Tankers

(Thousand deadweight tons)

China COSCO

MOL

Teekay

NYK

China Merchants

SCF

Source: Companies’ published 
data and Clarkson (March 2016)

LNG Carriers

(Number of vessels)

■■ In operation ■■ On Order

*Qatar Gas Transport Company Ltd.
Source: MOL (March 2016) 
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

Teekay

MISC

0

0

0

5,000

10,000

15,000

20,000

16,587

25

50

75

69

100

23

92

40

80

120

160

116

0

600

1,200

1,800

2,400

3,000

546

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Overview of Operations

Bulkships
Dry Bulkers

Consolidated Revenues Breakdown (FY2015)

General Cargo Carrier/
Heavy Lifter

8%

Steaming Coal Carrier*

10%

Wood Chip Carrier

10%

General Bulk Carrier

26%

Iron Ore and 
Coking Coal 
Carrier

46%

* From FY 2016, Steaming Coal Carrier business is included in the Energy Transport Business Unit.

Dry Bulker Fleet Table (Number of vessels)

Vessel Type

Standard DWT

At the 
end of 
Mar.2016

At the 
end of 
Mar.2015

Use

Capesize

180,000

Panamax

80,000

Handymax

55,000

Small handy

33,000

Wood chip carriers

54,000

Others (Heavy 
lifter, General 
cargo carriers)

Total

12,000

92

31

60

52

41

54

104

37

72

56

43

55

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.

Wood chips, 
soybean meal, etc.

Steel products, 
plants, etc.

330

367

Portfolio

Highly Specialized

F
i
r

m
P
r
o
f
i
t
s

Wood
Chip
Carriers

Heavy Lifters
and General
Cargo Carriers

Capesize
Bulkers

Small and
Medium-Sized
Bulkers

V
a
r
i
a
b
l
e

P
r
o
f
i
t
s

Less Specialized

34   Mitsui O.S.K. Lines

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MOL16_英文_出校データ戻し.indd   34-35

Kenichi Nagata Executive Vice President

Director General of 
Dry Bulk Business Unit

Fiscal 2015 in Review
The dry bulker market in ﬁ scal 2015 remained at historic 
lows even into the new year. Autumn did not bring the 
expected seasonal boost in demand.

As for Capesize bulkers, on the supply side, there was a 
slight overall increase in the number of vessels as deliveries 
declined and more vessels were demolished due to persis-
tently weak market conditions. On the demand side, howev-
er, crude steel production fell in China, where the economy 
continues to slow, causing iron ore imports to stagnate. 
Sentiment soured amid weakness in forward freight agree-
ments (FFAs) and iron ore and other commodity markets. In 
addition, full-scale operations of 400,000-ton very large 
iron-ore Valemax carriers commenced, further reducing 
activity in the spot market. All these factors seem to have 
contributed to the sluggish market conditions. The number 
of scrapped Panamax bulkers did, however, increase greatly 
and deliveries of new vessels slowed. In contrast, new deliv-
eries of small-sized vessels greatly eclipsed demolitions. With 
Chinese coal imports declining due to environmental con-
cerns, the market remained weak for small- and medium-
sized dry bulkers as overcapacity persisted.
  We made diligent efforts to secure highly stable proﬁ ts 
with long-term transport contracts, improve operational efﬁ -
ciency and cut costs. Reﬂ ecting the severe market conditions, 
however, proﬁ tability signiﬁ cantly worsened year on year and, 
for the ﬁ rst time since ﬁ scal 2012, this resulted in a loss.

Fiscal 2016 Initiatives 
We implemented a new round of Business Structural 
Reforms in the fourth quarter of ﬁ scal 2015 and recorded an 
extraordinary loss, which included ¥117.4 billion for such 
related expenses as redelivering chartered-in vessels before 
maturity of charter contracts and selling owned vessels.
  We conducted the ﬁ rst set of Business Structural 
Reforms back in ﬁ scal 2012. The central achievement of 
those reforms was shifting sales and operations of free ves-
sels to the shipping hub Singapore, simultaneously raising 
the competitiveness of the ﬂ eet by lowering vessel costs to 
then current market prices. At the same time, we focused on 
raising the ratio of our ﬂ eet that is covered by cargo trans-

port contracts. This was eventually raised from 40% to over 60% 
during the course of the three years that followed.

Since then, however, market conditions have worsened much 

more than we predicted, including the Baltic Dry Index hitting 
record lows as cargo ﬂ ows stagnated with the slowdown in 
China’s growth. Considering the external environment, it is 
unlikely for the time being that market conditions will recover to 
the point we had predicted in ﬁ scal 2012. Determining the need 
to react swiftly to this new reality, we again implemented a 
round of reforms.

In this round, as for small- and medium-sized dry bulkers, we 
will essentially withdraw from operating free vessels on the spot 
market that are not backed by cargo demand. In other words, 
we will considerably streamline our ﬂ eet to a level in line with 
the number of cargo contracts we have accumulated. Our main 
aim is to concentrate on deﬁ nitively meeting the cargo transport 
needs of our customers. At the same time, we are further 
enhancing our competitiveness by lowering the vessel costs of 
our remaining core ﬂ eet to match the current market. In addi-
tion, we will reduce free vessels for Capesize bulkers as well.

In ﬁ scal 2016, we will steadily carry out the single-year man-

agement plan with the goal of completing the current set of 
Business Structural Reforms. We will continue to tirelessly focus 
our efforts on returning to proﬁ tability, recognizing the need to 
swiftly return to a growth trajectory by eliminating the factors 
that had negatively impacted the highly stable proﬁ ts that our 
long-term transport contracts generate.

Global Seaborne Trade of Major Dry Bulk Cargoes
(Millions tons)

3,500

3,000

2,500

2,000

1,500

1,000

500

0

2010 2011 2012 2013 2014 2015

(cid:2) Iron Ore (cid:2) Coking Coal (cid:2) Steaming Coal (cid:2) Grain 
Source: Clarkson

 YOY %

Vessels Supply (Capesize) (Number of vessels)

300

200

100

0

-100

2010 2011 2012 2013 2014 2015

12%

10%

8%

6%

4%

2%

0%

-2%

24%

16%

8%

0%

-8%

Underlined words are explained in the Glossary on page 18.

(cid:2) Deliveries  (cid:2) Demolitions 
Source: MOL internal calculation based on IHS-Fairplay

 YOY %

Sustainability Highlights

Installing Ballast Water Treatment Systems 
in Advance of new Environmental 
Regulations

Ballast water, which is discharged while loading cargo, can 
transport marine organisms around the world, negatively 
impacting marine ecosystems and biodiversity. Accordingly, 
the International Maritime Organization (IMO) adopted the 
Ballast Water Management Convention in February 2004, 
and its ratiﬁ cation is under way. MOL developed a Ballast 
Water treatment system in collaboration with manufacturers 
and, in ﬁ scal 2014, set a policy of installing the system on 
the Company’s vessels before the convention takes effect. 
With a vigilant eye on the ratiﬁ cation of the convention, we 
have been installing the system and, in ﬁ scal 2015, complet-
ed installation on 30 vessels including dry bulkers.

Ballast voyage departure port

Destination port

Marine 
organisms

Destruction of the 
marine ecosystem

Unloading cargo and 
taking in ballast water

Loading cargo and 
discharging ballast water

[Dry Bulker] Capesize Bulker: AZUL BRISA

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The LPG tanker business remained healthy in ﬁ scal 2015. A 
major Chinese client became, as both a cargo owner and a ship-
owner, a member of the pool of very large LPG carriers (VLGCs) 
jointly operated by MOL’s subsidiary Phoenix Tankers Pte Ltd. This 
increased the ﬂ eet size to a world-leading 29 vessels and secured 
new cargo on the United-States/China route.

Fiscal 2016 Initiatives
Although China is expected to continue stockpiling strategic 
reserves of crude oil in ﬁ scal 2016 and beyond, we foresee the 
number of new VLCC deliveries increasing year on year and the 
market softening. The division’s policy is to continue reducing 
market exposure and prioritize the accumulation of long-term, 
highly stable proﬁ ts. We will continue seizing favorable market 
conditions and promoting the shift toward medium- and long-
term transport contracts.

The parcel chemical transport business operated by Tokyo 
Marine Asia Pte Ltd. can be cited as a ﬁ eld expected to accumu-
late ﬁ rm proﬁ ts going forward. This business entails transporting 
small lots of various chemical products on ships ﬁ tted with segre-
gated stainless steel tanks. This is a business that highly favors 
experience and knowhow related to the safe transport of chemi-
cal products and a proven track record in vessel management 
and seafarer training. Moreover, this is a very difﬁ cult ﬁ eld to 
enter as it is necessary to have a ﬂ eet of the right size to ensure 
effective deployment of vessels. Going forward, in this business, 
we will strive to stabilize and improve proﬁ tability by consolidat-
ing small lots of high value-added cargo while using contracts of 
affreightment (COA) as a central pillar. We also plan to expand 
the scale of our ﬂ eet by replacing existing vessels and securing 
up to 13 new vessels while enhancing cost competitiveness by 
using larger vessels.

The methanol tanker business, which MOL spearheaded 
globally in 1982, is stable with operations under long-term con-
tracts, and we are building up our ﬂ eet. Upon delivery of those 
still under construction, our ﬂ eet will expand to 19 vessels. Since 
the shale revolution, expansions of North American methanol 
plants, which use inexpensive shale gas, have been planned. If 
those expansions are successfully achieved around 2020, we pre-
dict transport demand for methanol will expand even more 
greatly. We believe this business can continue to steadily contrib-
ute to proﬁ ts as a pillar of highly stable proﬁ ts.

The tanker division’s ﬂ eet is currently one of the world’s larg-

est and we will continue our strenuous efforts to maintain and 
improve our competitiveness while building brand power as a 
tanker shipping company by investing in ﬁ elds expected to pro-
vide stable growth.

Crude Oil: Global Seaborne Trade by Import 
Country/Area  (Million tons)

2,000

1,500

1,000

500

0

2010

2012 2013 2014 2015 2016
(cid:2) China (cid:2) Japan (cid:2) Other Asia/Paciﬁ c (cid:2) Europe (cid:2) North America (cid:2) Others
Source: Clarkson

2011

Vessels Supply (VLCC) (Number of vessels)

75

50

25

0

-25

2010 2011 2012 2013 2014 2015

(forecast)

15%

10%

5%

0%

-5%

(cid:2) Deliveries  (cid:2) Demolitions 
Source: MOL internal calculations based on IHS-Fairplay

 YOY %

Sustainability Highlights

World’s First Methanol-Powered Carriers 
on Order

MOL has ordered three methanol carriers equipped 
with dual-fuel low-speed diesel engines that use meth-
anol as a propellant—a world’s ﬁ rst—with delivery 
scheduled during ﬁ scal 2016. The main diesel engine 
emits less CO2 and NOX than normal engines that use 
heavy fuel oil. And because methanol does not contain 
SOX, its low environmental load makes this fuel a pref-
erable alternative to heavy oil.

Energy Transport Business Unit

Establishment of the “Energy Transport 
Business Unit”

Energy needs are diversifying. This includes the need to 

respond to deregulation sweeping the electric power 

industry. The Group established the “Energy Transport 

Business Unit” to comprehensively meet the complex 

needs of major customers, both in Japan and overseas, 

for petroleum, coal, LNG, ethane, methanol, LPG and 

other forms of energy. We reorganized the Sales 

Division to optimally place personnel and strengthen 

cooperation between sections. To ensure we propose 

and provide transport services most appropriate for 

customer needs, we will continue to enhance our sales 

capabilities and cost competitiveness.

Fiscal 2015 in Review
In ﬁ scal 2015, the tanker division achieved a huge increase 
in proﬁ t due to favorable market conditions across all vessel 
types. Thanks to an increase in real, non-speculative, oil 
demand and a buildup in China’s strategic reserves amid 
falling crude prices, crude oil transport demand also 
increased. Due to the shale revolution, West African light 
crude, which had been exported to the United States, is 
now being exported to India and China, leading to an 
increase in ton-miles. All of these factors have helped to 
greatly improve market conditions for crude oil tankers. We 
have worked hard to seize these favorable conditions and 
amass medium- to long-term contracts. In product tankers, 
operating rates at reﬁ neries have remained high globally 
and cargo ﬂ ows for petroleum products have taken off, 
leading to solid business performance. This solid perfor-
mance is also thanks to ﬁ rm proﬁ ts from chemical tankers 
operated by subsidiary Tokyo Marine Asia Pte Ltd and 
methanol tankers on long-term contracts.

Takeshi Hashimoto
Senior Managing Executive Ofﬁ cer
Director General of
Energy Transport Business Unit

Akio Mitsuta
Managing Executive Ofﬁ cer
Deputy Director General of
Energy Transport Business Unit

Bulkships
Tankers

Consolidated Revenues Breakdown (FY2015)

Chemical Tanker

28%

LPG Tanker

9%

Methanol Tanker

10%

Crude Oil Tanker

32%

Product Tanker

21%

Tanker Fleet Table (Number of vessels)

Portfolio

Highly Specialized

Methanol
Tankers

Chemical
Tankers

LPG
Tankers

Crude Oil
Tankers

F
i
r

m
P
r
o
f
i
t
s

Product 
Tankers

V
a
r
i
a
b
l
e

P
r
o
f
i
t
s

At the end 
of Mar. 
2016

At the end 
of Mar. 
2015

Vessel type under pool 
management 
(at the end of March 2016)

Crude oil tankers

Product tankers*1

Chemical tankers*2 
Including Methanol 
tankers

LPG tankers

42

45

79

9

42

50

LR1 (70,000 DWT) 
MR (50,000 DWT)

75

Chemical tanker

9

VLGC (very large gas 
carrier, 80,000m3)

Total

175

176

*1 Main cargoes: gasoline, naphtha, kerosene, jet fuel and gas oil, etc.
*2 Main cargoes: xylene, benzene, methanol and plant oil, etc.

36   Mitsui O.S.K. Lines

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Less Specialized

Underlined words are explained in the Glossary on page 18.

The ﬁ rst ship equipped with a duel-fuel diesel engine—the TARANAKI 
SUN—was delivered in April 2016.

Annual Report 2016   37

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2016/08/02   13:36

 
 
 
 
 
 
Bulkships
LNG Carriers/
Offshore Businesses
Steaming Coal Carriers

New Projects Starting Operation in FY2016

LNG Carriers

Osaka Gas

ex.Australia

To Japan

1 vessel

Kansai Electric Power

ex.Australia

To Japan

1 vessel

Exxon Mobil

ex.Papua New Guinea

To China

1 vessel

SINOPEC (China)

ex.Australia

To China

2 vessels

Petronet (India)

ex.Australia

To India

1 vessel

Offshore Businesses

Petrobras

Brazil

Tullow Ghana

Ghana

Ethane Carriers

FPSO

FPSO

1

1

Reliance (India)

ex.USA

To India

6 vessels

Portfolio

Highly Specialized

Medium- to long-term contracts

Offshore
Businesses

LNG Carriers
(medium- to long-
term contracts)

F
i
r

m
P
r
o
f
i
t
s

Steaming
Coal Carriers

T/C

V
a
r
i
a
b
e

l

P
r
o
f
i
t
s

Less Specialized

Fiscal 2015 in Review
We recorded large increases in revenue and income in ﬁ scal 2015 due 
to the delivery of four new LNG vessels and one FPSO (our third), 
which were all built based on secured long-term contracts, and the 
shedding of the previous year’s temporary expenses, including sched-
uled dry-dockings. Although we have been recording stable earnings 
based on long-term contracts, the investments made over the last few 
years have clearly had an impact on this year’s performance as well.
  On the other hand, falling crude oil, gas and other energy prices 

put an end to the long-running global resource boom. With 
the slowdown in new development projects, we were unable 
to achieve remarkable progress in securing new long-term 
contracts in the LNG carriers and offshore businesses during 
ﬁ scal 2015.
  We expect energy prices and investments in new large-
scale projects to begin recovering from the latter half of ﬁ s-
cal 2016 into ﬁ scal 2017 and onwards. It may take some 
time before we secure contracts for new projects.

Fiscal 2016 Initiatives
MOL has around 30 outstanding orders for LNG and ethane 
carriers, all being built based on long-term contracts. 
Revenue and income will likely continue to increase in ﬁ scal 
2016 as 14 new projects, including six for ethane carriers, 
are scheduled to launch. Fiscal 2016 is shaping up to be a 
year in which we can continue to steadily push ahead with 
our goal of accumulating long-term, highly stable proﬁ ts. 
Hiring and training efforts are also advancing on course as 
we seek to secure enough seafarers to match the vessels 
scheduled for delivery. Every related division including 
Marine Safety and Technical is doing their best to ensure the 
smooth launch of all forthcoming projects.

Expanding overseas will be central to our ﬁ scal 2016 
strategy. Speciﬁ cally, we are actively targeting China, India 
and Southeast Asian countries, where there is growth poten-
tial for energy as their populations expand, and targeting 
Europe, which is promoting measures to lower their depen-
dence on Russian energy. Through these endeavors, we will 
extend our global customer base nurtured through far-rang-
ing projects over many years, and continue to accelerate 
business expansion with renewed focus on securing and 
accumulating highly stable proﬁ ts.

The LNG carrier division is distinguished by its long track 
record of safe transportation and the long-standing trust of 
its customers. Moreover, we know how to succeed through 
collaboration. Our business model includes joint ventures 
and vessel sharing with companies in Japan and overseas. 
We are widely recognized for our ﬂ exible response capabili-
ties, adapting to the unique requirements of each country 
and region, as well as our management capabilities to coor-
dinate with partners, align long-term projects and manage 
them successfully. We are steadily elevating MOL’s LNG carri-
er brand.

In addition, offshore businesses are a relatively new area 

for MOL. Since the Offshore and LNG Project Division was 
established in June 2014, we have built solid relationships 
with partner companies and are currently engaged in six 
FPSO  projects and one FSRU project; three facilities are 
already in operation with the other four under construction. 
We will see these projects through to fruition while main-
taining our tight-knit relationships with partners, leveraging 
all our knowhow and strength. At the same time, we aim to 
expand the scale of the offshore business and will continue 
to steadily grow these businesses over a long-term span of 
ﬁ ve to ten years.

38   Mitsui O.S.K. Lines

MOL16_英文_出校データ戻し.indd   38-39
MOL16_英文_出校データ戻し.indd   38-39

Coal Carrier Division Foresees Demand in 
Emerging Economies, in Addition to Long-term 
Stable Business with Domestic Customers
The steaming coal carrier division, which is expanding its 
business mainly in mid- to long-term contracts with electric 
power companies in Japan, had been included in the dry 
bulker division but is now one of the divisions under the 
Energy Transport Business Unit following the most recent 
restructuring of our sales organization. This division will con-
tinue to meet diversifying customer needs along with MOL 
Coastal Shipping, Ltd., which operates coastal bulkers.
  With the deregulation of the Japan’s electric power indus-
try in 2016, the cheapest electric power fuel—coal—is getting 
another look. Many new plans for coal-ﬁ red electric power 
plants are being unveiled in Japan. While some proposals may 
be difﬁ cult to implement due to newly established CO2 emis-
sion reduction targets, we will continue to actively expand our 
sales activities so we do not miss any business opportunities. 
In addition, to address the serious lack of electric power, there 
are many plans for the construction of coal-ﬁ red electric 
power plants in emerging economies like Southeast Asian 
countries and India. We can expect a large increase in over-
seas demand for coal transport going forward.

Looking ahead, the coal carrier division will continue to 
foster cooperation between the tanker division and LNG car-
rier/offshore businesses division as we work to strengthen the 
MOL brand in the energy transport ﬁ eld.

Underlined words are explained in the Glossary on page 18.

LNG: Demand Forecast by Area

6%

6%

35%

2015

8%

9%

13%

14%

23%

8%

4%

11%

2020 (forecast)

10%

7%

21%

(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

LNG: Seaborne Trade (Million tons)

400

350

300

250

200

150

100

50

0

2007

2008

2009 2010 2011 2012 2013 2014 2015 2016* 2017* 2018* 2019*  2020*

*forecast

(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

Sustainability Highlights

New Seafarer Training Program for Ethane 
Carriers Created to Suit the Increasing 
Sophistication  of Liquid Gas Transport

Our seafarer training program for ethane carriers was the 
ﬁ rst in the world to attain the Society of International 
Gas Tanker & Terminal Operators Ltd. (SIGTTO*) standard 
certiﬁ cation. MOL has for a long time carried out the 
LNG Carrier Standard Training Course based on SIGTTO 
standards. With this certiﬁ cation, MOL became the ﬁ rst 
shipping company in the world able to offer SIGTTO 
accredited standard training courses for all liqueﬁ ed gas 
transport, including liqueﬁ ed ethane gas (LEG) and LPG, 
at its own training centers.

[Steaming Coal Carrier] SOMA MARU

Annual Report 2016   39

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Bulkships
Car Carriers

Portfolio

Highly Specialized

Naotoshi Omoto Managing Executive Ofﬁ cer

F
i
r

m
P
r
o
f
i
t
s

Car Carriers

T/C

V
a
r
i
a
b
l
e

P
r
o
f
i
t
s

Less Specialized

Fiscal 2015 in Review
Global auto sales exceeded 89 million units in calendar 2015, a record 
high. This increase was headed by China, where measures were intro-
duced to lower taxes on small-sized vehicles, and the United States, 
where sales remained ﬁ rm throughout the year. On the other hand, 
the number of vehicles transported by sea worldwide stayed level at 
around 15 million units. The number of vehicles exported from Japan, 
however, surpassed the originally projected 4 million units on 
increased U.S. demand for imports as Japanese automakers favored 
domestic production due to a weaker yen. Shipments to emerging 
and oil-producing nations ﬂ agged as slumping crude oil prices placed 
downward pressure on their economies. Ultimately, the car carrier 
division saw income fall from the previous ﬁ scal year despite efforts to 
minimize ballast voyages and to reduce operating costs.

The Company has long been active in shipping cargo between 
points outside of Japan as well as shipping imports to Japan. Volumes 
in cross trades and imports achieved major progress. One example is 
a contract with a major European automaker to export vehicles from 
a Mediterranean port. Previously, vehicles produced in southern and 
central Europe were transported by rail to northern European ports 
and then exported to Asia. Our new service allows the automakers to 
use maritime transport from this Mediterranean port, which is closer 
to production bases, thereby lowering their inland shipping costs. We 
also acquired a multi-year contract to transport vehicles for a major 
U.S. automaker that is ramping up production in India. We achieved 
an impressive record for these kind of cross trades and inbound 
trades in ﬁ scal 2015.

  On the other hand, due mainly to unstable local rail con-
ditions, we haven’t yet been able to achieve the earnings 
originally projected for the Mexican vehicle export service 
launched in April 2014. However, global automakers prize 
Mexico as a production base for U.S. auto imports and major 
automakers will continue to ramp up operations in the coun-
try going forward, leading to stable earnings in the medium- 
to long-term. MOL will continue raising transport quality and 
steadily implementing measures to improve proﬁ ts while 
working with customers to consider total logistic solutions, 
including lowering costs for rail, truck and other forms of 
inland transportation.

Fiscal 2016 Initiatives
In recent years, trade patterns for vehicles have been growing 
more complex as Japanese automakers launched overseas 
manufacturing bases and then expanded production to cover 
solid demand from neighboring regions. We have uniﬁ ed our 
car carrier ﬂ eet—one of the largest in the world—around a 
standard vessel size with high usability in various sea lanes 
and ports across the globe. This has enabled us to respond 
ﬂ exibly to diversifying customer needs and trade patterns. 
MOL is bucking the industry trend toward larger vessels fol-
lowing expansion of the Panama Canal and is instead pursing 
its own strategy. In non-marine vehicle transport, we are 
advancing in areas such as logistics. We have already racked 
up accomplishments in the vehicle terminal business in India, 
the United Kingdom and the Netherlands, as well as the 
inland transport business in Thailand, Indonesia and China. 
Going forward, we are considering making an entry into such 
regions as Mexico and Turkey where the production and 
import of vehicles is expected to expand.

Long-distance vehicle transport bound from Japan for 
North America and Europe appears to have peaked. We are 
entering a period of transition toward cross-trade transport. 
Always mindful of automakers’ strategies, MOL is optimizing 
the car carrier ﬂ eet for more efﬁ ciency. We are striving to 
improve customer satisfaction by enhancing our sales capa-
bilities across our global network.

Underlined words are explained in the Glossary on page 18.

40   Mitsui O.S.K. Lines

MOL16_英文_出校データ戻し.indd   40-41
MOL16_英文_出校データ戻し.indd   40-41

Main Routes

Global Car Seaborne Trade
(Thousand units) 

(excluding CKD)

16,000

12,000

8,000

4,000

0

2010 2011 2012 2013 2014 2015

Car Export from Japan by Destination
 (Thousand units) 

(excluding CKD)

Car Export from Emerging Countries
(Thousand units)

(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.

6,000

4,500

3,000

1,500

0

2010 2011 2012 2013 2014 2015

6,000

4,000

2,000

0

2010 2011 2012 2013 2014 2015

(cid:2) North America (cid:2) Europe (cid:2) Middle East (cid:2) Oceania  (cid:2) Asia (cid:2) Latin America (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.

Sustainability Highlights

Bow Design for Next-Gen Car Carrier FLEXIE 
Expected to Lower CO2 Emissions About 2%

The next-generation car carrier FLEXIE is scheduled to be 
delivered in 2017. Wind resistance is reduced by making 
the bow round, cutting CO2 emissions about 2% com-
pared with current car carriers. The new bow shape is the 
result of joint research among MOL, MOL Techno-Trade, 
Ltd. and Akishima Laboratories (Mitsui Zosen) Inc.

Next-gen car carrier FLEXIE

[Car Carrier] EUPHONY ACE

Annual Report 2016   41

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2016/08/02   13:36

 
 
 
 
Containerships

Containerships

Revenue Breakdown by Trade  (FY2015)

Intra-Asia Trade

18%

North-South Trade

10%

Europe Trade

27%

Portfolio

Highly Specialized

Terminals
& Logistics

ロジス
ティクス

T/C

F
i
r

m
P
r
o
f
i
t
s

V
a
r
i
a
b
e

l

P
r
o
f
i
t
s

Containerships

Less Specialized

Fiscal 2015 in Review
The containership business posted a loss of ¥29.8 billion in ﬁ scal 2015 
as the market stagnated at unprecedented lows for Asia-Europe trade 
and Asia-South America East Coast trade, causing the loss to expand 
year over year. On the Asia-Europe route, the gap between supply and 
demand widened with shipping companies delivering new Ultra Large 
Container Ships (ULCSs) in brisk succession even as cargo shipments 
bound for Europe declined. On the Asia-South America East Coast 
route, there was a steep drop in cargo bound for Brazil due to a rapid 
downturn in the economy sparked by falling natural resource prices.
  On the Asia-South America East Coast route in particular, MOL 
has comparatively large capacity and was severely impacted by the 
decline in trade. To meet the challenge posed by this decline, we 
began joint operations with Maersk and MSC from July 2015 and 
pursued such rationalization efforts as reducing the number of ports 
of call and replacing vessels to improve operating efﬁ ciency. 

42   Mitsui O.S.K. Lines

MOL16_英文_出校データ戻し.indd   42-43
MOL16_英文_出校データ戻し.indd   42-43

Liner Division
Akihiko Ono Managing Executive Ofﬁ cer

North America 
Trade

45%

Nevertheless, these efforts were unable to make up for the 
worsening market conditions.
  We implemented Business Structural Reforms in the 
fourth quarter ﬁ scal 2015, recording ¥61.9 billion in related 
expenses as an extraordinary loss. These expenses mainly 
comprise of an impairment loss on relatively costly mid-size 
containerships. To improve proﬁ tability on the Asia-South 
America East Coast route, we carried out even greater ratio-
nalization of our service in February 2016, halving capacity, 
and are disposing of surplus vessels. As a result of the 
reforms, we expect to essentially eliminate the structural 
disadvantage MOL had relative to other companies.

Fiscal 2016 Initiatives
In addition to improving our proﬁ tability through the previ-
ously mentioned Business Structural Reforms, we are work-
ing to improve the quality of business and enhance yield 
management in ﬁ scal 2016. As a result of prioritizing cost 
cuts and the deep integration of sales functions over the last 
few years, our approach became overly standardized, mak-
ing it difﬁ cult for MOL to differentiate our brand from our 
competitors. We are now in the process of reinforcing our 
worldwide sales and customer service organization in order 
to improve our capability to provide the high level of service 
our customers require. 

Since the beginning of 2016, the entire Liner division has 
adopted shared targets and focused efforts on the initiatives 
outlined under the vision of “C.A.R.E.”: Care for our cus-
tomers, Assure quality, Reinforce sales and Enhance custom-
er service. Additionally, in regards to yield management, 
which aims to maximize round trip proﬁ tability, we will 
strengthen our forecasting accuracy in order to more pre-
cisely predict and communicate container ﬂ ows in a manner 
which will allow us to reduce equipment repositioning 
expense. The newly established Shipment Management 
Center (SMC), located in the United States, serves as a good 
example of our progress towards improving customer service 
and enhancing yield management. The SMC functions as a 
high-level customer response unit offering the capability to 

quickly generate revenue paying cargo for surplus equipment. 
Furthermore, we began development of a new enterprise 

system last year. Regarding the functions that contribute to 
improved customer service and enhanced yield management, 
development is progressing ahead of schedule. First, we are unit-
ing our global customer information on a single system and cre-
ating a customer relations management (CRM) system for use 
across the entire organization. We are working to enhance cus-
tomer service by improving system functions that automatically 
notify customers of their cargo status, as well as enhancements 
for searching bookings and contracts. In addition, from the per-
spective of improving yield management, we are using the latest 
tools to promote the analysis and sharing of data in order to 
improve turnover of our overall container ﬂ eet.

Terminals & Logistics

Port Projects & Logistics Business Division 
Toshiya Konishi Managing Executive Ofﬁ cer

The Port Projects & Logistics Business Division, which is expected 
to grow and secure relatively ﬁ rm proﬁ ts, separated from the 
Liner Division at the end of April 2015 to enable expanded busi-
ness activities. In the terminal (port projects) business, we are 
continuing to raise operating efﬁ ciency at major ports by actively 
introducing the latest technology. These efforts include expand-
ing automated operation at our terminal at the Port of Los 
Angeles and jointly funding a leading-edge fully-automated ter-
minal at Rotterdam Port, which opened in September 2015. In 
addition, we began work on expanding the terminal we operate 
at the Port of Kobe in July 2016 and will continue to actively pro-
mote new terminal businesses in Vietnam, Thailand and other 
Southeast Asian countries.

In the logistics business, MOL Logistics established a local 

subsidiary in Myanmar in May 2016. The company is also 
enhancing its services and actively working to expand its loca-
tions in growth regions, primarily in other Southeast Asian coun-
tries. In heavy cargo transport, we are expanding our business by 
providing optimal transport and one-stop services encompassing 
containerships, multipurpose cargo ships and RoRo ships under 
the uniﬁ ed brand “MOL Project & Heavy Cargo,” which 
launched in March 2015.

Global Containership Capacity by TEU Size Range 
(Thousand TEU)

20,000

15,000

10,000

5,000

0

2010

2011

2012

2013

2014

2015

20%

15%

10%

5%

0%

(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 
Source: MOL internal calculations based on Alphaliner / IHS-Fairplay

 YOY %

Asia-North America Container Trade Cargo 
Movements (Million TEU)
(Excluding Canada cargo)

15

10

5

0

2010

2011

2012

2013

2014

2015

(cid:2) Outbound (cid:2) Inbound

Source: Piers/JoC etc

Asia-Europe Container Trade Cargo 
Movements (Million TEU)
(Including Mediterranean cargo)

15

10

5

0

2010

2011

2012

2013

2014

2015

(cid:2) Outbound (cid:2) Inbound

Source: Drewry

Underlined words are explained in the Glossary on page 18.

TraPac Container Terminal in Los Angeles

Annual Report 2016   43

2016/08/02   13:36
2016/08/02   13:36

 
 
 
 
 
Ferries & 
Coastal RoRo Ships

Toshiyuki Sonobe Managing Executive Ofﬁ cer

Portfolio

Highly Specialized

Ferries &
Coastal RoRo
Ships

Associated
Businesses
    (maritime-related)

F
i
r

m
P
r
o
f
i
t
s

Associated
Businesses
(real estate)

T/C

V
a
r
i
a
b
e

l

P
r
o
f
i
t
s

Less Specialized

Fiscal 2015 in Review
For the half year beginning August 2015, our ferry services on the 
Eastern Japan route connecting a port northeast of Tokyo with 
Hokkaido were forced into irregular operations with one fewer vessel 
due to the ﬁ re that occurred on the SUNFLOWER DAISETSU. This 
lowered capacity, reducing the number of automobiles and trucks 
transported as well as the number of passengers. Although lower 
fuel prices contributed to lower costs, revenue fell from the previous 
year, and ordinary income held steady at ¥4.4 billion.

A shortage of truck drivers, a graying population and enforce-
ment of legitimate labor management in the trucking sector have all 
helped accelerate a modal shift in long distance transport from inland 
transport to ferries. As the Japanese economy recovers, cargo vol-
umes are expected to continue to rise.

Amid this environment, we decided in ﬁ scal 2015 to replace the 

Sustainability Highlights

Ferry Sunﬂ ower Offers Pleasant Voyages 
while Reducing Environmental Load

To offer more comfortable and relaxing voyages, our 

new vessels scheduled for delivery in 2018 will each 

have 94 rooms, 20% more than our current vessels, 

and each room will have a toilet, shower, refrigerator 

and sink. The vessels will also provide 150% more 

public space, including a spacious, open entry way 

on the third ﬂ oor that lets the breeze through. To 

play a greater role in the eco-friendly modal shift in 

Japan, the new ferries will have 16% more space for 

loading trucks. We 

are also working to 

lower their environ-

mental load by 

adopting a new 

propulsion system.

[Ferry] SUNFLOWER SATSUMA 

existing two ferries which operate the Western Japan route 
with new, upgraded vessels in ﬁ scal 2018. This is not our 
only effort to capture demand for ferry transportation and 
actively expand business. Two new vessels, ordered in the 
previous ﬁ scal year, are expected to launch in ﬁ scal 2017.

Fiscal 2016 Initiatives
Proﬁ t for the division is projected to rise year on year in ﬁ scal 
2016. After enhancing onboard ﬁ reﬁ ghting equipment, the 
SUNFLOWER DAISETSU returned to service in February 2016, 
returning the Eastern Japan service to normal four-vessel 
operations. To prevent another ﬁ re from occurring, we coop-
erated with the relevant committees to further strengthen 
the safe operating structure. This entailed conducting a com-
prehensive review of safety measures, including seafarer drill 
plans, and conducting a follow-up review.

In addition, we are creating more attractive services for pas-

senger transportation. We are working to enhance facilities, 
including renovating several guest cabins and greatly expanding 
the number of individual rooms. We are also strengthening 
packages and promotions to uncover new demand and raise 
brand awareness through advertising efforts.

The strength of MOL’s ferries and Coastal RoRo ships 
business lies in offering Japan’s most extensive maritime net-
work. We connect each area of the country, from 
Tomakomai, Hokkaido in the north to Shibushi, Kagoshima 
in the south. Transporting over a million passengers annually, 
we serve as an artery for domestic distribution and support 
Japan’s economy. We are working to expand services to 
meet customer needs while reinforcing safe operations and 
transportation quality. We will continue to strive to reinforce 
MOL’s brand as the leader of an eco-friendly modal shift in 
domestic logistics.

Associated 
Businesses

Toshiyuki Sonobe Managing Executive Ofﬁ cer

Fiscal 2015 in Review
This segment comprises MOL’s real estate, tugboat, cruise ship, trad-
ing and other businesses. Real estate, especially Daibiru 
Corporation, is a main pillar supporting MOL’s highly stable proﬁ ts.
Daibiru sustained steady revenues as the ofﬁ ce leasing mar-
ket continued to improve, especially in Tokyo, its main market. 
However, revenue and income fell for associated businesses over-
all in ﬁ scal 2015 due mainly to depreciation expenses incurred 
from the Shin-Daibiru Building, which was completed in Osaka in 
March 2015. Revenues decreased to ¥96.6 billion, and ordinary 
income slid to ¥10.1 billion.

The cruise ship business improved its proﬁ tability thanks to 

higher numbers of passengers amid rising interest in cruises and 
an active domestic market stimulated by increased calls to 
Japanese ports by foreign luxury cruise ships. In the trading busi-
ness, sales fell for Propeller Boss Cap Fins (PBCFs), a device to 
improve energy-efﬁ ciency, as investments in energy-saving tech-
nology were scaled back due to lower crude prices. Meanwhile, 
the tugboat business continued to sustain solid ﬁ gures.

Fiscal 2016 Initiatives
In ﬁ scal 2016, ordinary income is expected to improve markedly to 
¥12.0 billion primarily because there will be no more initial expens-
es associated with the completion of the Shin-Daibiru Building in 
Osaka. The occupancy rate is already at 95%, and we anticipate 
steady contributions to earnings from ﬁ scal 2016 onwards.

Daibiru embarked on a new medium-term management plan 

entitled “Design 100” Project 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% compared to ﬁ scal 2012 through 
investments totaling ¥100.0 billion. In the three years since the 
plan launched, we’ve invested ¥50.0 billion, including overseas 
projects, and plan to allot 20–30% of total investment to over-
seas projects going forward. We aim to increase the share of 
overseas sales to 5–10% overall. 

Vietnam is an excellent example of Daibiru’s overseas proj-
ects. MOL established a liner route with Vietnam in 1915 so we 
have had deep, long-lasting relations with this country, and more 
recently we became the only Japanese shipping company autho-
rized by the government to set up an independent Vietnamese 
sales agency, wholly owned by MOL. Leveraging MOL’s network 
and local brand power, Daibiru successfully entered the 
Vietnamese market with its ﬁ rst overseas project in 2012. We are 
currently considering further expanding business in Vietnam and 
elsewhere in our strategic focus area of Southeast Asia.

Shin-Daibiru Building

Sustainability Highlights

The Shin-Daibiru Building Received an AAA 
Rating from the Japan Habitat Evaluation 
and Certiﬁ cation Program (JHEP)

The Shin-Daibiru Building, which was completed in 
March 2015, received an AAA rating from the Japan 
Habitat Evaluation and Certiﬁ cation Program (JHEP). 
This program, which is run by the Ecosystem 
Conservation Society—Japan, quantiﬁ ably evaluates 
and certiﬁ es initiatives that contribute to the preser-
vation and recovery of biodiversity. The Shin-Daibiru 
Building uses local grasses and trees for about half of 
the landscaping on its premises. Zelkova, Camellia, 
Maple and other trees over 50 years old that were 
grown in the long adored roof arboretum of the for-
mer Shin-Daibiru Building were transplanted to a 
green space of over 3,000 square meters, which now 
provides a relaxing sanctuary amidst the many ofﬁ ce 
buildings.

In the cruise ship business, we will continue working to 
increase the number of passengers by differentiating our busi-
ness through meticulous, high-class service with the aim of 
increasing recognition of the MOL brand and improving our 
proﬁ tability. In the tugboat business, we will continue to con-
sider entering ﬁ elds related to offshore businesses, such as 
specialty tugboats that assist in building wind power facilities. 
In addition, the trading business will continue pursuing 
research to further enhance the performance of PBCFs.

44   Mitsui O.S.K. Lines

Underlined words are explained in the Glossary on page 18.

Annual Report 2016   45

MOL16_英文_出校データ戻し.indd   44-45
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2016/08/02   13:36
2016/08/02   13:36

 
 
 
 
 
 
 
 
 
 
 
Feature: Expanding MOL Group’s Business in Asian Growth Markets

Early Entry into Steadily Growing Vietnam

Many Asian countries are growing, but Vietnam’s growth is par-

ticularly robust. In addition, demand for marine transport is 

expected to grow exceptionally. For MOL, this is a strategically 

At Cai Mep Port in 

southern Vietnam, we 

operate a container ter-

minal with a local part-

ner. Large vessels can 

berth at this efﬁ cient ter-

minal, which is a great 

boon to our customers. 

We also have a well-

A tugboat assists a containership in the port

Yasushi Furukawa
Chief Country Representative of MOL Group

established service where we transport loaded containers to Cai 

Mep from Cambodia using a river barge. Going forward, we also 

expect to use this terminal as a transshipment port, further 

increasing the number of calls by our containership service and 

enhancing synergistic effects with the marine transport business.

In addition, we are working to develop a container terminal 

at Lach Huyen Port aiming to open it in 2018. It will be the only 

important region.

In Vietnam, demand 

for energy and electricity is 

rapidly expanding. MOL 

has current opportunities 

to enter these markets, 

including imports of steam-

ing coal for coal-ﬁ red 

power plant projects. 

Moreover, we are expect-

ing demand for LNG 

Strengthening 
Our presence in Vietnam

Laos

Thai

Cambodia

China

Hanoi
•CornerStone Building
 Real estate business

Lach Huyen

(cid:129)Haiphong International Container Terminal
 Terminal business starting operations in 2018

Vietnam

Cai Mep

As Vietnam’s economy 
grows, we will capture 
demand for resources, 
energy and infrastructure.

(cid:129)Tan Cang - Cai Mep International Terminal

                 Terminal business

(cid:129)Tan Cang - Cai Mep Towage Services

                 Tugboat business

Ho Chi Minh
(cid:129)Mitsui O.S.K. Lines (Vietnam)

 Marine transport business including containerships, dry bulkers and car carriers, etc

(cid:129)MOL Logistics (Vietnam)

 Logistics business

(cid:129)Saigon Tower

 Real estate business

46   Mitsui O.S.K. Lines

MOL16_英文_出校データ戻し.indd   46-47
MOL16_英文_出校データ戻し.indd   46-47

imports to increase in the future. In addition, while Vietnam cur-

port in the northern region of the country where large vessels 

rently exports crude oil, new reﬁ ning facilities are now under con-

can berth. Japanese manufacturing companies are lining up to 

struction. If the reﬁ ning industry takes off, product tankers could 

make entry into the northern region, and we expect the impor-

be needed to export reﬁ ned oil products and there may even be 

tance of this region as an export base to increase going forward.

cases when they import crude oil. There is also plenty of room for 

the automotive market to grow, and vehicle imports will continue 

to grow steadily going forward. In Vietnam, MOL already has an 

established presence in containership services, terminals and tug 

Logistics and Real Estate Businesses Lift 
Our Presence in Vietnam

boats as well as imports of vehicles on car carriers and exports of 

MOL Logistics (Vietnam) Inc. is focusing on enhancing and 

paper-making raw materials on wood chip carriers. Mitsui O.S.K. 

expanding its transport services within Vietnam. Headquartered 

Kinkai, Ltd. handles transport of steel products. As Vietnam’s 

economy continues to develop, we are eager to expand our busi-

ness by leveraging the total power of the MOL Group.

The relationship between MOL and Vietnam goes back 120 

years to 1896, when we shipped rice from Saigon to Japan. In 

2006, we became the only Japanese shipping company autho-

rized by the government to set up an independent Vietnamese 

sales agency, wholly owned by MOL. And by joining with power-

ful partners, we are making progress in the terminal and tug 

boat businesses. From an early stage, we have developed periph-

eral businesses to complement marine transport through these 

and other efforts.

Our Terminal Business Leverages Synergies with 
the Marine Transport Business

Saigon Tower

in Ho Chi Minh City, the 

company develops a wide 

range of services, includ-

ing marine and air trans-

port, inland domestic 

transport, warehousing, 

and import customs clear-

ance. It now has eight 

locations after adding 

locations in Hanoi and 

Haiphong. In 2013, the 

MOL Logistics established 

a local subsidiary in neigh-

boring Cambodia and is 

working to meet cross-

border logistics needs, fur-

Container Terminal in Cai Mep

ther raising the proﬁ le of MOL in Southeast Asia.

In addition, our real estate business, Daibiru, acquired Saigon 

Tower in Ho Chi Minh City in 2012 and the CornerStone Building 

in Hanoi in 2014. With a comprehensive business model that 

handles everything from ownership to management, this busi-

ness supports the MOL Group’s ﬁ rm proﬁ ts.

  Going forward, we will continue to bolster cooperation, 

leveraging the total power of the MOL Group to continue con-

tributing to Vietnam’s economic growth.

Annual Report 2016   47

2016/08/02   13:36
2016/08/02   13:36

 
 
 
 
Financial and Non-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

Proﬁ t (loss) attributable to owners of parent

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:

Proﬁ t (loss) attributable to owners of parent

Net assets

Cash dividends applicable to the year

Management indicators:

Gearing ratio (%)

Net gearing ratio (%)

Equity ratio (%)

ROA (%)(*)

ROE (%)

Dividend payout ratio (%)

MOL STEP

MOL ADVANCE

GEAR UP! 
MOL

RISE 2013

STEER FOR 
2020

2006/3

2007/3

2008/3

2009/3

2010/3

2011/3

2012/3

2013/3

2014/3

2015/3

2016/3

Millions of yen

¥1,366,725

¥1,568,435

¥1,945,697

¥1,865,802

¥1,347,965

¥1,543,661

¥1,435,221

¥1,509,194

¥1,729,452

¥1,817,070

¥1,712,223

1,101,459

1,300,038

1,544,109

1,564,486

1,228,479

1,328,960

1,368,795

1,432,014

1,587,902

1,683,795

1,594,569

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

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

41,092

54,986

71,710

57,394

(25,615)

94,256

17,250

51,330

58,332

42,356

(66,656)

92,495

(155,076)

(136,049)

(260,068)

(190,022)

(133,484)

(134,785)

(134,313)

(104,241)

(119,871)

(159,151)

65,700

68,581

74,481

78,156

88,366

77,446

85,624

94,685

83,984

87,804

2,324

36,269

(154,385)

(170,448)

182,509

209,190

(26,681)

92,772

100,458

116,025

115,330

1,470,824

1,639,940

1,900,551

1,807,080

1,861,312

1,868,741

1,946,162

2,164,611

2,364,695

2,624,050

2,219,587

769,902

571,429

424,461

424,461

847,660

569,417

620,989

550,764

1,047,825

1,106,746

1,209,176

1,257,823

1,293,803

1,303,967

1,379,245

1,498,028

1,376,432

601,174

751,652

679,315

702,617

695,022

623,714

775,114

735,702

659,507

724,259

740,247

660,795

869,619

717,909

637,422

1,046,865

1,094,081

1,183,401

1,044,980

619,493

535,423

783,549

679,160

892,435

782,557

646,925

540,951

¥94.98

354.01

18.00

¥101.20

¥159.14

¥106.13

459.55

20.00

567.74

31.00

521.23

31.00

¥10.63

551.70

3.00

¥48.75

552.83

10.00

(¥21.76)

(¥149.57)

533.27

5.00

447.76

−

¥47.99

567.90

5.00

¥  35.42

¥  (142.50)

654.26

7.00 

452.28

5.00 

Yen

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

CO2 Emissions of MOL Fleet (Thousand tons)

17,457

18,392

20,065

Number of MOL Group employees:
(the parent company and consolidated subsidiaries)

8,351

8,621

9,626

(*) Ordinary income (loss) /Average total assets at the beginning and the end of the ﬁ scal year.

48   Mitsui O.S.K. Lines

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MOL16_英文_出校データ戻し.indd   48-49

113

99

34.5

11.0

19.5

29.2

20,374

10,012

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

135

29.8

2.1

5.8

19.8

193

164

24.4

1.5

(25.8)

−

18,684

20,053

19,435

19,053

9,707

9,438

9,431

9,465

18,860

10,289

18,803

10,508

18,676

10,500

Annual Report 2016   49

2016/08/02   13:36
2016/08/02   13:36

Key Indicators

Shipping and Other Revenues/
Ordinary Income (Loss)

Total Assets/Net Assets

Ordinary Income (Loss) by Segment

Interest-bearing Debt / Net Interest-
bearing Debt / Shareholders’ Equity

Gearing Ratio / Net Gearing Ratio / 
Equity Ratio

Credit Ratings (As of June 2016)

(¥ billions)

(¥ billions)

(¥ billions)

(¥ billions)

(%)

Type of Rating

Rating

2,000

1,500

1,000

500

0

–500

400

3,000

1,000

150

300

2,400

200

1,800

100

1,200

0

600

800

600

400

200

100

50

0

11/3

12/3

13/3 14/3 15/3 16/3

–100

0

11/3

12/3

13/3 14/3 15/3 16/3

0

-50

11/3

12/3

13/3 14/3 15/3 16/3

(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

FY2015
Shipping and Other Revenues ¥1,712.2 billion
¥36.2 billion
Ordinary Income

FY2015
Total Assets

Net Assets

¥2,219.5 billion
¥646.9 billion

FY2015
Bulkships

Containerships

Other segments, etc.

¥54.8 billion
¥(29.8) billion
¥11.2 billion

Shipping and other revenues decreased ¥104.8 billion 
year on year and ordinary income decreased ¥15.0 bil-
lion due to unprecedented stagnation in the dry bulker 
market and in containership freight rates despite tail-
winds from the weaker yen, lower bunker prices and 
strong market conditions for tankers.

Total assets as of March 31, 2016 were ¥404.4 billion 
lower than at March 31, 2015 due to decreases in ves-
sels and investment securities. Net assets decreased 
¥245.5 billion year on year due mainly to decreases in 
retained earnings.

In the bulkships segment, the higher proﬁ ts of the tankers 
and the LNG carriers/offshore businesses offset the lower 
proﬁ ts of dry bulkers and car carriers. The containerships 
segment posted a larger ordinary loss than ﬁ scal 2014.

1,200

1,000

800

600

400

200

0

11/3

12/3

13/3 14/3 15/3 16/3

200

150

100

50

0

11/3

12/3

13/3 14/3 15/3 16/3

40

30

20

10

0

Short-term debt rating 
(CP)

JCR

Long-term preferred 
debt (issuer) rating

Long-term debt rating

Issuer rating

R&I 

Short-term debt rating 
(CP)

Long-term individual 
debt rating

Moody’s 

Corporate family 
rating

(cid:2) Shareholders’ Equity

 Gearing Ratio (left scale)
 Net Gearing Ratio (left scale)
 Equity Ratio (right scale)

(cid:2) Interest-bearing Debt
(cid:2) Net Interest-bearing Debt
FY2015
Interest-bearing Debt
Net Interest-bearing 
Debt*

Shareholders’ Equity**

¥1,044.9 billion
¥885.5 billion
¥540.9 billion

*  Interest-bearing debt – cash & cash equivalents
**  “Shareholders’ equity” in this section comprises the total of 

FY2015
Gearing Ratio

Net Gearing Ratio

Equity Ratio

193%
164%
24%

owners’ equity and accumulated other comprehensive income (loss).

Interest-bearing debt decreased ¥138.4 billion to 
¥1,044.9 billion due to a decrease in short-term borrow-
ings and corporate bonds. Shareholders’ equity decreased 
¥241.6 billion to ¥540.9 billion due to lower retained 
earnings following the Business Structural Reforms.

The net gearing ratio worsened 29 points and the equi-
ty ratio worsened 5 points, reﬂ ecting the ¥241.6 billion 
decrease in shareholders’ equity, the ¥138.4 billion fall 
in interest-bearing debt, and the ¥404.4 billion 
decrease in total assets.

JCR

R&I

Moody’s 

J-1*

A–*

A–*

BBB

a-2

BBB

Ba1*

A–*
BBB
Ba1*

ROA/ROE

(%)

Capital Expenditure

CO2 Emissions of MOL Fleet

(¥ billions)

(thousand tons)

20

10

0

–10

–20

–30

–40

 ROA
 ROE

FY2015
ROA

ROE

250

200

150

100

50

0

11/3

12/3

13/3 14/3 15/3 16/3

25,000

20,000

15,000

10,000

5,000

0

11/3

12/3

13/3 14/3 15/3 16/3

11/3

12/3

13/3 14/3 15/3 16/3

1.5%
(25.8)%

FY2015
Capital Expenditure

¥104.8 billion

FY2015
CO2 Emissions 
of MOL Fleet

18,676 thousand tons

Net cash provided by operating activities was up ¥116.6 
billion year on year, while cash used in investing activi-
ties narrowed by ¥132.4 billion, to ¥26.6 billion; result-
ing in positive free cash ﬂ ows.

ROA and ROE were both lower as ordinary income and 
net income both fell due mainly to the lower market 
and the recording of an extraordinary loss following the 
Business Structural Reforms.

Capital expenditure represented here is the net amount 
calculated by deducting proceeds from the sale of ves-
sels when delivered from “Tangible/intangible ﬁ xed 
assets increased” contained in the annual securities 
report.

The listed CO2 emissions were mainly from bunker A 
and C used as fuel for vessels operated by the MOL 
Group.

Net Income (Loss)* per Share/Cash Dividends 
Applicable to the Year/ Dividend Payout Ratio

Cash Flows

(¥)

150

100

50

0

–50

–100

–150

11/3

12/3

13/3 14/3 15/3 16/3

(%)

(¥ billions)

30

20

10

0

250

200

150

100

50

0

-50

-100

-150

(cid:2) Net income (Loss)* per share (left scale)
(cid:2) Cash Dividends Applicable to the Year (left scale)

 Dividend Payout Ratio (right scale)

FY2015
Net Income (Loss)* per Share ¥(142.50)
Cash Dividends Applicable
¥5
to the Year

Due mainly to recording expenses related to the 
Business Structural Reforms, net income* declined 
¥212.8 billion. MOL paid ¥5 per share in dividends for 
the ﬁ scal year, including a ¥3.5 interim dividend, a year-
on-year decrease of ¥2 per share.

*Proﬁ t (loss) attributable to owners of the parent

50   Mitsui O.S.K. Lines

MOL16_英文_出校データ戻し.indd   50-51
MOL16_英文_出校データ戻し.indd   50-51

-200

11/3

12/3
(cid:2) Cash ﬂ ows from operating activities
(cid:2) Cash ﬂ ows from investing activities

13/3 14/3 15/3 16/3

 Free cash ﬂ ows

FY2015
Cash Flows from Operating 
Activities
Cash Flows from Investing 
Activities

¥209.1 billion

¥(26.6) billion

MOL’s credit ratings are currently under downward 
pressure due mainly to the ﬁ nancial burden of the 
Business Structural Reforms and the protracted stagna-
tion of the marine transport market. Going forward, 
MOL will continue to provide explanations to the credit 
rating agencies about its growth strategies and path to 
improved ﬁ nancial standing with the continued aim of 
improving its credit ratings.

(*)Credit monitor rating

Annual Report 2016   51

2016/08/02   13:36
2016/08/02   13:36

Message from the CFO

Masahiro Tanabe 
Senior Managing Executive Ofﬁ cer

Assessment of the 
Fiscal 2015 Financial Results
Fiscal 2015 brought a welcome tailwind with the continued 
fall in bunker prices and the persistently weak yen, in addi-
tion to signiﬁ cant earnings contributions from the strong 
tanker market. Yet, especially in the latter half of the year, 
we faced ﬁ erce headwinds with rates stagnating at historic 
lows in the dry bulker and container freight markets. As a 
result, consolidated ordinary income fell 29% year on year to 
¥36.2 billion.

In bulkships, although the spot market for dry bulkers 

remained weak due to a slump in Brazilian iron ore exports 
and decreased coal imports into China, the spot market for 
tankers remained ﬁ rm due in part to falling crude oil prices 
and the subsequent increase in actual demand for petro-
leum, as well as demand for strategic reserves in China. In 
addition, MOL beneﬁ tted from the highly stable proﬁ ts of 
dry bulkers, tankers and LNG carriers on medium- to long-
term contracts that are resilient to market ﬂ uctuations. As a 
result, this segment secured ¥54.8 billion in ordinary income, 
roughly the same as in the previous ﬁ scal year.

Containerships recorded an ordinary loss of ¥29.8 billion, 

widening the loss from the previous ﬁ scal year. Despite the 
far-reaching rationalization of unproﬁ table routes undertak-
en throughout the year, in addition to falling bunker prices 
that helped improve proﬁ tability, the stagnant freight rates 
plagued almost every route, worsening proﬁ tability more 
than we assumed.

Financial Foundation Following 
the Business Structural Reforms
At the end of ﬁ scal 2015, interest-bearing debt declined 
¥138.4 billion from ¥1,183.4 billion at the end of the previous 
ﬁ scal year to ¥1,044.9 billion. Following the Business Structural 
Reforms, the other ﬁ nancial indicators worsened, including a 
decline in the equity ratio to 24% and an increase in the net 
gearing ratio to 164%.

From ﬁ scal 2016 onwards, we will continue working to 
recover and enhance shareholders' equity through the accu-
mulation of proﬁ ts. On the other hand, we will continue 

Shareholders’ Equity  (¥ billions)

1,400

1,200

1,000

800

600

400

200

0

1,183.4

1,054.6

1,044.9

782.5

885.5

1,144.7

978.5

540.9

565.6

FY2014 Result

FY2015 Result

FY2016 Outlook

(cid:2) Interest-bearing Debt (cid:2) Net Interest-bearing Debt*1 (cid:2) Shareholders’ Equity

*1 Interest-bearing debt – cash & cash equivalents

52   Mitsui O.S.K. Lines

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MOL16_英文_出校データ戻し.indd   52-53

investing in businesses that will generate future long-term, 
highly stable proﬁ ts, especially LNG carriers and offshore busi-
nesses. Those areas where we have made aggressive invest-
ments in the past few years will reap the reward from ﬁ scal 
2017 and begin to expand earnings. We believe these two 
businesses will contribute to improved ﬁ nancial soundness.

Status of Cash Flows
In ﬁ scal 2015, we recorded ¥179.3 billion in expenses related 
to Business Structural Reforms, mainly for impairment loss, 
fees for canceling chartered vessel contracts, and loss on sales 
of vessels. The impairment loss did not affect cash ﬂ ows. In 
addition, the actual payment of fees for canceling chartered 
vessels are being made in the next ﬁ scal year. As a result, free 
cash ﬂ ows for the year increased signiﬁ cantly also helped by 
recovering funds through the utilization of off-balance sheet 
structures and project ﬁ nance for already invested projects.
  On the other hand, in ﬁ scal 2016, we expect negative 
free cash ﬂ ows. Cash ﬂ ows from operating activities will 
decline sharply due in part to making payments to cancel 
chartered vessel contracts. In addition, cash ﬂ ows from 
investing activities will increase, especially in LNG carriers 
and offshore businesses. Business Structural Reforms will 
affect cash ﬂ ows over the course of ﬁ scal 2015 and 2016, 
but looking at the total of the two years, we expect free 
cash ﬂ ows to remain positive.

Impact of Exchange Rates and Bunker 
Prices on Financial 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 
2016, we project that each ¥1-per-dollar change against the 
assumed ¥108-to-U.S. dollar yearly average exchange rate 
will have an impact of approximately ¥1.0 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$230 per metric ton, and we calculated at 
the beginning of the ﬁ scal year that every dollar deviation 
would have an impact of ¥170 million. (If the price falls, it 
will improve proﬁ tability.) We will continue to strategically 
utilize hedging in order to control the effect of ﬂ uctuating 
bunker prices going forward. With the progress made in 
placing hedges, the degree of impact from ﬂ uctuating bun-
ker prices will become smaller.

Outlook for 
Operating Results in Fiscal 2016
We are expecting consolidated ordinary income to decrease 
45% year on year to ¥20.0 billion and proﬁ t attributable to 
owners of parent to amount to ¥20.0 billion in comparison 
to a loss of ¥170.4 billion in the previous ﬁ scal year, on the 

Underlined words are explained in the Glossary on page 18.

Gearing Ratio / Equity Ratio

(Net) Gearing Ratio

Equity Ratio

40%

250%

200%

150%

100%

193%

164%

24%

202%

173%

25%

30%

151%

135%

FY2014 Result

FY2015 Result

FY2016 Outlook

 Gearing Ratio*2  

 Net Gearing Ratio*3  

 Equity Ratio

*2 Interest - bearing debt / Shareholder’s equity
*3 (Interest – bearing debt –cash & cash equivalents) /Shareholders’ equity

Cash Flows  (¥ billions)

(250)

(200)

(150)

(100)

(50)

0

FY2015–
2016
Total

212.0

(159.1)

(119.8)

(113.0)

94.2

92.4

106.0

(56.5)

FY2015–
2016
Average

FY2013
Result

FY2014
Result

FY2015-2016 (2 fiscal years)
Forecast

30%

20%

250

200

150

100

50

0

(cid:2) CFs from Investing Activities (left axis)  (cid:2) CFs from Operating Activities (right axis)

Impact of Exchange Rate 
Fluctuations (Model)  

Impact of Bunker Prices 
Fluctuations (Model)

Impact=1+2

Revenues

Expenses

Proﬁ t

2

U.S. Dollar 
Revenue

Exposure

I

m
p
a
c
t

U.S. Dollar 
Expense

Imbalance

1

Japanese Yen 
Revenue

Japanese 
Yen 
Expense

T
o
t
a

l

C
o
n
s
u
m
p
t
i
o
n

Hedged 
portion

Recoverable 
by Surcharge, 
etc.

Annual Report 2016   53

2016/08/02   13:36
2016/08/02   13:36

 
 
 
 
 
Message from the CFO

assumption that the exchange rate will be ¥108 to the U.S. 
dollar and bunker prices will be US$230, as mentioned previ-
ously.

their performance, we forecast ordinary income of ¥20.0 bil-
lion for the Company overall, a worsening of ¥16.2 billion 
year on year.

In bulkships, dry bulkers are expected to return to proﬁ t-

ability as the positive effects steadily appear following the 
Business Structural Reforms. To an extent, however, we 
expect these positive effects to be cancelled out due in part 
to worsening spot market conditions, a strong yen and the 
conclusion of a few highly proﬁ table long-term contracts. In 
addition, taking into consideration the softening tanker mar-
ket and reduced car exports to resource exporting countries, 
we forecast proﬁ t will decline ¥19.8 billion year on year in 
bulkships overall.

In containerships, we expect several factors to improve 
proﬁ tability, including the positive impacts of the Business 
Structural Reforms, the rationalization of unproﬁ table routes 
conducted in the previous ﬁ scal year, and falling bunker pric-
es. However, this will likely be cancelled out by a steep 
decline in freight rates, especially on the Asia-North America 
route, and we forecast that overall segment loss will widen 
¥2.1 billion year on year in containerships. However, as we 
expect ferries, real estate, and other divisions to improve 

FY2015     FY2016 Variable Factors (Outlook)

Dry bulkers

 (¥ billions)

Impact 
of business 
structural 
reforms

Impact 
of spot 
market

(3.0)

Impact of 
maturity of 
long-term 
contaracts 
/COA renewal

(6.0)

Others
(2.0)

+26.0

Increase in 
ship costs 
(before business 
structural reforms)

(4.0)

Impact 
of foreign 
exchange, etc

(3.0)

FY2015

Consolidated Ordinary Income (Loss) by Segment

(Billions of yen)

FY2015 Result

FY2016 
Outlook*

Bulkships

Containerships

Ferry/Coastal RoRo Ships

Associated business

Other

Corporate/Eliminate

Total

Exchange rate

Bunker price

54.8

(29.8)

4.4

10.1

3.5

(6.9)

36.2

35.0

(32.0)

5.5

12.0

1.5

(2.0)

20.0

¥120.62/$

¥108.00/$

$265/MT

$230/MT

*As of April 28, 2016

Containerships

(¥ billions)

Impact 
of business 
structural 
reforms

Impact 
of market, 
etc

Impact of 
route/ fleet 
rationalization

+10.0

(29.8)

Impact 
of bunker 
prices

+11.0

(34.0)

(32.0)

+11.0

Management Foundation 
Underpinning MOL:

Corporate Governance and Corporate Social Responsibility

FY2016
Outlook

FY2015

FY2016
Outlook

56

Board Of Directors, Audit & Supervisory Board Members and Executive Ofﬁ cers

Status of Credit Ratings
MOL’s credit ratings are currently under downward pressure 
due mainly to the ﬁ nancial burden of the Business Structural 
Reforms and the protracted severe business environment. We 
are exchanging information more closely with the credit rat-
ing agencies. With the aim of recovering our credit ratings 
going forward, I think we need to ﬁ rmly achieve the proﬁ t 
targets. We need to carefully explain our timeline and course 
to implement our growth strategies, and we need to be sure 
to provide updates on the accompanying improvement in our 
ﬁ nancial standing.
  MOL currently is promoting investment focused on LNG 
carriers and offshore businesses, which are based on sound 
long-term transport contracts with highly credible customers. 

These investments have received a certain level of positive 
feedback from credit agencies as a possible source of future 
growth that will contribute to the accumulation of long-term, 
highly stable proﬁ ts. In regard to the ﬁ nancial burden associ-
ated with the lag time before new projects begin contributing 
to earnings, we will continue to work on measures to ﬁ rmly 
reduce the ﬁ nancial burden while maintaining necessary 
investment. We will work to moderate cash ﬂ ow used in 
investing activities and control interest-bearing debt mainly by 
utilizing off-balance sheet structures. Moreover, we have 
many options for fund procurement, a wealth of knowhow 
and strong relationships with ﬁ nancial institutions. We will 
choose the best method to procure funds, such as utilizing 
project ﬁ nance.

Underlined words are explained in the Glossary on page 18.

54   Mitsui O.S.K. Lines

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58 Message from an Outside Director

60

64

67

69

Corporate Governance

Safe Operation

Risk Management

Corporate Social Responsibility (CSR)

Annual Report 2016   55

2016/08/02   13:36
2016/08/02   13:36

 
 
Board of Directors, Audit & Supervisory Board Members and Executive Ofﬁ cers

 (At the end of June, 2016)

Board of Directors

Audit & Supervisory Board Members

Koichi Muto
Representative Director 

Born 1953

Junichiro Ikeda
Representative Director 

Born 1956

Kenichi Nagata
Representative Director 

Born 1956

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 and Executive 

Ofﬁ cer

Jun. 2015    Representative Director, Chairman of the Board, 

Executive Ofﬁ cer (current)

Apr. 1979  Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2004  General Manager of Human Resources Division
Jun. 2007  General Manager of Liner Division
Jun. 2008  Executive 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. 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)

Masahiro Tanabe
Director 

Born 1957

Shizuo Takahashi
Director 

Born 1959

Takeshi Hashimoto
Director 

Born 1957

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 

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 

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 

(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)

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)

Division
Jun. 2011  Executive Ofﬁ cer
Jun. 2012  Managing Executive Ofﬁ cer
Jun. 2015  Director, Managing Executive Ofﬁ cer
Apr. 2016  Senior Managing Executive Ofﬁ cer
Jun. 2016    Director, Senior Managing Executive Ofﬁ cer 

(current)

Independent Ofﬁ cers

Masayuki Matsushima 
Outside Director 

Hideto Fujii 
Outside Director 

Etsuko Katsu 
Outside Director 

Jun. 2011
Jun. 2011

Nov. 2012
Sept. 2014
Jun. 2016

Director of Mitsui O.S.K. Lines, Ltd. (current)
Outside Director of Mitsui Fudosan Co., Ltd 
(current)
Chairman of NWIC Co., Ltd. (current)
Senior Advisor of Integral Corporation (current)
Outside Director of JGC Corporation (current)

Jun. 2015  Adviser of Sumitomo Corporation (current)
Jun. 2016  Director of Mitsui O.S.K. Lines, Ltd. (current)

Apr. 2003    Professor of School of Political Science and 

Economics, Meiji University (current)

Jan. 2013    Board Member of Japan-United States 

Educational Commission (current)

Mar. 2015   Vice President of Center for Entrance Examination   
                 Standardization (current)
Jun. 2016  Director of Mitsui O.S.K. Lines, Ltd. (current)

56   Mitsui O.S.K. Lines

MOL16_英文_出校データ戻し.indd   56-57
MOL16_英文_出校データ戻し.indd   56-57

Takashi Nakashima  Born 1959
Audit & Supervisory Board Member  

Takehiko Ota 
Audit & Supervisory Board Member  

Born 1960

Apr. 1982  Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2009    General Manager of Research 

Ofﬁ ce

Jun. 2011    General Manager of General 

Affairs Division
Jun. 2015    Audit & Supervisory Board 

Member of Mitsui O.S.K. Lines, 
Ltd. (current)

Independent Ofﬁ cers

Apr. 1984  Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2008    General Manager of Investor 
Relations Ofﬁ ce
Jun. 2013    Audit & Supervisory Board 

Member of Mitsui O.S.K. Lines, 
Ltd. (current)

Hiroyuki Itami 
Outside Audit & Supervisory Board Member 

Hideki Yamashita 
Outside Audit & Supervisory Board Member  

Apr. 2008    Professor of Tokyo University of 

Science, Graduate School of 
Innovation Studies (current)

Jun. 2010    Outside Corporate Auditor of JFE 
Holdings, Inc. (Current)

Jun. 2011    Audit & Supervisory Board 

Member of Mitsui O.S.K. Lines, 
Ltd. (current)

Apr. 1982  Attorney-at-Law (current)
Apr. 1985    Established YAMASHITA & 

TOYAMA LAW AND PATENT 
OFFICE 

Mar. 1993    Patent Attorney (current)
Mar. 2012    Outside Corporate Auditor of I-cell 

Networks Corporation (Currernt)

Jun. 2014    Audit & Supervisory Board 

Member of Mitsui O.S.K. Lines, 
Ltd. (current)

Masanori Kobayashi
Executive Ofﬁ cer

(Safety Operations Headquarters, 

Tanker Safety Management Ofﬁ ce, 

LNG Safety Management Ofﬁ ce, 

Marine Safety Division)

Yutaka Hinooka
Executive Ofﬁ cer

(General Manager of Liner Division)

Masato Koike
Executive Ofﬁ cer

(General Manager of Tanker Division)

Koichi Yashima
Managing Executive Ofﬁ cer

(Human Resources Division, General 

Affairs Division)

Hideo Horiguchi
Executive Ofﬁ cer

(Accounting Division)

Mitsujiro Akasaka
Executive Ofﬁ cer

(Chief Executive Representative in  

Asia, Middle East & Oceania, 

Masanori Kato
Executive Ofﬁ cer

Managing Director of Mitsui O.S.K. 

(Safety Operations Headquarters, 

Bulk Shipping (Asia Oceania) Pte. Ltd.)

Human Resources Division, Marine 

Safety Division, Dry Bulk Carrier 

Supervising Ofﬁ ce)

Toshiaki Tanaka
Executive Ofﬁ cer 

(Dry Bulk Business Unit, Dry Bulk 

Carrier Division (A), Dry Bulk Carrier 

Supervising Ofﬁ ce)

Nobuo Ishihara
Executive Ofﬁ cer

(Chief Executive Representative in  

Europe & Africa, Managing Director of 

Mitsui O.S.K. Bulk Shipping (Europe) 

Ltd.)

Kenta Matsuzaka
Executive Ofﬁ cer

(Offshore and LNG Project Division, 

Executive Ofﬁ cers

Koichi Muto
Chairman

Junichiro Ikeda
President, Chief Executive Ofﬁ cer

Kenichi Nagata
Executive Vice President

Takeshi Hashimoto
Senior Managing Executive Ofﬁ cer

Yoshikazu Kawagoe
Managing Executive Ofﬁ cer

(Energy Transport Business Unit, 

 (Technical Division)

Energy Business Strategy Ofﬁ ce, 

Steaming Coal Carrier Division, LNG 

Carrier Division, Offshore and LNG 

Project Division, LNG Safety 

(Assistant to President, Dry Bulk 

Management Ofﬁ ce)

Business Unit, Dry Bulk Business 

Planning & Co-ordination Ofﬁ ce, Dry 

Bulk Carrier Division (B))

Masaaki Nemoto
Senior Managing Executive Ofﬁ cer

(Safety Operations Headquarters, 

Human Resources Division, Marine 

Safety Division, Dry Bulk Carrier 

Supervising Ofﬁ ce, Tanker Safety 

Management Ofﬁ ce, LNG Safety 

Management Ofﬁ ce)

Masahiro Tanabe
Senior Managing Executive Ofﬁ cer 

Toshiya Konishi
Managing Executive Ofﬁ cer

(Port Projects & Logistics Business 

Division, Chief Executive 

Representative in Americas)

Takashi Maruyama
Managing Executive Ofﬁ cer

(Finance Division, Investor Relations 

Ofﬁ ce)

Akihiko Ono
Managing Executive Ofﬁ cer

(Liner Division)

(Finance Division, Accounting Division 

Investor Relations Ofﬁ ce, Liner 

Akio Mitsuta
Managing Executive Ofﬁ cer

Division, Port Projects & Logistics 

(Energy Transport Business Unit, 

Business Division, Group Business 

Tanker Division, Tanker Safety 

Division, Research Ofﬁ ce)

Management Ofﬁ ce)

Shizuo Takahashi
Senior Managing Executive Ofﬁ cer

Naotoshi Omoto
Managing Executive Ofﬁ cer

(Chief Compliance Ofﬁ cer, Chief 

(Car Carrier Division)

Information Ofﬁ cer, Safety Operations 

Headquarters, Internal Audit Ofﬁ ce, 

Secretaries Ofﬁ ce, Corporate Planning 

Division, Public Relations Ofﬁ ce, MOL 

Information Systems, Ltd.)

Toshiyuki Sonobe
Managing Executive Ofﬁ cer

(Group Business Division, Kansai Area, 

General Manager of LNG Carrier 

Japan Logistics Business Promotion)

Division)

Annual Report 2016   57

2016/08/02   13:37
2016/08/02   13:37

Message from an Outside Director

As an outside director, I’d like 
to frankly express my opinion 
to help implement the 
Business Structural Reforms 
and improve corporate value.

Masayuki Matsushima Outside Director

Regarding Fiscal 2015 Business Structural Reforms

In ﬁ scal 2012, my second year as one of MOL’s outside directors, the Company carried out the ﬁ rst 
Business Structural Reforms, shifting operations of free vessels in dry bulkers to Singapore and recording 
around ¥100.0 billion in business structural reform costs. At the time, we believed that if we booked this 
loss, the Company’s operational structure would improve, and we would eventually be able to make a 
remarkable recovery. However, market conditions worsened more severely than expected and, as a 
result, the Company was again forced to implement Business Structural Reforms, which led to the loss of 
around ¥180.0 billion. In regard to this, I truly regret my actions as an outside director.

At this point, I believe that we must ensure the success of the ﬁ scal 2015 Business Structural 
Reforms and that this is truly the last round of reforms. Implementing these will be painful, but each 
employee and each executive must share this sense of crisis as we come together to face this challenge 
head on with indomitable determination. We say that corporations are, at their hearts, people. Well, 
MOL has excellent human resources. I ﬁ rmly believe that if everyone focuses their efforts toward one 
objective, we will see clear results.

Participating in the Deliberation on Corporate Strategy and Vision

While we have discussed various themes at the Deliberation on Corporate Strategy and Vision, we have 
also had repeated discussions on containerships, and these are connected to the current round of 
Business Structural Reforms. The containerships business is in the red even if you sum up the results 
throughout the past decade. We have repeatedly discussed ways to fundamentally strengthen the earn-
ings structure for containerships, as opposed to merely tweaking existing measures to improve proﬁ tabil-
ity. With each round of discussion, we delved further into the details, going from an objective analysis of 
circumstances to proposals of speciﬁ c strategies. At the deliberations, I asked how big the containership 
ﬂ eet should be and if the current portfolio of routes was sufﬁ cient. It took some time, but after some 
debate at the Deliberation on Corporate Strategy and Vision, the resulting ideas were incorporated into 
the Business Structural Reforms. I’m now eagerly awaiting the results of these ideas.

Customer-centric Perspective, Global Perspective: These I Expect of MOL

I have been saying that I would like business activities to be conducted from both a customer-centric 
perspective and a global perspective. Recently, I strongly feel that MOL has moved to a position where 
customer perspectives are valued. MOL has broken away from the past where the soaring marine trans-
port market allowed less focus on customers. Take, for example, an electric power company. As a cus-
tomer they might want to import coal or they might want to import LNG. In April 2016, MOL 
established the Energy Transport Business Unit, which bridges various segments, including tankers, LNG 
carriers and steaming coal carriers. I believe this was the result of the kind of debate I mentioned earlier. 
Moreover, I hope MOL becomes a company with high levels of customer satisfaction, a company that 
provides ﬁ nely turned solutions by leveraging the latest, highly innovative technology, including artiﬁ cial 
intelligence.
  Global perspectives refer to leveraging MOL’s expansive global network and enhancing partnerships 
between regions or within countries to more effectively capture cargo demand or otherwise leverage 
MOL’s collective strengths. This also reﬂ ects our debates, and in June 2015, MOL established chief execu-
tive representatives for the three major regions of the Americas; Europe and Africa; and Asia, the Middle 
East and Oceania. Moreover, in April 2016, MOL established country representatives for key countries 
under the chief executive representatives. Each representative can broadly conduct sales activities 
throughout their region or country, as well as across business ﬁ elds. In addition, there are more opportu-
nities to meet global customer needs through cooperation between representatives. Because we have 
established the necessary framework, going forward I would like MOL to really invigorate this and actu-
ally rack up some accomplishments.

Regarding My Role as Outside Director and the Establishment of the 
Nomination Advisory Committee and the Remuneration Advisory Committee

Outside directors are not omnipotent. While I do think that having outside directors is a good idea and 
increases transparency, it is delusional to expect them to be a magic wand that makes everything go 
smoothly.

The issue is not about how many outside directors you have got. Rather, it’s about how the Board of 

Directors is functioning as a whole, including outside directors. I believe that the duty of outside direc-
tors is to do what inside ofﬁ cers cannot do—in other words, using their outside perspective to provide 
frank, objective comments.
  On the other hand, looking at MOL, I would assess the functioning of the Board of Directors as 
exceeding expectations. Sufﬁ cient documents and data are provided before meetings, allowing both the 
inside and outside directors to engage in earnest discussion. This increases management transparency, 
activating checks and balances. Moreover, in September 2015, MOL established the Nomination 
Advisory Committee and the Remuneration Advisory Committee, enabling even deeper communication. 
I think both these committees are major assets for the Company. Going forward, I would like to continue 
frankly expressing my opinions with the aim of supporting the successful implementation of the Business 
Structural Reforms and improving corporate value.

MOL’s Deliberation on Corporate Strategy and Vision

At MOL, three hours are set aside for every 
board meeting, with one of the hours allotted 
to Deliberation on Corporate Strategy and 
Vision. At the Deliberation on Corporate 
Strategy and Vision, a theme is selected related 
to our management strategy, long-term vision 
or management in general. A free exchange of 
opinions ensues at these deliberations which 
include outside directors and outside Audit & 
Supervisory Board members.

FY2015 Deliberation on Corporate Strategy 
and Vision: Agenda Topics

FY2015

Agenda

April, May, July

MOL’s corporate governance

September, 
October

December

The advancement of global personnel

Portfolio of the tanker business and business 
policy going forward

January, February

The future of containership business

March

Business strategy for LNG carriers and offshore 
businesses

58   Mitsui O.S.K. Lines

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MOL16_英文_出校データ戻し.indd   58-59

Annual Report 2016   59

2016/08/02   13:37
2016/08/02   13:37

 
 
Corporate Governance

Governance at a Glance

System of governance

Total directors

Outside directors (ratio)

Total audit & supervisory board members

Outside audit & supervisory board mem-
bers (ratio)

Independent ofﬁ cers
(directors and audit & supervisory board 
members)

Meetings of the Board of Directors held in 
ﬁ scal 2015

Term of directors

Stock option system

Retirement beneﬁ t system

Anti-takeover measures

Compliance rules

External compliance advisory service desk

History

Company with an audit & 
supervisory board

9

3 (1/3)

4

2 (1/2)

5

10

1 year

Yes

No

No

Yes

Yes

2000
Management organization reform 
1. Introduced a system of executive ofﬁ cers 
2. Established an Executive Committee 
3. Reformed the Board of Directors (redeﬁ ned its duties as the highest-ranking 

decision-making body and the supervision of business activities) and reduced 
membership from 28 to 12
4. Elected two outside directors 
5. Established the Corporate Visionary Meeting 

Established the IR Ofﬁ ce 
Started holding the Annual General Shareholders’ Meeting on a day relatively 
free of other shareholders’ meetings

2001
Established Compliance Policy and a Compliance Committee

2011
Revised MOL’s Compliance Policy and Rules of Conduct

2014
Revised the Compliance Policy, establishing a chief compliance ofﬁ cer (CCO)

2015
Established the Nomination Advisory Committee and Remuneration 
Advisory Committee

Corporate Governance—Enabling Sustainable Growth 
and Raising Corporate Value

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 in the years 
surrounding 2000. Taking a lead position among Japanese com-
panies, MOL established an advanced, highly transparent corpo-
rate 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 improve-
ment and evolution. 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 gover-
nance) supervises and encourages business operations, which are 
carried out by the President as chief executive ofﬁ cer. In addition, 
as a company with an Audit & Supervisory Board, business and 
accounting audits are conducted by four audit & supervisory 
board members, including two outside members.

In 2015, we established the Nomination Advisory Committee 

and Remuneration Advisory Committee, further strengthening 
corporate governance. Operating under the Board of Directors, 
these committees are chaired by outside directors and take an 
objective viewpoint emphasizing the perspectives of stakeholders 
in performing their respective roles. The Nomination Advisory 
Committee considers the selection of directors and executive 
ofﬁ cers, while the Remuneration Advisory Committee deliberates 
on compensation for directors, including incentives to increase 
corporate value over the long term. 

To make even better use of the Board of Directors, we are 

working to carefully select and revise issues taken up by the 
board so that it can dedicate more of its meeting time to the 
MOL Group Long-Term Vision, strategy direction and manage-
ment oversight. Accordingly, we have expanded the scope of 
authority transferred to the Executive Committee to accelerate 
decision-making related to business operations. 
  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 over a certain size, such as the con-
struction of new vessels, are submitted to the Board of Directors 
at the basic policy formulation stage. The directors thoroughly 
evaluate and discuss the pros and cons of the projects and make 
decisions on their feasibility from many perspectives. Transferring 
the authority to implement projects within the scope of the basic 
policy to 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 

60   Mitsui O.S.K. Lines

MOL16_英文_出校データ戻し.indd   60-61
MOL16_英文_出校データ戻し.indd   60-61

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 audit & supervisory board members, 
thus helping to ensure that the perspective of shareholders is 
reﬂ ected in how MOL is managed. 

Executive Committee and Committees

Within the scope of the basic policy approved by the Board of 
Directors, MOL transfers signiﬁ cant authority to implement proj-
ects to the Executive Committee. This helps to speed up deci-
sion-making on individual projects by the executive ofﬁ cers 
supervised by the President.
  MOL has also established the following sub-committees of 
the Executive Committee to study and discuss especially impor-
tant matters and projects straddling divisions that will be submit-
ted to the Executive Committee for discussion. (See the chart 
below.)

Functions of Outside Directors and Reasons for 
Appointment

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 operations by 
bringing an outside perspective to management.
  MOL has appointed three outside directors whose experience 
encompasses the realms of ﬁ nance, business, and academia in 
Japan. MOL has adjudged that all three individuals are indepen-
dent and have neutral positions with no conﬂ icts of interest with 
the Company. The outside directors draw on their individual 

Corporate Governance Organization (as of June 21, 2016)

experience and insight to check the appropriateness of manage-
ment and the status of execution of business operations from 
the shareholders’ standpoint. At the same time, they express 
valuable opinions about management as a whole. In these ways, 
the outside directors play a major role in enhancing the opera-
tion of the Board of Directors.

Reasons for Appointment of Outside Directors

Name

Position

Reason for Appointment

Masayuki 
Matsushima

Outside Director of Mitsui 
Fudosan Co., Ltd. 
Chairman of NWIC Co., Ltd.
Senior Advisor of Integral 
Corporation 
Outside Director of JGC 
Corporation

Hideto Fujii

Adviser of Sumitomo 
Corporation

Etsuko Katsu

Professor of School of 
Political Science and 
Economics, Meiji University
Vice President of Center for 
Entrance Examination 
Standardization
Board Member of Japan-
United States Educational 
Commission

(As of June 30, 2016)

MOL adjudged that he has a neutral 
position with no conﬂ icts of interest 
with the Company as well as extensive, 
wide-ranging experience in and 
knowledge of ﬁ nance and other 
sectors. He will thus be able to bring a 
global perspective to the Company’s 
management and appropriately 
supervise business execution. 

MOL adjudged that he has a neutral 
position with no conﬂ icts of interest 
with the Company as well as extensive, 
wide-ranging experience in and 
knowledge of the management of 
Japan’s economy and monetary policy. 
He will thus be able to help maintain 
and strengthen the Company’s 
corporate governance from an 
independent and fair perspective. 

MOL adjudged that she has a neutral 
position with no conﬂ icts of interest 
with the Company as well as 
experience and insight in university 
management and global human 
resource development. She is also an 
expert in international ﬁ nance. She will 
thus be able to offer advice on the 
Company’s management and business 
execution from an independent 
perspective and contribute to the 
maintenance and reinforcement of 
corporate governance.

Elect and appoint/dismiss

Meeting of the Board of Directors [10] 

Outside directors: 3 
Internal directors: 6 
Total: 9

Elect and appoint/supervise

General Shareholders’ Meeting

Business audit
Accounting audit

Accounting audit

Elect and appoint/dismiss

Elect and appoint/dismiss

Audit & Supervisory Board Outside members: 2
Internal members: 2
Total: 4

Audit & Supervisory Board office

Accounting Auditors

Nomination Advisory Committee  Outside directors: 3 Internal directors: 2 Total: 5

Remuneration Advisory Committee  Outside directors: 3 Internal directors: 2 Total: 5

Executive Committee [47]
Internal directors and Executive officers: 8

Submit basic management policies and other issues for discussion

Submit to Executive Committee after preliminary deliberations

Provide direction 
on important 
business issues

Committees Under the Executive Committee
STEER Committee, Budget Committee, Investment and Finance Committee, 
Operational Safety Committee, CSR Committee, Technology, Innovation and Environment 
Committee,Compliance Committee, Global Strategic Planning Committee

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

Numbers in brackets show the number of meetings of the Board of Directors, Executive Committee during fiscal 2015.

Provide 
direction

Audit plan, 
Audit report

Communicate and coordinate 
with corporate auditors and 
independent public accountant

Internal Audit Office

Business audit
Accounting audit

Annual Report 2016   61

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Corporate Governance

Functions of Outside Audit & Supervisory Board 
Members and Reasons for Appointment

MOL has appointed four audit & supervisory board members, 
who are responsible for performing statutory auditing functions, 
including two outside audit & supervisory board members who 
are completely independent and have no conﬂ icts of interest 
with MOL. At a time when corporate auditing systems are taking 
on added importance, it goes without saying that the indepen-
dence of members from management and policy execution is 
assured. Our audit & supervisory board members work closely 
with the Internal Audit Ofﬁ ce and independent public accoun-
tants to assure effective corporate governance. They also work 
on strengthening corporate governance and compliance 
throughout the group.

Reasons for Appointment of Outside Audit & 
Supervisory Board Members

Name

Position

Reason for Appointment

Hiroyuki Itami

Professor of Tokyo 
University of Science, 
Graduate School of 
Innovation Studies
Outside Corporate Auditor, 
JFE Holdings, Inc

Hideki 
Yamashita

Attorney-at-Law and 
Patent Attorney,
YAMASHITA & TOYAMA 
LAW AND PATENT OFFICE,
Outside Corporate Auditor, 
I-Cell Networks

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 30, 2016)

Compensation for Directors, Audit & Supervisory Board 
Members and Independent Public Accountants

The Board of Directors, including the outside directors, deter-
mines compensation for the directors and audit & supervisory 
board members. Compensation paid to directors and audit & 
supervisory board members in ﬁ scal 2015 is shown in the follow-
ing 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 
Audit & Supervisory Board Members

No. of people 
remunerated

Total 
remuneration 
(¥ millions)

(Thousands 
of U.S.$)

Directors 
(Excluding outside directors)

Audit & Supervisory Board 
Members (Excluding 
outside members)

Outside directors and 
outside members

8

3

5

¥328

$2,918

64

45

573

402

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

¥108

103

¥212

¥4

2

¥7

¥113

$1,006

106

990

¥219

$1,947

Independent Ofﬁ cers

MOL has designated its three outside directors and two outside 
audit & supervisory board members as independent ofﬁ cers 
because there is no concern about a conﬂ ict of interest with gen-
eral investors 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 appropri-
ateness of management decisions and supervising the execution 
of business operations from the shareholders’ perspective based 
on their experience and insight.

Internal Control System

MOL has established a basic policy on the establishment of inter-
nal control systems* and goes beyond the scope required by law 
to promote activities to further enhance MOL Group management 
effectiveness, efﬁ ciency and transparency, namely ensuring the 
appropriateness of business operations and the trustworthiness of 
ﬁ nancial reporting. We have chosen two extracts from the policy 
and introduce them below: 1. Compliance and 2. Role of the audit 
& supervisory board members.

*Established by resolution of the Board of Directors in 2006, partially amended in 2015

1.  Compliance
The Company has established a Compliance Committee, which is 
headed by the Chief Compliance Ofﬁ cer, and formulated a 
Compliance Policy. General managers of divisions and ofﬁ ces are 
appointed as Compliance Ofﬁ cers. They are responsible for 
enforcing compliance 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 indepen-
dently of the Company’s divisions and ofﬁ ces, provides a coun-
seling 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 compliance advisory service desk, which 
we entrusted an outside attorney to run. The desk provides 
anonymous counseling services.

2.  Role of the Audit & Supervisory Board Members
The MOL Group has established rules for reporting to its audit & 
supervisory board members, creating a system in which directors, 
executive ofﬁ cers and employees report to the audit & supervisory 
board members on the Company’s operations and important mat-
ters that may impact business performance. These rules also safe-
guard appropriate frameworks for reporting legal violations and 
other compliance issues to audit & supervisory board members.  
Furthermore, the representative directors strive to regularly meet 

through its website.
  As recommended by the Corporate Governance Code, MOL 
proactively holds constructive dialogues with institutional inves-
tors and there will be no change to this policy. Feedback is regu-
larly 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 communica-
tion while being mindfully aware of fair disclosure.

The responsibility to provide information is not limited to 

management 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 responding 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 2015 (April 2015–March 2016)
Activity

Frequency Details

For securities 
analysts and 
institutional 
investors

Business 
performance 
presentations

4 times

Quarterly results/forecasts

For overseas 
institutional 
investors

For individual 
investors

President’s small 
meetings

Overseas investor 
road shows

Conferences held 
by securities 
companies

Corporate 
presentations for 
individual investors

2 times

Held for analysts in Japan

5 times

5 times

3 times

Once in North America, 
twice in Europe, twice 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

with audit & supervisory board members, and the Internal Audit 
Ofﬁ ce works in coordination with the audit & supervisory board 
members to provide assistance. In these ways, the Company 
actively cooperates with the audit & supervisory board members to 
facilitate effective auditing.

Measures Ensuring Compliance with the Antimonopoly Act

In 2014, the Japan Fair Trade Commission (JFTC) found MOL had violated Article 3 of 
the Antimonopoly Act. Considering this violation to be a very serious matter, we 
established the Review Committee of Recurrence Prevention Measures for Anti-
competitive Practices, headed by the President. The committee has examined and 
executed various concrete policies to prevent a recurrence of cartel activities, includ-
ing revising the compliance system and reforming the corporate culture. The mea-
sures resolved by the Review Committee of Recurrence Prevention Measures for 
Anti-competitive Practices are now being carried on by the Compliance Committee.

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, in addition to postal vot-
ing, so that shareholders who cannot attend the annual meeting 
can vote on proposals. Furthermore, 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 proposed 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 
2015, 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 website with an accompanying English transla-
tion. The Japanese and English drafts of presentation materials 
are also posted on the website. This information is e-mailed on 
the same day to foreign investors registered with the Company. 
MOL actively disseminates information about management strat-
egy, investment plans, market conditions and other information 

62   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. Unfortunately, while at sea, a ﬁ re occurred on 
MOL Ferry’s SUNFLOWER DAISETSU in July 2015, and one seafarer lost his life. In light of this tragedy, we will redouble our efforts 
going forward to fortify our safe operating system and ensure the thorough implementation 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 oper-
ation 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 personnel are united to strive to maximize operating safe-
ty, 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 working- 

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, 
including an experi-
enced MOL captain. 
They use the FMS.
Safety system, which 
was developed in cooperation with Weathernews Inc., to monitor 
weather and related developments where our vessels are operat-

Safety Operation Supporting Center (SOSC)

ing. FMS.Safety is used to check on the weather, sea, and other 
conditions surrounding the around 880 vessels operated by MOL 
Group companies 24 hours a day 365 days a year. There is always 
someone ready and at hand if a ship captain needs assistance. The 
system collects information on weather, international media 
reports, and other factors that might affect vessels under way so 
that the SOSC stands ready to offer timely information and advice 
and help prevent serious accidents before they happen.

■ Accident Response Drills
MOL regularly con-
ducts accident 
response drills on 
vessels while at sea. 
These drills simulate 
various situations 
such as an onboard 
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 management companies, and vessels. In November 2015, 
we conducted an emergency response drill based on the premise 
of our LNG carrier colliding with a containership while underway 
in Tokyo Bay. In May 2016, we conducted an emergency 
response drill based on the premise of our VLCC colliding with a 
containership while underway offshore the eastern coast of 
Himeshima in Oita Prefecture. We will continue to conduct drills 
on a regular basis and further strengthen our emergency 
response system.

Evacuation drill on board

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 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*1 (Lost Time Injury Frequency): 0.25 or below
3. Operational stoppage time*2: 24 hours/ship or below
4. Operational stoppage accident rate*3: 1.0/ship or below

In ﬁ scal 2015, MOL worked on three important targets:

areas in need of improvement. 

(1) Eradicate work-related accidents causing death, and reduce 

It is the MOL Group’s ultimate goal to eradicate work-related 

work-related accidents causing injury,
(2) Eradicate collisions and groundings, and
(3) Eradicate machinery trouble resulting in a dead ship condi-
tion (a ship being unable to move under its own power).
However, we were regrettably unable to achieve the Four 
Zeroes due to the previously mentioned ﬁ re that occurred 
aboard the ferry. We will nevertheless continue to work 
toward achieving these targets.

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. In light 
of the fact that one seafarer lost his life in a ferry ﬁ re, we are 
committed to redoubling our efforts to prevent accidents.

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 
experienced seafarers. We are also enhancing land-based educa-
tion and training curriculum and programs such as “hazard expe-
rience” training sessions and BRM drills.*4 These measures are 
geared towards enhancing the ability of seafarers to perceive 
danger 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 prob-
lems as well as close calls*5 and by using videos, photos and illus-
trations 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 technolo-
gy. This involves promoting the fail-safe design concept by pro-
viding shipyards and equipment manufacturers with feedback 
from vessels in operation on areas of non-conformance and 

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:
（~2014: 0.25 or below, 2015~: 0.7 or below）

0.38

0.44

0.31

0.30

0.53

2011

2012

2013

2014

2015

(Fiscal year)

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.

ESG-based IR Meetings
In March 2016, many institutional investors attended a meeting 
we held entitled "Achieving the World’s Safest Operations." We 
explained our safety measures in regard to both our facilities and 

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

19.82

0.40

19.04

0.66

0.52

0.51

25.56

0.99

2.0

1.5

1.0

0.5

Operational stoppage accident rate target:
1.00 or below

2011

2012

2013

2014

2015

(Fiscal year)

0

 Average operational stoppage time (hour/ship) (left scale)

 Operational stoppage accident rate (accidents/ship) (right scale)

64   Mitsui O.S.K. Lines

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Safe Operation

Risk Management

■ Management program for seafarer education and 
training acquired certiﬁ cation from DNV GL AS

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 GL AS in 
2012 for compliance with the 
Competence Management System (CMS).

Glossary

*1 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. In the scope of calcula-
tions, we originally included only workplace illnesses and injuries requiring disembarka-
tion from the ship. The LTIF criteria was strengthened from ﬁ scal 2015, and now includes 
any workplace illness or injury that prevents a worker from resuming even a reduced 
workload on that day, regardless of whether the illness or injury requires disembarkation. 
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)

*2 Operational stoppage time: Expresses the amount of ship operational stoppage time due 

to an accident per ship per year.

*3 Operational stoppage accident rate: Expresses the number of accidents that result in ship 

operational stoppage per ship per year.

*4 Bridge resource management drill: Simulating an incident on a vessel operation simulator 
to enable seafarers to acquire response techniques. It includes MOL’s original programs.

*5 Close calls: Risky incidents that came very close to causing a more serious accident.

our personnel, as well as how we have learned from previous 
marine incidents to strengthen our safety initiatives. They were 
also given a tour of our SOSC during the meeting. This was also 
a valuable opportunity for us to explain how MOL creates long-
term value.

Establishing a Self-Operated University of Merchant 
Marines in the Philippines
Filipino seafarers form the core of the crews on MOL's operated 
vessels. As operation technology grows increasingly sophisticat-
ed, we expect to see more activity for these seafarers. As the cul-
mination of MOL’s initiatives aimed at safe operations, we will 
establish the largest self-operated university of merchant marines 
in the Asia-Paciﬁ c region as we plan to reinforce efforts to secure 
and train excellent seafarers and achieve the world's safest oper-
ations.

For detailed new Maritime Academy in 
Philippines, see the Safety, Environmental and 
Social Report.

Third party evaluations

Safe Operation, Including Evaluations of Seafarer 
Educational Programs
■ Standard Training Courses for liqueﬁ ed gas 

transportation certiﬁ ed by DNV GL AS

The LNG Carrier Standard Training Course and the LEG/LPG 
Carrier Standard Training Course implemented globally by MOL 
were certiﬁ ed by Norway’s Det Norske Veritas (DNV) GL AS in 
2007 for compliance with the LNG carrier crew ability standards 
and in 2016 for compliance with the LEG/LPG advocated by 
SIGTTO.**
** Society of International Gas Tanker & Terminal Operators Ltd.

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. MOL has designated the reinforcement 
of total risk control as one measure to strengthen its manage-
ment foundation and support the successful execution of the 
plan. To fully exercise sustainable risk management, the 
Company transparently 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 
and sustain proﬁ t growth. In accordance with our internal mar-
ket risk management regulations, we appropriately reduce risks 

Variation of Procurement and Contract terms
(as of March 2016)

0

20%

40%

60%

80%

100%

Dry Bulkers
(373 ships)

Tankers
(175)

LNG Carriers
(69)

Car Carriers
(120)

Containerships
(95)

45%

45%

10%

34%

54%

12%

100%

98%

2%

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 2016, we operated around 880 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.

75%

25%

Exchange Rate Fluctuations

Owned or mid- and long-term chartered vessels with mid- and long-term contracts 
Owned or mid- and long-term chartered vessels with short-term contracts 
Short-term chartered vessels with short-term contracts

Market Exposure % by Vessel type 
(as of March 2016)

Total number 
of Fleet

Market Exposure

Capsize

Mid-and small-size bulkers

VLCC

Product Tanker

LPG Tanker

92

143

33

45

9

26%

52%

18%

78%

33%

66   Mitsui O.S.K. Lines

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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 2016, we project that each 
¥1-per-dollar change in the yen-U.S. dollar exchange rate will 
have an impact of approximately ¥1.0 billion on consolidated 
ordinary income.

Underlined words are explained in the Glossary on page 18.

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Risk Management

Corporate Social Responsibility (CSR)

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, 2016, interest-bearing debt totaled 
¥1,045.0 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 ¥3.0 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 880 vessels, whose annual fuel consump-
tion amounts to around 5.5 million tons of bunker. The 
Company is able to pass on about 60% 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 
¥0.17 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 ¥1.0 billion

Interest Rate 
(%)

A 1 percent rise in both yen- and U.S. dollar-denominated 
interest-bearing debt reduces ordinary income by 
approximately ¥3.0 billion

Bunker Price 
(US$/MT)

A US$1/MT increase reduces ordinary income by 
approximately ¥0.17 billion

Average Bunker Price (Consumption price) (US$/MT)

800

600

400

200

0

02/3 03/3 04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3 14/3 15/3

16/3

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 880 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.

MOL’s Approach to CSR

10 Principles of the Global Compact

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.

In order to fulﬁ ll these responsibilities, MOL deliberates on 
CSR-related policies and measures, primarily through the three 
committees under the Executive Committee.

Human 

Rights

Labour

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.

Principle 3.

Businesses should uphold the freedom of association and the effective 
recognition of the right to collective bargaining;

Principle 4. The elimination of all forms of forced and compulsory labour;

Principle 5. The effective abolition of child labour; and

Principle 6.

The elimination of discrimination in respect of employment and 
occupation.

Principle 7.

Businesses should support a precautionary approach to 
environmental challenges;

The MOL Group’s initiatives and policies regarding overall CSR 

Environment

Principle 8. Undertake initiatives to promote greater environmental responsibility; and

are deliberated on by the CSR Committee, which then sets sin-
gle-year, medium- and long-term targets and conducts regular 
reviews.

The Operational Safety Committee discusses basic policies 
and measures for ensuring the 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.

For more information on MOL CHART, see the left side of the 
four page spread on the inside cover under the title, “Long-Term 
Vision: To make the MOL Group an excellent and resilient organi-
zation that leads the world shipping industry.”

Organizational Framework for 
CSR Initiatives

Chief Executive 
Ofﬁ cer 
(President)

Executive 
Committee

CSR 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 vari-
ous stakeholders worldwide and contributing to the realization 
of sustainable growth of society are vital as it seeks to realize the 
ideas set forth in the MOL Group Corporate Principles. In order 
to contribute to an international framework for realizing these 
goals, MOL became the ﬁ rst Japanese shipping company to par-
ticipate in the United Nations (UN) Global Compact in 2005. 
Since then, MOL has worked to support and practice the 10 prin-
ciples 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.

Principle 9.

Encourage the development and diffusion of environmentally friendly 
technologies.

Anti-

Corruption

Principle 10.

Businesses should work against corruption in all its forms, including 
extortion and bribery.

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.

Medium-Term CSR Objectives

1. Thoroughly implement safe operation and provide safe, secure, sta-

ble, high-quality services.

2. Deepen initiatives to ensure thorough compliance.
3. Strengthen initiatives on corporate governance.
4. Promote personnel training and diversity to strengthen comprehen-

sive Group capabilities.

5. Make further progress on solving social issues and promoting environ-

ment 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.

68   Mitsui O.S.K. Lines

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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 environmen-
tal management, receives the results of the internal audit and 
conﬁ rms whether the system is functioning effectively.

Since 2003, we have had a third-party audit by DNV GL 
Business Assurance Japan KK every year, and a renewal audit 
every three years, and have earned ISO 14001 certiﬁ cation for 
our environmental management system. The results of our ﬁ scal 
2015 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 (52) and overseas 
(20). 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 the midterm manage-
ment plan, and establishes action plans to achieve those targets. 
Along with those targets, we collect each company’s data on its 
own environmental impact (fuel consumption, electric power 
consumption, paper usage, waste, and so on).

For more detailed diversity information, see 
the Safety, Environmental and Social Report.

For more detailed environmental initiatives information, 
see the Safety, Environmental and Social Report.

Corporate Social Responsibility (CSR)

Diversity

The MOL Group operates globally, employing approximately 
20,000 employees and seafarers of many diverse nationalities. 
  We are working to create and improve inclusive work environ-
ments that allow diverse human resources—including women 
and individuals of all nationalities—to realize their full potential 
and excel. By thus promoting diversity and inclusion, we aim to 
heighten the comprehensive strength of the Group. 

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 Committee, we identiﬁ ed the following ﬁ ve issues.

 ➊ Comply with environmental regulations

 ➋ Utilize technologies to reduce environmental impact

 ➌ Disclose environmental data

 ➍ Ensure safe operation

 ➎ Contribute to conservation of biodiversity

Organizational Structure for Environmental Initiatives
To effectively promote environmental initiatives based on the 
MOL Environmental Policy, the CSR Committee, a sub-committee 
of the Executive Committee, oversees planning and promotion of 
environment-related measures under the direction of the presi-
dent. The CSR Committee assesses environment-related risks and 
opportunities involving MOL, identiﬁ es the highest-priority issues 
in the Group’s environmental management, and sets environ-
mental targets, striving to achieve environment-friendly business 
activities. 

Organizational Structure to Promote the Environmental

Executive Committee

CSR Committee

Technology, Innovation and 
Environment Committee

(Secretariat ofﬁ ce: Corporate Planning 
Division, CSR and Environment Ofﬁ ce)

Director responsible for environmental manage-
ment (Chairman of CSR Committee)

Executive Ofﬁ cer of CSR Committee (Vice-
Chairman of CSR Committee)

Divisions/Ofﬁ ces

Divisions/Ofﬁ ces General Manager (Personnel 
responsible for environmental management)

70   Mitsui O.S.K. Lines

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Environmental Regulations

Schedule of Environmental Regulations by IMO, etc

Regulations

Tackling 
Global 
Warming

GHG emissions

2015

2016

2017

2018

2019

2020

2025

EEDI*1

Phase 1

Phase 2

Phase 3

SEEMP*2 Mandatory

*  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

Tier II

ECA*4

Tier II

Tier III

SOx emissions*5

General Sea 
Areas

Sulfur limit 3.5%

ECA

Sulfur limit 0.1%

Marine 
Environment 
Protection

Ballast Water 
Management 
Convention*7

General Sea 
Areas
Regulation by 
USGC*8

(Adopted in 2004: not ratiﬁ ed) Expected to be mandatory

(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)

Sulfur limit 0.5%*6

*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 characteristics 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 2017. (Applied to both new ships and, 
after certain grace periods, to existing ships)

Environmental Investments and CO2 Reductions
Environmental Investments

 (Billions of yen)

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 May 2016, 50 countries 
representing a combined total G/T of 34.81% 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 inventory 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 following 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 2016, 3 
countries have ratiﬁ ed.)

CO2 and Cost Reductions from Environmental Measures

Environment-related R&D activities

¥0.7

¥0.3

CO2 emissions reductions (1,000t)

Fiscal 2014

Fiscal 2015

 (FY)

Utilization and expansion of 
existing environmental 
technologies
Responses to environmental 
regulations

Initiatives to save bunker fuel

Initiatives of Group companies

2.1

0.5

0.9

0.2

0.9

2.2

1.0

0.3

Total

¥4.3

¥4.6

Cost Reductions (¥ billions)

2013

279

¥5.5

2014

348

¥5.5

2015

303

¥3.1

Underlined words are explained in the Glossary on page 18.

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Corporate Social Responsibility (CSR)

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 management system. (2014) Certiﬁ ed companies: 
MOL Ship Management Co., Ltd. (2014), 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. 
This marks the third time and second consecutive year MOL has 
received this distinction.

Social Contribution Activities

MOL aims to be a company that grows sustainably and harmoni-
ously with society. We proactively undertake social contribution 
activities that only a shipping company with a global network can. 
We are also focusing our efforts on activities in which our employ-
ees themselves participate. Examples include the following:

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.

■ 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.

■ 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.

• Transporting used children’s shoes and donating used containers 

to Zambia

• Hosting a discussion between the mayor of Miyako City, Iwate 

Prefecture and young people aboard the NIPPON MARU cruise ship

• Hosting a charity event in the employee cafeteria to address 

global food challenges

For more detailed Social Contribution information, 
see the Safety, Environmental and Social Report.

■ SMBC Sustainability Assessment Loan
In 2016, MOL received the highest rating for 
SMBC Sustainability Assessment Loans from 
Sumitomo Mitsui Banking Corporation (SMBC), 
winning speciﬁ c praise for timely and accurate 
disclosure of environmental, social, and gover-
nance (ESG) issues and for its initiatives on sustainability.

■ SMBC Nadeshiko Assessment Loan
MOL became the ﬁ rst company in the marine transport industry 
to be approved for an SMBC Nadeshiko Loan by Sumitomo Mitsui 
Banking Corporation (SMBC), receiving praise for being a growth 
company where women can be expected to play an active role 
thanks to our initiatives aiming to create a workplace where 
women can play a more active role.

Financial Section

Contents

74 Consolidated Balance Sheets

76 Consolidated Statements of Operations and Consolidated Statements 

of Comprehensive Income

77 Consolidated Statements of Changes in Net Assets

78 Consolidated Statements of Cash Flows

79 Notes to Consolidated Financial Statements

109 Independent Auditor’s Report

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Consolidated Balance Sheets

Mitsui O.S.K. Lines, Ltd. March 31, 2016 and 2015

ASSETS

Current assets:

Millions of yen

Thousands of 
U.S. dollars (Note 1)

2016

2015

2016

LIABILITIES AND NET ASSETS

Current liabilities:

Millions of yen

Thousands of 
U.S. dollars (Note 1)

2016

2015

2016

Cash and cash equivalents (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥   159,450

¥   128,802

$  1,415,069

Trade payables (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥   127,172

¥   167,002

$  1,128,612

Trade receivables (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

130,293

178,845

1,156,310

Bonds due within one year (Notes 3 and 7) . . . . . . . . . . . . . . . . . . . . . . . 

Inventories (Note 5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Deferred and prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Deferred tax assets (Note 15)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Allowance for doubtful accounts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

27,860

66,101

1,449

72,297

(975)

456,475

49,026

75,937

2,107

78,617

(1,538)

511,796

247,249

586,626

12,859

641,614

(8,653)

4,051,074

Vessels, property and equipment, net of accumulated depreciation 
(Notes 7 and 13):

Vessels  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Buildings and structures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Machinery, equipment and vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Furniture and ﬁ xtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Vessels and other property under construction  . . . . . . . . . . . . . . . . . . . . 

Others  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

822,270 

159,483 

22,828 

4,482 

221,614 

143,342 

2,413 

906,984 

165,930 

21,387 

5,928 

221,993 

173,279 

2,527 

7,297,391 

1,415,362 

202,591 

39,776 

1,966,755 

1,272,116 

21,415 

Net vessels, property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

1,376,432 

1,498,028 

12,215,406 

Investments, intangibles and other assets:

Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investment securities (Notes 3, 4 and 7)  . . . . . . . . . . . . . . . . . . . . . . . . . 

Long-term loans receivable (Note 3)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Long-term prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Net deﬁ ned beneﬁ t assets (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Deferred tax assets  (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Allowance for doubtful accounts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Total investments, intangibles and other assets . . . . . . . . . . . . . . . . . . . . 

33,483

215,056

49,015

3,565

13,292

4,422

69,908

(2,061)

386,680

37,068

268,811

74,959

3,692

24,063

3,954

203,184

(1,505)

614,226

297,151

1,908,555

434,993

31,638

117,962

39,244

620,413

(18,291)

3,431,665

Short-term loans (Notes 3 and 7)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Accrued income taxes (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Advances received  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Deferred tax liabilities  (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Allowance for bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Allowance for directors' bonuses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Provision for loss on business liquidation . . . . . . . . . . . . . . . . . . . . . . . . . 

Provision for contract loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Commercial paper (Notes 3 and 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Non-current liabilities:

Bonds due after one year (Notes 3 and 7) . . . . . . . . . . . . . . . . . . . . . . . . 

Long-term bank loans (Notes 3 and 7)  . . . . . . . . . . . . . . . . . . . . . . . . . . 

Lease obligations  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Deferred tax liabilities  (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Directors' and corporate auditors' retirement beneﬁ ts . . . . . . . . . . . . . . . 

Reserve for periodic drydocking  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Non-controlling interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Total net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

45,000

107,976

4,872

29,327

712

4,485

130

71,008

8,604

—

64,508

463,794

220,840

648,117

20,948

81,553

1,659

14,854

13,442

107,445

1,108,868

1,572,662

65,400

45,389

354,180

(6,848)

458,121

20,950

35,034

26,886

(40)

82,830

2,682

103,292

646,925

15,000

179,389

7,639

36,280

593

4,764

242

—

—

5,500

88,938

505,347

270,185

688,332

22,928

109,043

1,803

15,803

13,660

104,514

1,226,268

1,731,615

399,361

958,253

43,237

260,268

6,319

39,803

1,154

630,174

76,358

—

572,489

4,116,028

1,959,886

5,751,837

185,907

723,758

14,723

131,825

119,294

953,629

9,840,859

13,956,887

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

580,405

402,813

3,143,237

(60,774)

4,065,681

185,925

310,916

238,605

(355)

735,091

23,802

916,684

5,741,258

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥2,219,587

¥2,624,050

$19,698,145

Total liabilities and net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥2,219,587

¥2,624,050

$19,698,145

See accompanying notes.

74   Mitsui O.S.K. Lines

Annual Report 2016   75

16MOL英文財務p73_109_0727.indd   74-75
16MOL英文財務p73_109_0727.indd   74-75

2016/07/27   16:14
2016/07/27   16:14

 
Consolidated Statements of Operations and 
Consolidated Statements of Comprehensive Income

Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2016 and 2015

(Consolidated Statements of Operations)

Shipping and other revenues (Note 14)  . . . . . . . . . . . . . . . . . . . . . . . . . 
Shipping and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Gross operating income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . 
Operating income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Non-operating income:

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Equity in earnings of afﬁ liated companies . . . . . . . . . . . . . . . . . . . . . . . . 
Foreign exchange gain  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Others  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total non-operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Non-operating expenses:

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Others  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total non-operating expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Ordinary income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other gains:

Gain on sales of vessels, property, equipment and others  . . . . . . . . . . . . 
Gain on sales of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Gain on cancellation fee for chartered ships . . . . . . . . . . . . . . . . . . . . . . 
Others  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total other gains  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other losses:

Loss on sales and disposals of vessels, property, equipment and others . . 
Loss on valuation of shares of subsidiaries and associates . . . . . . . . . . . . 
Impairment loss (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Costs of business structural reforms (Note 11) . . . . . . . . . . . . . . . . . . . . . 
Others  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total other losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Income (Loss) before income taxes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Income taxes (Note 15):

Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net income attributable to non-controlling interests . . . . . . . . . . . . . . . . . . 
Net income (loss) attributable to owners of parent . . . . . . . . . . . . . . . 

(Consolidated Statements of Comprehensive Income)

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other comprehensive income (Note 18):

Unrealized holding gains (losses) on available-for-sale securities, net of tax . . .
Unrealized gains (losses) on hedging derivatives, net of tax . . . . . . . . . . . 
Foreign currency translation adjustments. . . . . . . . . . . . . . . . . . . . . . . . . 
Remeasurements of deﬁ ned beneﬁ t plans, net of tax  . . . . . . . . . . . . . . . 
 Share of other comprehensive loss of associates accounted for
 using equity method  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Millions of yen

2016

¥1,712,223
1,594,569
117,654
115,330
2,324

2015

¥1,817,070
1,683,795
133,275
116,025
17,250

Thousands of 
U.S. dollars (Note 1)

2016

$15,195,447
14,151,304
1,044,143
1,023,518
20,625

4,079
6,131
9,178
23,908
7,452
50,748

14,576
2,227
16,803
36,269

9,431
12,934
4,060
3,587
30,012

629
26,228
—
179,291
14,518
220,666
(154,385)

11,134 
261 
(165,780)
4,668
¥  (170,448)

2,705
6,920
4,930
25,523
8,688
48,766

12,556
2,130
14,686
51,330

16,225
135
2,229
7,563
26,152

897
—
10,198
—
8,055
19,150
58,332

12,440
(2,577)
48,469
6,113
¥     42,356

36,200
54,411
81,452
212,176
66,134
450,373

129,357
19,765
149,122
321,876

83,697
114,785
36,031
31,834
266,347

5,582
232,765
—
1,591,152
128,843
1,958,342
(1,370,119)

98,811
2,316
(1,471,246)
41,427
$ (1,512,673)

Millions of yen

Thousands of 
U.S. dollars (Note 1)

2016

2015

2016

¥(165,780)

¥  48,469

$(1,471,246)

(24,187)
(31,368)
(1,520)
(5,369)

(3,475)
(65,919)
¥(231,699)

12,892
46,674
20,802
4,134

(214,652)
(278,381)
(13,490)
(47,648)

(9,981)
74,521
¥122,990

(30,840)
(585,011)
$(2,056,257)

Comprehensive income (loss)
Comprehensive income (loss) attributable to owners of parent . . . . . . . . . . 
Comprehensive income attributable to non-controlling interests . . . . . . . . . 

¥(233,644)
1,945

¥114,990
8,000

$(2,073,518)
17,261

(Amounts per share of common stock)
Net income (loss)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Diluted net income (Note 2)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Cash dividends applicable to the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Yen

U.S. dollars (Note 1)

¥(142.50)
—
5.00

¥35.42
32.98
7.00

$(1.26)
—
0.04

See accompanying notes.

76   Mitsui O.S.K. Lines

Consolidated Statements of Changes in Net Assets

Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2016 and 2015

Millions of yen

Unrealized
Unrealized 
holding gains
gains
on available-
 on hedging
for-sale
derivatives,
securities,
net of tax
net of tax
¥(6,982) ¥ 32,810 ¥ 39,711

Treasury 
stock, at 
cost

Remeasure-
ments 
 of deﬁ ned 
beneﬁ t 
plans,
net of tax
¥1,186

Foreign
currency
translation
adjustments
¥    (315)

Share 
subscription 
rights
¥2,391 ¥101,998

Non-controlling 
interests

Total
net assets
¥783,549

—

—
¥(6,982) ¥ 32,810 ¥ 39,711

—

—
¥    (315)

—
¥1,186

—

—
¥2,391 ¥101,998

(4,567)
¥778,982

Common 
stock
¥65,400

Capital 
Retained 
surplus
earnings
¥44,517 ¥502,833

—
¥65,400

— (4,567)
¥44,517 ¥498,266

—
—

—

—

—
—
—

—

—

—
—
— (7,172)

— 42,356

—

205

—
—
(48)

—

—

(121)
—
(49)

—

—

19
—

—

—

—
(56)
196

—

—
—

—

—

—
—
—

—

—
—

—

—

—
—
—

—

—
—

—

—

—
—
—

—

—
—

—

—

—
—
—

—

(19)
—

—

—

—
—
—

—

—
—

—

—

—
—
—

—

—
(7,172)

42,356

205

(121)
(56)
99

—

— 11,451

29,059

27,988

4,136

181

5,327

78,142

¥65,400

¥44,469 ¥533,485

¥(6,823) ¥ 44,261 ¥ 68,770

¥27,673

¥5,322

¥2,553 ¥107,325

¥892,435

—
¥65,400

—

—
¥44,469 ¥533,485

—

—
¥(6,823) ¥ 44,261 ¥ 68,770

—

—
¥27,673

—
¥5,322

—

—
¥2,553 ¥107,325

—
¥892,435

—
—

—

—

—
—
—

—

—
—
— (8,971)

— (170,448)

—

—
—
—

920

—

141
—
(27)

—

7
—

—

—

—
(47)
15

—

—
—

—

—

—
—
—

—

—
—

—

—

—
—
—

—

—
—

—

—

—
—
—

—

—
—

—

—

—
—
—

—

(7)
—

—

—

—
—
—

—

—
—

—

—

—
—
—

—

—
(8,971)

(170,448)

—

141
(47)
(12)

920

—
¥65,400

—

—
¥45,389 ¥354,180

— (23,311)

(33,736)
¥(6,848) ¥ 20,950 ¥ 35,034

(787)
¥26,886

(5,362)
¥    (40)

136

(4,033)
¥2,682 ¥103,292

(67,093)
¥646,925

Thousands of U.S. dollars (Note 1)

Foreign
currency
Treasury 
translation
stock, at 
adjustments
cost
$580,405 $394,648 $4,734,514 $(60,552) $ 392,803 $ 610,312 $245,589

Common 
stock

Retained 
earnings

Capital 
surplus

Unrealized
holding gains
on available-
for-sale
securities,
net of tax

Unrealized 
gains
 on hedging
derivatives,
net of tax

—

—
$580,405 $394,648 $4,734,514 $(60,552) $ 392,803 $ 610,312 $245,589

—

—

—

—

—

Remeasure-
ments 
 of deﬁ ned 
beneﬁ t 
plans,
net of tax
$47,231

Share 
subscription 
rights
$22,657 $952,476

Non-controlling 
interests

Total
net assets
$7,920,083

—
$47,231

—

—
$22,657 $952,476

—
$7,920,083

—
—

—

—

—
—
—

—

—
—
— (79,615)

— (1,512,673)

—

62
—

—

—

—

—
—
—

1,251
—
(240)

—
(417)
133

8,165

—

—

—
—

—

—

—
—
—

—

—
—

—

—

—
—
—

—

—
—

—

—

—
—
—

—

—
—

—

—

—
—
—

—

(62)
—

—
—

—
(79,615)

—

—

—
—
—

—

— (1,512,673)

—

—
—
—

—

—

1,251
(417)
(107)

8,165

—

(6,984)
$580,405 $402,813 $3,143,237 $(60,774) $ 185,925 $ 310,916 $238,605

— (206,878)

(299,396)

—

—

(47,586)
$    (355)

1,207

(35,792)
$23,802 $916,684

(595,429)
$5,741,258

Annual Report 2016   77

Balance at April 1, 2014 . . . . . . .
Cumulative effects of changes in 
accounting policies  . . . . . . . . .
Restated balance . . . . . . . . . . .
Issuance of new shares—exercise 
of subscription rights to shares  . . 
Dividends paid  . . . . . . . . . . . . . . . 
Net income (loss) attributable to 
owners of parent . . . . . . . . . . . . . . . . .
Due to change in consolidated 
subsidiaries . . . . . . . . . . . . . . . . . 
Due to change in afﬁ liated 
companies accounted for by the 
equity method . . . . . . . . . . . . . . . 
Purchases of treasury stock . . . . . . 
Disposal of treasury stock . . . . . . . 
Purchases of shares of 
consolidated subsidiaries . . . . . . . 
Net changes of items other than 
owner's equity during the year  . . 

Balance at 
March 31 and April 1, 2015 . . . .
Cumulative effects of changes in 
accounting policies  . . . . . . . . .
Restated balance . . . . . . . . . . .
Issuance of new shares—exercise 
of subscription rights to shares  . . 
Dividends paid  . . . . . . . . . . . . . . . 
Net income (loss) attributable to 
owners of parent . . . . . . . . . . . . . . . . .
Due to change in consolidated 
subsidiaries . . . . . . . . . . . . . . . . . 
Due to change in afﬁ liated 
companies accounted for by the 
equity method . . . . . . . . . . . . . . . 
Purchases of treasury stock . . . . . . 
Disposal of treasury stock . . . . . . . 
Purchases of shares of 
consolidated subsidiaries . . . . . . . 
Net changes of items other than 
owner's equity during the year . . . . . .
Balance at March 31, 2016 . . . . .

Balance at April 1, 2015 . . . . . . .
Cumulative effects of changes in 
accounting policies  . . . . . . . . .
Restated balance . . . . . . . . . . .

Issuance of new shares—
exercise of subscription rights 
to shares . . . . . . . . . . . . . . . . . 
Dividends paid . . . . . . . . . . . . . 
Net income (loss) attributable 
to owners of parent . . . . . . . . 
Due to change in consolidated 
subsidiaries . . . . . . . . . . . . . . . 
Due to change in afﬁ liated 
companies accounted for by the 
equity method . . . . . . . . . . . . . . . 
Purchases of treasury stock . . . . . . 
Disposal of treasury stock . . . . . . . 
Purchases of shares of 
consolidated subsidiaries . . . . . . . 
Net changes of items other 
than owner's equity during 
the year . . . . . . . . . . . . . . . . . 
Balance at March 31, 2016 . . . . .

See accompanying notes.

16MOL英文財務p73_109_0727.indd   76-77
16MOL英文財務p73_109_0727.indd   76-77

2016/07/27   16:14
2016/07/27   16:14

Consolidated Statements of Cash Flows

 Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2016 and 2015

Notes to Consolidated Financial Statements

Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2016 and 2015

Cash ﬂ ows from operating activities:
Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Adjustments to reconcile income (loss) before income taxes to net cash 
provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Depreciation and amortization  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Impairment loss  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Costs of business structural reforms  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Loss (Gain) on sales of investment securities . . . . . . . . . . . . . . . . . . . . . . 
Loss (Gain) on sales and disposal of vessels, property and equipment  . . . 
Loss on valuation of shares of subsidiaries and associates . . . . . . . . . . . . 
Foreign exchange loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Changes in operating assets and liabilities:

Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade payables  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Others, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Sub total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Interest and dividend income received . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Interest expenses paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . 
Cash ﬂ ows from investing activities:

Purchase of investment securities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Proceeds from sales and redemption of investment securities  . . . . . . . . . 
Purchase of vessels, property and equipment and intangible assets . . . . . . . . . . . . 
Proceeds from sales of vessels, property and equipment and intangible assets . . . 
Purchase of shares of subsidiaries resulting in change in scope of
 consolidation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Proceeds from sales of shares of subsidiaries . . . . . . . . . . . . . . . . . . . . . . 
Net decrease (increase) in short-term loans receivables  . . . . . . . . . . . . . . 
Disbursements for long-term loans receivables  . . . . . . . . . . . . . . . . . . . . 
Collections of long-term loans receivables . . . . . . . . . . . . . . . . . . . . . . . . 
Others, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Cash ﬂ ows from ﬁ nancing activities:

Net increase (decrease) in short-term bank 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Sales of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Cash dividends paid by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Cash dividends paid to non-controlling interests . . . . . . . . . . . . . . . . . . . 
Others, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net cash provided by (used in) ﬁ nancing activities . . . . . . . . . . . . . . . . . . . . 
Effect of foreign exchange rate changes on cash and cash 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 . . . 
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . 

See accompanying notes.

78   Mitsui O.S.K. Lines

Millions of yen

Thousands of 
U.S. dollars (Note 1)

2016

2015

2016

¥(154,385)

¥   58,332

$(1,370,119)

92,772
—
179,291
(9,178)
(1,096)
(454)
(233)
(10,210)
14,576
(12,915)
(8,643)
26,228
(25,084)

47,462
21,185
(38,943)
91,997 
12,627
224,997
14,099
(14,306)
(15,600)
209,190

(7,919)
16,371
(123,840)
69,202

—
11,137
(5,459)
(32,984)
49,311
(2,500)
(26,681)

(40,010)
(5,500)
80,885
(152,552)
—
(15,600)
(47)
29
(8,928)
(1,116)
(5,896)
(148,735)
(3,126)
30,648
128,802
—
¥ 159,450

87,804
10,198
—
(4,930)
2,356
(1,560)
377
(9,625)
12,556
(134)
(13,380)
—
(24,801)

(28,223)
11,750
19,756 
13,417 
(25,161)
108,732
12,411
(13,107)
(15,541)
92,495

(14,594)
1,770
(186,317)
74,184

(6,258)
8,706
(4,526)
(59,942)
27,957
(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
¥ 128,802

823,323
—
1,591,152
(81,452)
(9,727)
(4,029)
(2,068)
(90,611)
129,357
(114,617)
(76,704)
232,765
(222,613)

421,211
188,010
(345,607)
816,445 
112,062
1,996,778
125,124
(126,961)
(138,445)
1,856,496

(70,279)
145,288
(1,099,042)
614,146

—
98,837
(48,447)
(292,723)
437,620
(22,186)
(236,786)

(355,076)
(48,811)
717,829
(1,353,852)
—
(138,445)
(417)
257
(79,233)
(9,904)
(52,325)
(1,319,977)
(27,742)
271,991
1,143,078
—
$ 1,415,069

  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 made revisions according to ASBJ PITF No.18. The accompanying consolidated ﬁ nan-

cial statements have been restructured and translated into English (with some expanded descriptions) from the consolidated ﬁ nan-

cial statements of Mitsui O.S.K. Lines, Ltd. (the “Company”) prepared in accordance with Japanese GAAP and ﬁ led with the 

appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. Some sup-

plementary information included in the statutory Japanese language consolidated ﬁ nancial statements, but not required for fair pre-

sentation, 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, 2016, which was ¥112.68 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 362 subsidiaries for the year ended March 31, 

2016 (371 subsidiaries for the year ended March 31, 2015). 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 76 afﬁ liated companies for the year ended March 31, 2016, and 70 afﬁ liated com-

panies for the year ended March 31, 2015. 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.

The difference between acquisition cost and net assets acquired is treated as goodwill and is amortized principally over 5 years 

on a straight-line basis. 

Amortized amount is included in “Selling, general and administrative expenses” of the consolidated statements of operations.

(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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(4)  FREIGHT REVENUES AND RELATED EXPENSES

1. Containerships

(14) PROVISION FOR CONTRACT LOSS

The Company recognizes provision for contract loss to cover potential losses with higher probability for the future performance of 

Freight revenues and the related voyage expenses are recognized by the multiple transportation progress method.

contract due to a decision made over contract, etc.

2. Vessels other than containerships

(15) DIRECTORS’ AND CORPORATE AUDITORS’ RETIREMENT BENEFITS 

Freight revenues and the related voyage expenses are recognized mainly by the completed-voyage method. 

The domestic subsidiaries of the Company recognize liabilities for retirement beneﬁ ts for directors and corporate auditors at an 

(5)  SECURITIES

amount required in accordance with the internal regulations.

Securities are classiﬁ ed into (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended to 

(16) RESERVE FOR PERIODIC DRYDOCKING 

be held to maturity (hereafter, “held-to-maturity debt securities”), (c) equity securities issued by subsidiaries and afﬁ liated compa-

Reserve for periodic drydocking is based on the estimated amount of expenditures for periodic drydocking in the future. 

nies, or (d) for all other securities that are not classiﬁ ed in any of the above categories (hereafter, “available-for-sale securities”).

(17) EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITS

Trading securities are stated at fair market value. Unrealized gains and losses from market value ﬂ uctuations are recognized as 

The Company and its consolidated subsidiaries (the “Group”) recognized net deﬁ ned beneﬁ t assets and net deﬁ ned beneﬁ t liabili-

gains or losses in the period of the change. Held-to-maturity debt securities are stated at amortized cost, net of the amount consid-

ties for employees’ severance and retirement beneﬁ ts and retirement beneﬁ ts based on the estimated amounts of projected beneﬁ t 

ered not collectible. Equity securities issued by subsidiaries and afﬁ liated companies which are not consolidated or accounted for 

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 

using the equity method are stated at moving-average cost. Available-for-sale securities with fair market values are stated at fair 

straight-line method.

market values, and the corresponding unrealized holding gains or losses, net of applicable income taxes, are reported as separate 

Actuarial gains and losses are recognized in the statements of operations using the straight-line method over the average of the 

component of net assets. Other securities with no available fair market value are stated at moving-average cost.

estimated remaining service lives of mainly 10 years commencing with the following period. Past service costs are chieﬂ y accounted 

If the market value of held-to-maturity debt securities, equity securities issued by unconsolidated subsidiaries and afﬁ liated com-

for as expenses in lump-sum at the time of occurrence.

panies not on the equity method, and available-for-sale securities, declines signiﬁ cantly, such securities are stated at fair market 

(18) INCOME TAXES

value and the difference between fair market value and the carrying amount is recognized as loss in the period of the decline. If the 

The Group recognizes tax effects of temporary differences between the ﬁ nancial statement basis and the tax basis of assets and lia-

fair market value of held-to-maturity debt securities, equity securities issued by unconsolidated subsidiaries and afﬁ liated companies 

bilities. The provision for income taxes is computed based on the pretax income included in the consolidated statements of opera-

not on the equity method, and available-for-sale securities is not readily available, such securities should be written down to net 

tions. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax 

assets value with a corresponding charge in the statements of operations in the event net assets value declines signiﬁ cantly. In these 

consequences of temporary differences.

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. 

(19) AMOUNTS PER SHARE OF COMMON STOCK

(6)  INVENTORIES

Net income per share of common stock is computed based upon the weighted-average number of shares outstanding during the 

Inventories are stated principally at cost determined by the moving-average method (with regard to the book value of inventories 

year. 

on the balance sheet, by writing the inventories down based on their decrease in proﬁ tability of assets).

Fully diluted net income per share of common stock assumes exercise of the outstanding stock options at the beginning of the 

(7)  DEPRECIATION AND AMORTIZATION  

year or at the date of issuance. For the year ended March 31, 2016 fully diluted net income per share is not disclosed because of 

Depreciation of vessels and buildings is computed mainly by the straight-line method. Depreciation of other property and equip-

the Company’s net loss position.

ment is computed mainly by the declining-balance method. Amortization of intangible assets is computed by the straight-line 

Cash dividends per share have been presented on an accrual basis and include dividends to be approved after the balance sheet 

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).

date, but applicable to the year then ended.

(20) DERIVATIVES AND HEDGE ACCOUNTING

Depreciation of ﬁ nance lease that transfer ownership to lessees is computed mainly by the identical to depreciation method 

Companies are required to state derivative ﬁ nancial instruments at fair value and to recognize changes in the fair value as gains or 

applied to self-owned non-current assets. Depreciation of ﬁ nance lease that do not transfer ownership to lessees is computed 

losses unless derivative ﬁ nancial instruments are used for hedging purposes. 

mainly by straight-line method on the assumption that the lease term is the useful life and the estimated residual is zero. With 

If derivative ﬁ nancial instruments are used as hedging instruments and meet certain hedging criteria, the Group defers recogni-

regard to ﬁ nance lease that do not transfer ownership for which the starting date for the lease transaction is prior to March 31, 

tion of gains or losses resulting from changes in fair value of derivative ﬁ nancial instruments until the related losses or gains on the 

2008, they are continuously accounted for by a method corresponding to that used for ordinary operating lease contracts.

hedged items are recognized. 

(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

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”).

In cases where a vessel’s construction period is long and the amount of interest accruing during this period is signiﬁ cant, such inter-

If foreign exchange forward contracts are used as hedging instruments and meet certain hedging criteria, hedged foreign cur-

est expenses are capitalized as a part of the acquisition cost which amounted to ¥2,847 million ($25,266 thousand) for the year 

rency assets and liabilities are translated at the rate of these contracts (“allocation method”).

ended March 31, 2016 and ¥5,139 million for the year ended March 31, 2015.

(10) ALLOWANCE FOR DOUBTFUL ACCOUNTS

The following summarizes hedging derivative ﬁ nancial instruments used by the Group and items hedged:

Allowance for doubtful accounts is provided in an amount sufﬁ cient to cover probable losses on collection. It consists of the esti-

Hedging instruments: 

Hedged items:

mated uncollectible amount with respect to certain identiﬁ ed doubtful receivables and an amount calculated using the actual per-

Loans payable in foreign currencies 

Foreign currency future transactions 

centage of the Company’s collection losses.

(11) ALLOWANCE FOR BONUSES

Allowance for bonuses to employees is based on the estimated amount of future payments attributed to the ﬁ scal year.

(12) ALLOWANCE FOR DIRECTORS’ BONUSES 

The Company and several domestic consolidated subsidiaries record allowance for bonuses to directors based on the estimated 

amount of future payments.

(13) PROVISION FOR LOSS ON BUSINESS LIQUIDATION

Provision for loss on business liquidation is recorded for estimated losses arising from the business liquidations to be carried out by 

certain consolidated subsidiaries of the Company.

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.

80   Mitsui O.S.K. Lines

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The Company evaluates hedge effectiveness by comparing the cumulative changes in cash ﬂ ows from or the changes in fair 

  3. FINANCIAL INSTRUMENTS

value of hedged items and the cumulative changes in cash ﬂ ows from or the changes in fair value of hedging instruments.

(21)  RECLASSIFICATIONS

Certain prior year amounts have been reclassiﬁ ed to conform to the 2016 presentation.

(22)  CHANGES IN ACCOUNTING POLICIES

(Application of Accounting Standards for Business Combinations)

The Group adopted “Revised Accounting Standard for Business Combinations” (ASBJ Statement No.21, September 13, 2013 (here-

inafter, “Statement No.21”)), “Revised Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No.22, 

September 13, 2013 (hereinafter, “Statement No.22”)) and “Revised Accounting Standard for Business Divestitures” (ASBJ 

Statement No.7, September 13, 2013 (hereinafter, “Statement No.7”)) (together, the “Business Combination Accounting 

Standards”), from the year ended March 31, 2016.  As a result, the Company changed its accounting policies to recognize in capi-

tal surplus the differences arising from the changes in the Company’s ownership interest of subsidiaries over which the Company 

continues to maintain control and to record acquisition related costs as expenses in the ﬁ scal year in which the costs are incurred. In 

addition, the Company changed its accounting policy for the reallocation of acquisition costs due to the completion following pro-

visional accounting to reﬂ ect such reallocation in the consolidated ﬁ nancial statements for the ﬁ scal year in which the business 

combination took place. The Company also changed the presentation of net income and the term “non-controlling interests” is 

used instead of “minority interests”. Certain amounts in the prior year comparative information were reclassiﬁ ed to conform to 

such changes in the current year presentation.

In the consolidated statement of cash ﬂ ows, cash ﬂ ows from acquisition or disposal of shares of subsidiaries with no changes in 

the scope of consolidation are included in “Cash ﬂ ows from ﬁ nancing activities” and cash ﬂ ows from acquisition related costs for 

shares of subsidiaries with changes in the scope of consolidation or costs related to acquisition or disposal of shares of subsidiaries 

with no changes in the scope of consolidation are included in “Cash ﬂ ows from operating activities”.

  With regard to the application of the Business Combination Accounting Standards, the Company followed the provisional treat-

ments in article 58-2 (4) of Statement No.21, article 44-5 (4) of Statement No.22 and article 57-4 (4) of Statement No.7 with appli-

cation from the beginning of the current ﬁ scal year prospectively.

The effect of these changes on the consolidated ﬁ nancial statement is immaterial.

(23)  ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIED

Revised Implementation Guidance on Recoverability of Deferred Tax Assets (ASBJ Guidance No.26, March 28 , 2016).

1.  Overview

Following the framework in Auditing Committee Report No. 66 “Audit Treatment regarding the Judgment of Recoverability of 

Deferred Tax Assets”, which prescribes estimation of deferred tax assets according to the classiﬁ cation of the entity by one of ﬁ ve 

types, the following treatments were changed as necessary:

1.  Treatment for an entity that does not meet any of the criteria in types 1 to 5;

2.  Criteria for types 2 and 3;

3.  Treatment for deductible temporary differences which an entity classiﬁ ed as type 2 is unable to schedule; 

4.   Treatment for the period which an entity classiﬁ ed as type 3 is able to reasonably estimate with respect to future taxable income 

before consideration of taxable or deductible temporary differences that exist at the end of the current ﬁ scal year; and

5.  Treatment when an entity classiﬁ ed as type 4 also meets the criteria for types 2 or 3.

2. Effective dates

This standard will be effective from the beginning of the year ending March 31, 2017.

3. Effect of application of the standard

The Group is currently under assessment of the effect of this new standard on the consolidated ﬁ nancial statements.

(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 

situations.

Derivatives are utilized to hedge risks as discussed below and are executed within the scope of real requirements. Our policy is 

not to use derivatives for speculative purposes.

II. Details of 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 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 corpo-

rate bonds.

*  Interest rate swap contracts:

To avoid interest rate risk arising out of interest payment of long-term bank 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 (20) 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 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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(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;

Book values and fair values of the ﬁ nancial instruments on the consolidated balance sheet at March 31, 2016 were the following;

Millions of yen

Book Value

Fair Value

Difference

Assets

Millions of yen

Book Value

Fair Value

Difference

Assets

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥   159,450

¥   159,450

¥        —

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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,810

130,293

10,988

87,319

59,132

6,810

130,293

10,988

87,319

64,561

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥   453,992

¥   459,421

—

—

—

—

5,429

¥  5,429

Liabilities

Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥   127,172

¥   127,172

¥       —

Short-term loans  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Bonds(*2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-term bank loans(*3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30,275

265,840

725,818

30,275

261,864

746,600

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,149,105

¥1,165,911

Derivative ﬁ nancial instruments(*4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥     16,405

¥     16,187

—

(3,976)

20,782

¥16,806

¥    (218)

Assets

Thousands of U.S. dollars (Note 1)

Book Value

Fair Value

Difference

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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,821

178,845

5,556

120,583

76,265

2,821

178,845

5,556

120,583

82,282

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥   512,872

¥   518,889

—

—

—

—

6,017

¥  6,017

Liabilities

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)

*1 The book value of long-term loans receivable includes current portion amounting to ¥1,306 million.
*2 The book value of bonds includes current portion amounting to ¥15,000 million.  
*3 The book value of long-term bank loans includes current portion amounting to ¥105,186 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.

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$  1,415,069

$   1,415,069

$         —

The following is a description of the valuation methodologies used for the assets and liabilities measured at the fair value.

Time deposits with a maturity of more than three months . . . . . . . . . . . . . . . .

60,437

60,437

Trade receivables  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,156,310

1,156,310

Short-term loans receivable  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

97,515

97,515

Investment securities

  Available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-term loans receivable(*1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

774,929

524,778

774,929

572,959

—

—

—

—

48,181

Cash and cash equivalents, Time deposits with a maturity of more than three months, Trade receivables and Short-term loans 

receivable

The fair value of above assets is evaluated at the book value because they are settled within a short term period and the fair 

value is almost equal to book value.

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$  4,029,038

$  4,077,219

$  48,181

Investment securities

Liabilities

The fair value of stocks is evaluated at market prices at stock exchange as of the end of the years and the fair value of bonds is 

Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$  1,128,612

$  1,128,612

$         —

evaluated at market prices at the stock exchange or at the value provided by ﬁ nancial institutions as of the end of the years.

Short-term loans  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Bonds(*2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-term bank loans(*3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

268,681

2,359,247

6,441,409

268,681

2,323,962

6,625,843

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$10,197,949

$10,347,098

Derivative ﬁ nancial instruments(*4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$     145,589

$     143,655

—

(35,285)

184,434

$149,149

$   (1,934)

*1 The book value of long-term loans receivable includes current portion amounting to ¥10,117 million ($89,785 thousand).
*2 The book value of bonds includes current portion amounting to ¥45,000 million ($399,361 thousand).
*3 The book value of long-term bank loans includes current portion amounting to ¥77,701 million ($689,572 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.

Long-term loans receivable

The fair value of long-term loans receivable with variable interests rate is evaluated at the book value because the interest rate 

reﬂ ects the market rate in a short term and the fair value is almost equal to the book value, unless the creditworthiness of the bor-

rower has changed signiﬁ cantly because the loan was made. The fair value of long-term loans receivable with ﬁ xed interest rates, 

for each category of loans based on the type of loans, and maturity length, is evaluated by discounting the total amount of princi-

pal and interest using the rate which would apply if similar loans were newly made.

Trade payables, Short-term loans and Commercial paper

The fair value of above liabilities is evaluated at the book value, because they are settled within a short term period and the fair 

value is almost equal to the book value.

Bonds

The fair value of corporate bonds with market price is evaluated on their market price. The fair value of variable interest rates cor-

porate bonds without market price is evaluated at the book value because the interest rate reﬂ ects the market rate in a short term 

and there has been no signiﬁ cant change in the creditworthiness of us before and after the issue.

Long-term bank loans

The fair value of long-term bank loans with variable interest rates is evaluated at the book value because the interest rate reﬂ ects 

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the market rate in a 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 to be 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 rates bank loans and 

the interest rate reﬂ ects the market in a 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   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investments in unconsolidated subsidiaries and afﬁ liated companies  . . . . . . . .

Others   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Millions of yen

Thousands of
U.S. dollars (Note 1)

Book Value

Book Value

Book Value

2016

¥    7,063

120,668

6

2015

2016

¥    7,821

$     62,682

140,395

1,070,891

12

53

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

  4. SECURITIES

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥127,737

¥148,228

$1,133,626

A.  The following tables summarize acquisition costs, book values and fair values of securities with available fair values at March 31, 

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.

2016 and 2015.

Available-for-sale securities:

Securities with book values exceeding acquisition costs at March 31, 2016

At March 31, 2016, the aggregate annual maturity of monetary claims and securities was as follows;

Type

Millions of yen

Acquisition cost

Book Value

Difference

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥33,086

¥66,378

¥33,292

Bonds  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

210

225

15

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥33,296

¥66,603

¥33,307

Type

Thousands of U.S. dollars (Note 1)

Acquisition cost

Book Value

Difference

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$293,628

$589,084

$295,456

Bonds  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,864

1,997

133

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$295,492

$591,081

$295,589

Securities with book values exceeding acquisition costs at March 31, 2015

Millions of yen

After one year
 through ﬁ ve 
years

After ﬁ ve years
 through ten 
years

¥     —
—

¥     —
—

After ten years
¥       —
—

—

—

10

200

9,572

¥9,782

—

—

—

—

—

—

—

—

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  . . . . . . . . . . . . . . . . . . . . . . . . . .

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits with a maturity of more than three months . . .

Within a year
¥159,450
6,810

130,293

10,988

—

—

10,117

¥317,658

Within a year
$1,415,069
60,437

4,283

¥4,283

35,160

¥35,160

Type

Millions of yen

Acquisition cost

Book Value

Difference

Thousands of U.S. dollars (Note 1)

After one year
 through ﬁ ve 
years
$       —
—

After ﬁ ve years
 through ten 
years
$       —
—

After ten years
$         —
—

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥48,766

¥115,824

¥67,058

Bonds  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

200

215

15

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥48,966

¥116,039

¥67,073

Trade receivables  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,156,310

Short-term loans receivable  . . . . . . . . . . . . . . . . . . . . . . . . . .

97,515

Marketable securities and investments securities
  Available-for-sale securities 

 (Governmental/municipal bonds) . . . . . . . . . . . . . . . . . . . .

  Available-for-sale securities 

 (Corporate bonds) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term loans receivable  . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

89,785

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,819,116

—

—

89

1,775

84,949

$86,813

—

—

—

—

—

—

—

—

38,010

$38,010

312,034

$312,034

At March 31, 2015, the aggregate annual maturity of monetary claims and securities was as follows;

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Securities with book values not exceeding acquisition costs at March 31, 2016

  6. DERIVATIVE TRANSACTIONS

Type

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Type

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Securities with book values not exceeding acquisition costs at March 31, 2015

Millions of yen

Acquisition cost

Book Value

Difference

¥23,494

¥23,494

¥20,716

¥20,716

¥(2,778)

¥(2,778)

Thousands of U.S. dollars (Note 1)

Acquisition cost

Book Value

Difference

$208,502

$208,502

$183,848

$183,848

$(24,654)

$(24,654)

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)

B.  Total sales of available-for-sale securities sold in the years ended March 31, 2016 and 2015 and the related gains and losses 

were as follows:

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, 

2016 and 2015, 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)

2016

2015

2016

¥    1

0 

¥260

(9)

¥  24

1

¥  —

—

¥467

1

¥  24

0

$       9

0

$2,307

(80)

$   213

9

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross realized losses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C.  Impairment losses of securities  

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

¥15,279

12,934

2

2015

¥290

135

—

2016

$135,596

114,785

18

(2) Interest related

Interest rate swaps

Receive ﬂ oating, pay ﬁ xed

Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Fair values  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥25,435

(2,090)

¥40,183

$225,728

(1,213)

(18,548)

 For the year ended March 31, 2016, the Company reduced the book value on the securities and booked the reductions as impair-

Receive ﬁ xed, pay ﬂ oating

ment losses of ¥26,285 million ($233,271 thousand).

No impairment loss on the securities was recognized for the year ended March 31, 2015.

  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 

Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥  9,034

¥       —

$  80,174

Fair values  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

200

—

1,775

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.

cost. 

  5. INVENTORIES

Inventories as of March 31, 2016 and 2015 consisted of the following:

Fuel and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

¥26,603

1,257

¥27,860

2015

2016

¥48,030

$236,093

996

11,156

¥49,026

$247,249

88   Mitsui O.S.K. Lines

Annual Report 2016   89

16MOL英文財務p73_109_0727.indd   88-89
16MOL英文財務p73_109_0727.indd   88-89

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II. Hedge accounting applied  

  7. SHORT-TERM DEBT AND LONG-TERM DEBT

The following tables summarize the outstanding contract amounts and fair values of ﬁ nancial derivatives of the Group at March 31, 

(1) SHORT-TERM DEBT

2016 and 2015, for which hedge accounting has been applied. 

Short-term debt at March 31, 2016 and 2015 consisted of the following:

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

(1) Deferral hedge accounting

a.  Forward currency exchange contracts to hedge the risk for the

 foreign currency transactions

  Sell (U.S. dollar):

  Contracts outstanding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥  49,932

¥         —

$   443,131

  Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(854)

—

(7,579)

  Buy (U.S. dollar):

  Contracts outstanding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥  55,421

¥         —

$   491,844

  Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2,323)

—

(20,616)

b.  Currency swaps contracts to hedge the risk for charterages

  Sell (U.S. dollar):

  Contracts outstanding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥    6,458

¥    7,669

$     57,313

  Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,397)

(1,664)

(12,398)

  Buy (U.S. dollar):

  Contracts outstanding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥185,023

¥453,024

$1,642,022

  Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49,596

182,171

440,149

c.  Interest rate swaps to hedge the risk for the long-term bank loans 

 and charterages

  Receive ﬂ oating, pay ﬁ xed

  Contracts outstanding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥307,776

¥290,387

$2,731,416

  Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(25,858)

(21,451)

(229,482)

d. Crude oil swaps to hedge the risk for the fuel oil

  Receive ﬂ oating, pay ﬁ xed

  Contracts outstanding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥    1,365

¥         —

$     12,114

  Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(779)

—

(6,913)

e.  Commodities futures to hedge the risk for the fuel oil

  Contracts outstanding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥     1,305

¥  11,907

$     11,581

  Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(83)

(4,324)

(737)

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

(2) Special treatment

Interest rate swaps to hedge the risk for the long-term bank loans

  Receive ﬂ oating, pay ﬁ xed

  Contracts outstanding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥20,758

¥20,550

$184,221

  Fair values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(218)

(437)

(1,935)

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

(3) Allocation method

Currency swaps to hedge the risk for the foreign bonds and long-term bank loans 

Contracts outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥13,700

¥31,781

$121,583

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.

Short-term bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥30,275

Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

—

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥30,275

Millions of yen

2016

Thousands of
U.S. dollars (Note 1)

2016

$268,681

—

$268,681

2015

¥74,203

5,500

¥79,703

Average interest rates on short-term bank loans at March 31, 2016 and 2015 were 0.46% and 0.55%, respectively. Average 

interest rate on commercial paper at March 31, 2015 was 0.09%.

(2) LONG-TERM DEBT

Long-term debt at March 31, 2016 and 2015 consisted of the following:

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

Bonds:

0.296% yen bonds due July 10, 2015  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥         —

¥     15,000

$            —

0.573% yen bonds due June 21, 2016  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2.070% yen bonds due September 30, 2016. . . . . . . . . . . . . . . . . . . . . . . . . 

1.106% yen bonds due December 17, 2016  . . . . . . . . . . . . . . . . . . . . . . . . . 

0.461% yen bonds due July 12, 2017  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

0.000% U.S. dollars bonds due April 24, 2018*  . . . . . . . . . . . . . . . . . . . . . . 

1.999% yen bonds due May 27, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

1.673% yen bonds due September 13, 2019. . . . . . . . . . . . . . . . . . . . . . . . . 

1.398% yen bonds due May 28, 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

0.000% U.S. dollars bonds due April 24, 2020*  . . . . . . . . . . . . . . . . . . . . . . 

1.361% yen bonds due June 21, 2021  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

1.652% yen bonds due May 27, 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

1.139% yen bonds due July 12, 2022  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

1.071% yen bonds due January 23, 2023  . . . . . . . . . . . . . . . . . . . . . . . . . . . 

0.845% yen bonds due March 4, 2024  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

0.970% yen bonds due June 19, 2024  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

0.803% yen bonds due March 3, 2025  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Long-term bank loans due within one year:

10,000

15,000

20,000

20,000

33,804

18,500

10,000

15,000

22,536

17,800

5,000

8,700

10,000

15,000

29,500

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

88,747

133,120

177,494

177,494

300,000

164,182

88,747

133,120

200,000

157,969

44,373

77,210

88,747

133,120

261,804

133,120

 Long-term bank loans due within one year at average interest rate of 0.87% 
and 0.64% at March 31, 2016 and 2015, respectively.. . . . . . . . . . . . . . . . .

77,701

105,186

689,572

Long-term bank loans due after one year:

 Long-term bank loans due through 2034 at average interest rate of 1.50% 
and 1.20% at March 31, 2016 and 2015, respectively.. . . . . . . . . . . . . . . . .

Amount due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

*Zero coupon convertible bonds, details are as follows.

648,117

991,658

122,701

688,332

1,078,703

120,186

5,751,837

8,800,656

1,088,933

¥868,957

¥   958,517

$7,711,723

(1) Exercise period
(2) Conversion price

The 2018 Bonds

The 2020 Bonds

From May 8, 2014 to April 10, 2018
U.S.$ 5.31 per share

From May 8, 2014 to April 9, 2020
U.S.$ 4.78 per share

90   Mitsui O.S.K. Lines

Annual Report 2016   91

16MOL英文財務p73_109_0727.indd   90-91
16MOL英文財務p73_109_0727.indd   90-91

2016/07/27   16:14
2016/07/27   16:14

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At March 31, 2016, the aggregate annual maturity of long-term debt was as follows:

  9. NET ASSETS

Year ending March 31
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Millions of yen
¥122,701

2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2022 and thereafter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

115,405

142,326

82,406

115,366

413,454

Thousands of
U.S. dollars (Note 1)
$1,088,933

1,024,184

1,263,099

731,328

1,023,837

3,669,275

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥991,658

$8,800,656

(3) ASSETS PLEDGED AND SECURED DEBT

At March 31, 2016 and 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)

2016

2015

2016

Vessels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥245,710

¥202,454

$2,180,600

Vessels and other property under construction . . . . . . . . . . . . . . . . . . . . . . . . . . 

Investment securities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

26,108

76,623

90,908

73,811

231,700

680,006

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥348,441

¥367,173

$3,092,306

Secured debt

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

Net assets comprises four sections, which are the owners’ equity, accumulated other comprehensive income, share subscription 

rights and non-controlling 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, 2016 and 2015 were as follows:

Balance at April 1, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Increase during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  Decrease during the year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Shares of common
stock (Thousands)
1,206,286

Shares of treasury
stock (Thousands)
10,373

—

—

150

(337)

Balance at March 31 and April 1, 2015  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,206,286

10,186

Increase during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  Decrease during the year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

140

(104)

Short-term bank debt  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥         —

¥         10

$            —

Balance at March 31, 2016  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,206,286

10,222

Long-term bank debt due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Long-term bank debt due after one year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

14,500

158,772

13,759

156,237

128,683

1,409,052

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥173,272

¥170,006

$1,537,735

(B) SHARE SUBSCRIPTION RIGHTS

Share subscription rights at March 31, 2016 and 2015 consisted of the following:

  8. COMMITMENTS AND CONTINGENT LIABILITIES

(A) COMMITMENT 

At March 31, 2016 and 2015, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The nonexercised portion of loan commitments . . . . . . . . . . . . . . . . . . . . . . . .

Millions of yen

Thousands of 
U.S. dollars (Note 1)

2016

¥13,522

9,578

¥  3,944

2015

2016

¥15,622

$120,000

—

85,000

¥15,622

$  35,000

(B) CONTINGENT LIABILITIES

At March 31, 2016 and 2015, 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 ¥148,653 million ($1,319,249 thousand) 

and ¥112,360 million, respectively.

Stock options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(C) DIVIDENDS

(1) Dividends paid for the year ended March 31, 2016 were as follows:

Millions of yen

2016

2015

¥2,682

¥2,682

¥2,553

¥2,553

Thousands of
U.S. dollars (Note 1)

2016

$23,802

$23,802

Approved at the shareholders’ meeting held on June 23, 2015  . . . . . . . . . . . . . . . . . . . . . . . . .

Approved at the board of directors held on October 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . .

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Millions of yen
¥4,785

Thousands of
U.S. dollars (Note 1)
$42,465

¥4,186

¥8,971

$37,150

$79,615

(2) Dividends included in the retained earnings at March 31, 2016 and to be paid in subsequent periods were as follows:

Approved at the shareholders’ meeting held on June 21, 2016  . . . . . . . . . . . . . . . . . . . . . . . . .

Millions of yen
¥1,794

Thousands of
U.S. dollars (Note 1)
$15,921

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,794

$15,921

92   Mitsui O.S.K. Lines

Annual Report 2016   93

16MOL英文財務p73_109_0727.indd   92-93
16MOL英文財務p73_109_0727.indd   92-93

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2016/07/27   16:14

 
 
 
 
 
 
  10. IMPAIRMENT LOSS

For the year ended March 31, 2015, the Group recorded an impairment loss on the following asset group.

  12. LEASES

AS LESSEE:

Assets to be disposed of by sale

Application

Type
Vessels and Other

Millions of yen
¥10,198

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 year ended March 31, 2015, 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 impairment losses.

The recoverable amount for this asset group was evaluated based on the asset’s net selling price. And the asset’s net selling 

price was appraised based on the target price of assets to be disposed of by sale.

(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, 2016 of 

ﬁ nance leases that do not transfer ownership to the lessee was as follows: 

Acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net book value  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  11. BREAKDOWN OF COSTS OF BUSINESS STRUCTURAL REFORMS

The Company recognized costs of business structural reforms arising from the business structural reforms for bulk carriers and con-

Acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

tainerships which mainly consist of impairment loss and provision for loss on business liquidation.

A breakdown of the costs was as follows:

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net book value  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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:

 Impairment loss  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

 Provision for loss on business liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

 Loss on cancellation fee for chartered vessels  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

 Others  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Millions of yen
¥  90,308

Thousands of
U.S. dollars (Note 1)
$   801,455

71,008

9,459

8,516

630,174

83,946

75,577

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥179,291

$1,591,152

(IMPAIRMENT LOSS)

For the year ended March 31, 2016, the Group recorded an impairment loss on the following asset group.

Application

Assets for operations

Assets to be disposed of by sale

Type
Vessels and Other

Vessels and Other

Millions of yen
¥56,449

Thousands of
U.S. dollars (Note 1)
$500,967

33,859

300,488

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 year ended March 31, 2016, since proﬁ tability of the assets related to Containerships segment for operations signiﬁ -

cantly deteriorated, the Group reduced the book value on these assets to recoverable amounts and booked the reductions as costs 

Acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net book value  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)  Future lease payments at March 31, 2016 and 2015

Amount due within one year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  

Amount due after one year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Furniture and 
ﬁ xtures

¥—

—

¥—

Millions of yen

Machinery, 
equipment and 
vehicles

¥190

179

¥  11

Thousands of U.S. dollars (Note 1)

Furniture and 
ﬁ xtures

Machinery, 
equipment and 
vehicles

$—

—

$—

$1,686

1,588

$     98

Total

¥190

179

¥  11

Total

$1,686

1,588

$     98

Furniture and 
ﬁ xtures

¥2,425

2,401

¥     24

Millions of yen

Machinery, 
equipment and 
vehicles

¥190

162

¥  28

Total

¥2,615

2,563

¥     52

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

¥13

—

¥13

¥123

13

¥136

$115

—

$115

Millions of yen

2016

¥126

41

2

Thousands of
U.S. dollars (Note 1)

2016

$1,118

364

18

2015

¥1,340

385

41

of business structural reforms.

(3)  Lease payments, depreciation equivalent and interest equivalent

For the year ended March 31, 2016, with regard to the target price of assets related to Bulkships segment to be disposed of by 

sale which fell below book value, the Group reduced the book value on these assets to recoverable amounts and booked the reduc-

tions as costs of business structural reforms.

The recoverable amount for this asset group was evaluated based on the asset’s net selling price. And the asset’s net selling 

Lease payments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

price was appraised based on the appraisal value reasonably calculated by a third party and the target price of assets to be disposed 

Depreciation equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  

of by sale.

Interest equivalent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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(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, 2016 

AND 2015:

Amount due within one year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  

Amount due after one year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

¥  51,195

286,547

¥337,742

2015

2016

¥  54,586

$   454,339

264,331

2,543,016

¥318,917

$2,997,355

AS LESSOR:

(A)   FUTURE LEASE INCOME UNDER OPERATING LEASES FOR ONLY NON-CANCELABLE CONTRACTS AT MARCH 31, 2016 AND 

2015:

Amount due within one year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  

Amount due after one year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  

Total  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

¥14,146

42,867

¥57,013

2015

¥13,212

46,912

¥60,124

2016

$125,542

380,431

$505,973

  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)

2016

2015

2016

Balance at beginning of the year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥317,018

¥280,120

$2,813,436

Changes during the year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at end of the year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair value at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5,926)

311,092 

444,844 

36,898

317,018

432,440

(52,591)

2,760,845 

3,947,852 

Notes:  1. Book value is the acquisition cost, net of 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), acquisition of the Corner Stone Building (¥11,135 million), and the acquisition of land 

near Akihabara Station from the Tokyo Metropolitan Government (¥7,151 million), while the primary decrease was mainly 

due to the depreciation of existing properties (¥6,176 million).

4.  Of changes during the year ended March 31, 2016, the primary increase was mainly due to the renewal construction of 

ofﬁ ce buildings (¥1,367 million ($12,132 thousand)), and the additional acquisition of land near Akihabara Station (¥724 

million ($6,425 thousand)), while the primary decrease was mainly due to the depreciation of existing properties (¥7,782 

million ($69,063 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)

2016

¥28,492

17,917 

¥10,575

2015

¥27,058

16,041

¥11,017

2016

$252,858

159,008 

$  93,850

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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  14. SEGMENT AND RELATED INFORMATION

(A) SEGMENT INFORMATION: 

Millions of yen

For the year ended March 31, 2015:

Bulkships

Millions of yen

Reportable segment

Container-
ships

Ferry & 
Domestic
transport

Associated 
business

Sub Total

Others

Total

Adjustment

Consolidated

For the year ended March 31, 2016:

Bulkships

Reportable segment

Container-
ships

Ferry & 
Domestic
transport

Associated 
business

Sub Total

Others

Total

Adjustment

Consolidated

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

1. Revenues:

(1)  Revenues from customers,

unconsolidated subsidiaries and
afﬁ liated companies  . . . . . . . . . .

¥   838,893

¥719,109

¥49,618

¥  96,606

¥1,704,226

¥    7,997

¥1,712,223

¥          — ¥1,712,223

(2)  Inter-segment revenues . . . . . . . .

251

2,026

188

30,373

32,838

5,312

38,150

(38,150)

—

Total revenues . . . . . . . . . . . . . . .

¥   839,144

¥721,135

¥49,806

¥126,979

¥1,737,064

¥  13,309

¥1,750,373

¥  (38,150)

¥1,712,223

Segment income (loss)  . . . . . . . .

¥     54,857

¥ (29,831)

¥  4,424

¥  10,172

¥     39,622

¥    3,550

¥     43,172

¥    (6,903)

¥     36,269

Segment assets . . . . . . . . . . . . . .

¥1,526,583

¥397,081

¥44,097

¥416,454

¥2,384,215

¥162,725

¥2,546,940

¥(327,353)

¥2,219,587

2. Others

(1)  Depreciation and amortization  . .

¥     62,112

¥  16,907

¥  2,022

¥  10,091

¥     91,132

¥       273

¥     91,405

¥     1,367

¥     92,772

(2)  Amortization of goodwill  . . . . . .

(3)  Interest income . . . . . . . . . . . . . .

(4)  Interest expense  . . . . . . . . . . . . .

(5)  Equity in earnings (losses) of 

afﬁ liated companies, net . . . . . . .

(6)  Costs of business structural 

reforms. . . . . . . . . . . . . . . . . . . .

12

2,761

12,934

63

665

2,022

7,813

706

117,411

61,880

—

21

143

453

—

132

74

207

3,521

1,738

16,837

255

—

9,227

179,291

1

1,785

1,034

(49)

—

208

5,306

17,871

9,178

179,291

(7)  Investment in afﬁ liates  . . . . . . . .

91,287

14,131

2,094

2,083

109,595

1,896

111,491

—

(1,227)

(3,295)

—

—

—

208

4,079

14,576

9,178

179,291

111,491

(8)  Increase in vessels, property and 

equipment and  intangible assets  . 

87,116

15,526

5,866

5,177

113,685

124

113,809

1,903

115,712

(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 expense  . . . . . . . . . . . . .

(5)  Equity in earnings (losses) of 

afﬁ liated companies, net . . . . . . .

(307)

2,019

10,632

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)

1,390

723

(124)

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)  Increase in vessels, property and 

equipment and  intangible assets  . 

138,059

21,783

3,193

32,341

195,376

182

195,558

587

196,145

(Segment income (loss))
Segment income (loss) is calculated by adjusting ordinary income (loss).

(B) RELATED INFORMATION:

(1) Information about geographic areas:

Thousands of U.S. dollars (Note 1)

That’s why the revenues of geographic areas are revenues, wherever they may be earned, of companies registered in countries 

Our service areas are not necessarily consistent with our customer’s location in our core ocean transport business.

For the year ended March 31, 2016:

Bulkships

Reportable segment

Container-
ships

Ferry & 
Domestic
transport

Associated 
business

Sub Total

Others

Total

Adjustment

Consolidated

1. Revenues:

(1)  Revenues from customers,

unconsolidated subsidiaries and
afﬁ liated companies  . . . . . . . . . .

$  7,444,915

$6,381,869

$440,344 $   857,348

$15,124,476 $     70,971

$15,195,447

$               — $15,195,447

in the geographic areas.

For the year ended March 31, 2016:

Japan

North America

Europe

Asia

Others

Consolidated

Revenues . . . . . . . . . . . . . . . . . . . . . .

¥1,432,969

Vessels, property and equipment  . . . .

¥1,082,305

¥28,185

¥41,748

¥35,759

¥  3,455

¥214,875

¥214,263

¥     435

¥34,661

¥1,712,223

¥1,376,432

Millions of yen

(2)  Inter-segment revenues . . . . . . . .

2,227

17,980

1,669

269,551

291,427

47,143

338,570

(338,570)

—

Thousands of U.S. dollars (Note 1)

Total revenues . . . . . . . . . . . . . . .

$  7,447,142

$6,399,849

$442,013 $1,126,899

$15,415,903 $   118,114

$15,534,017

$   (338,570)

$15,195,447

For the year ended March 31, 2016:

Japan

North America

Europe

Asia

Others

Consolidated

Segment income (loss)  . . . . . . . .

$     486,839

$  (264,741) $  39,262 $     90,273

$     351,633 $     31,505

$     383,138

$     (61,262)

$     321,876

Segment assets . . . . . . . . . . . . . .

$13,547,950

$3,523,971

$391,347 $3,695,900

$21,159,168 $1,444,133

$22,603,301

$(2,905,156)

$19,698,145

Revenues . . . . . . . . . . . . . . . . . . . . . .

$12,717,155

$250,133

$317,350

$1,906,949

$    3,860

$15,195,447

Vessels, property and equipment  . . . .

$  9,605,121

$370,501

$  30,662

$1,901,517

$307,605

$12,215,406

2. Others

(1)  Depreciation and amortization  . .

$     551,225

$   150,044

$  17,945 $     89,554

$     808,768 $       2,423

$     811,191

$     12,132

$     823,323

(2)  Amortization of goodwill  . . . . . .

(3)  Interest income . . . . . . . . . . . . . .

(4)  Interest expense  . . . . . . . . . . . . .

(5)  Equity in earnings (losses) of 

afﬁ liated companies, net . . . . . . .

(6)  Costs of business structural 

reforms. . . . . . . . . . . . . . . . . . . .

107

24,503

114,785

559

5,902

—

186

1,171

657

1,837

31,248

17,945

1,269

15,424

149,423

9

15,841

9,177

1,846

47,089

158,600

—

(10,889)

(29,243)

69,338

6,266

4,020

2,263

81,887

(435)

81,452

1,041,986

549,166

—

—

1,591,152

—

1,591,152

(7)  Investment in afﬁ liates  . . . . . . . .

810,144

125,408

18,584

18,486

972,622

16,826

989,448

1,846

36,200

129,357

81,452

1,591,152

989,448

—

—

—

For the year ended March 31, 2015:

Japan

North America

Europe

Asia

Others

Consolidated

Revenues . . . . . . . . . . . . . . . . . . . . . .

¥1,538,042

Vessels, property and equipment  . . . .

¥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

(2)  Information about impairment loss by reportable segment:

Millions of yen

Reportable segment

Container-
ships

Ferry & 
Domestic
transport

Associated 
business

Sub Total

Others

Adjustment
and elimination

Consolidated

(8)  Increase in vessels, property and 

equipment and  intangible assets  . 

773,127

137,788

52,059

45,945

1,008,919

1,101

1,010,020

16,888

1,026,908

For the year ended March 31, 2016:

Bulkships

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Impairment loss . . . . . . . . . . . . . . . .

¥33,859

¥56,449

¥—

¥—

¥90,308

¥—

¥—

¥90,308

 
 
 
 
 
 
 
 
 
 
Thousands of U.S. dollars (Note 1)

  15. INCOME TAXES

For the year ended March 31, 2016:

Bulkships

Reportable segment

Container-
ships

Ferry & 
Domestic
transport

Associated 
business

Sub Total

Others

Adjustment
and elimination

Consolidated

Impairment loss . . . . . . . . . . . . . . . .

$300,488

$500,967

$—

$—

$801,455

$—

$—

$801,455

Note: Above Impairment loss for the year ended March 31, 2016 was included in Costs of business structural reforms (other losses) 

in consolidated statements of operations.

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

(3)  Information about goodwill by reportable segment:

For the year ended March 31, 2016:

Bulkships

Millions of yen

Reportable segment

Container-
ships

Ferry & 
Domestic
transport

Associated 
business

Sub Total

Others

Adjustment
and elimination

Consolidated

Goodwill at  the end of current 
year  . . . . . . . . . . . . . . . . . . . . . . .

¥89

¥14

¥—

¥2,317

¥2,420

¥0

¥—

¥2,420

For the year ended March 31, 2016:

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 at  the end of current 
year  . . . . . . . . . . . . . . . . . . . . . . .

$790

$124

$— $20,563

$21,477

$0

$—

$21,477

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 at  the end of current 
year  . . . . . . . . . . . . . . . . . . . . . . .

¥128

¥364

¥ —

¥2,508

¥3,000

¥1

¥ —

¥3,001

The Company is subject to a number of taxes based on income, which, in the aggregate, indicate statutory rates in Japan of 

approximately 29.8% for the year ended March 31, 2016 and 31.8% for the year ended March 31, 2015.

(A) Signiﬁ cant components of deferred tax assets and liabilities at March 31, 2016 and 2015 were as follows:

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

Deferred tax assets:

Operating loss carried forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥     53,931

¥     53,557

$       478,621

Write-down of securities and other investments. . . . . . . . . . . . . . . . . . . . . . . 

Reserve for bonuses expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Impairment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Excess bad debt expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Net deﬁ ned beneﬁ t liabilities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Retirement allowances for directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Unrealized gain on sale of ﬁ xed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Provision for loss on business liquidation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Provision for contract loss  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Total deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Valuation allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Net deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

1,519 

1,412 

26,346 

892 

4,651 

559 

1,435 

20,237 

1,204 

5,911 

118,097 

(110,911)

7,186 

1,861

1,546

661

1,011

2,386

526

1,548

—

—

4,750

67,846

13,481 

12,531 

233,813 

7,916 

41,276 

4,961 

12,735 

179,597 

10,685 

52,458 

1,048,074 

(61,414)

(984,300)

6,432

63,774 

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  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1,749)

(1,897)

(15,522)

(604)

(555)

(5,360)

(11,806)

(2,714)

(17,179)

(8,496)

(39,531)

(1,501)

(83,580)

(22,760)

(2,809)

(15,436)

(10,073)

(53,880)

(2,597)

(110,007)

(104,775)

(24,086)

(152,458)

(75,399)

(350,826)

(13,322)

(741,748)

  Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(76,394)

¥(103,575)

$   (677,974)

On March 29, 2016, 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, 

2016 to March 31, 2018 and on or after April 1, 2018 are changed from 29.5% for the year ended March 31, 2016 to 28.8% and 

28.5%, respectively, as of March 31, 2016.

Due to these changes in statutory income tax rates, net deferred tax liabilities (after deducting the deferred tax assets) 

decreased by ¥1,520 million ($13,490 thousand) as of March 31, 2016, deferred income tax expense recognized for the ﬁ scal year 

ended March 31, 2016 decreased by ¥521 million ($4,624 thousand), unrealized holding gains on available-for-sale securities 

increased by ¥464 million ($4,118 thousand) , unrealized gains on hedging derivatives increased by ¥531 million ($4,712 thousand) 

and remeasurements of deﬁ ned beneﬁ t plans increased by ¥3 million ($27 thousand).

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(B)  Reconciliation of the statutory tax rate to the effective tax rate for the year ended March 31, 2015, was as follow:

(3) MOVEMENTS IN NET LIABILITY FOR RETIREMENT BENEFITS BASED ON THE SIMPLIFIED METHOD

Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . .

  Non-deductible expenses  . . . . . . . . . . . . . . .

  Tax exempt revenues  . . . . . . . . . . . . . . . . . .

2015

31.8%

0.5%

(7.8)%

  Effect on tonnage tax system . . . . . . . . . . . .

(12.2)%

  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  . . . . . . . . . . . . . . . . . . . . . . .

22.9%

(2.3)%

(5.0)%

(10.3)%

(0.7)%

16.9%

*Reconciliation of the statutory tax rate to the effective tax rate for the year ended March 31, 2016, is not stated as the Company 

recorded loss before income taxes.

  16. EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITS

(A) OUTLINE OF EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITS

The Group has 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.

Balance at beginning of the year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥10,264

¥  9,899

  Retirement beneﬁ t costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

  Beneﬁ ts paid  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

  Contributions paid by the employer  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2,158

(1,510)

(753)

1,824

(267)

(1,192)

Balance at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥10,159

¥10,264

$91,090

19,152

(13,401)

(6,683)

$90,158

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

(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)

2016

2015

2016

Funded retirement beneﬁ t obligations  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥ 55,188

¥ 53,665

$489,776

Plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Unfunded retirement beneﬁ t obligations  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Total net liability (asset) for retirement beneﬁ ts at end of the year  . . . . . . . . . . . 

Liability for retirement beneﬁ ts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Asset for retirement beneﬁ ts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total net liability (asset) for retirement beneﬁ ts at end of the year  . . . . . . . . . . . 

(66,745)

(11,557)

11,707

150

13,442

(13,292)
¥      150

(75,930)

(22,265)

11,862

(10,403)

13,660

(592,341)

(102,565)

103,897

1,332

119,294

(24,063)
¥ (10,403)

(117,962)
$     1,332

The retirement lump-sum plans provide for a lump-sum payment, as employee retirement beneﬁ ts, determined by reference to 

(5) RETIREMENT BENEFIT COSTS

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 (the “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)

2016

2015

2016

Balance at beginning of the year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥45,500

¥41,743

$403,798

  Cumulative effect of changes in accounting policies . . . . . . . . . . . . . . . . . . . . 

  Service cost  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

  Actuarial loss (gain)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

—

1,694

485

4,934

4,565

1,723

496

(733)

—

15,034

4,304

43,788

  Beneﬁ ts paid  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

(5,844)

(2,294)

(51,864)

Balance at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥46,769

¥45,500

$415,060

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

Service cost  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥ 1,694

¥ 1,723

$ 15,034

Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Expected return on plan assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Net actuarial loss amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Retirement beneﬁ t costs calculated by the simpliﬁ ed method. . . . . . . . . . . . . . . 

Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

485

(1,323)

(1,192)

2,158

221

497

(1,198)

(715)

1,476

157

4,304

(11,741)

(10,579)

19,152

1,961

Total retirement beneﬁ t costs for the ﬁ scal year  . . . . . . . . . . . . . . . . . . . . . . . . . 

¥ 2,043

¥ 1,940

$ 18,131

(6) REMEASUREMENTS OF DEFINED BENEFIT PLANS

Actuarial loss (gain)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥7,675

¥(5,863)

$68,113

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

(2) MOVEMENTS IN PLAN ASSETS EXCEPT PLAN APPLIED SIMPLIFIED METHOD

(7) ACCUMULATED REMEASUREMENTS OF DEFINED BENEFIT PLANS

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

Balance at beginning of the year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥66,169

¥59,906

$587,229

Expected return on plan assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Actuarial loss (gain)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Contributions paid by the employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Beneﬁ ts paid  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Return of assets of retirement beneﬁ t trust  . . . . . . . . . . . . . . . . . . . . . . . . . . 

1,323

(1,550)

—

(5,584)

(3,581)

1,198

5,845

1,293

(2,073)

—

11,741

(13,756)

—

(49,556)

(31,780)

Balance at end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥56,777

¥66,169

$503,878

Unrecognized actuarial differences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥49

¥(7,626)

$435

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2016

2015

34%

23%

36%

7%

0%

100%

27%

47%

22%

18%

13%

0%

100%

37%

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 were mainly 0.5%–1.1% for the year ended March 31, 2016 and 0.6%–1.2% for the year ended March 31, 

2015. Also, the rates of expected return on plan assets were mainly 2.0% for the year ended March 31, 2016 and 2015.

(C) DEFINED CONTRIBUTION PLANS

The estimated amounts of contributions to deﬁ ned contribution plans were ¥816 million ($7,242 thousand) at March 31, 2016 and  

¥747 million at March 31, 2015.

  17. STOCK OPTIONS

(A) EXPENSED AMOUNT

Expensed amounts on stock options for the years ended March 31, 2016 and 2015 were as follows:

Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Millions of yen

Thousands of
U.S. dollars (Note 1)

2016

2015

2016

¥146

¥146

¥195

¥195

$1,296 

$1,296

(B) TERMS AND CONDITIONS

The following table summarizes terms and conditions of stock options for the years when they were granted:

Number of grantees

2005

2006

2007

2008

Directors: 11
Executive ofﬁ cers: 17
Employees: 38
Presidents of the Company’s 
domestic consolidated 
subsidiaries: 34

Directors: 11
Executive ofﬁ cers: 17
Employees: 37
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

Directors: 11
Executive ofﬁ cers: 20
Employees: 38
Presidents of the Company’s 
domestic consolidated 
ssubsidiaries: 36

Number of stock options

Common stock  1,650,000

Common stock  1,700,000

Common stock  1,710,000

Common stock  1,760,000

Grant date

August 5, 2005

August 11, 2006

August 10, 2007

August 8, 2008

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, 2006 to 
June 23, 2015

From June 20, 2007 to 
June 22, 2016

From June 20, 2008 to 
June 21, 2017

From July 25, 2009 to 
June 24, 2018

Number of grantees

2009

2010

2011

2012

Directors: 11
Executive ofﬁ cers: 20
Employees: 34
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: 35
Presidents of the Company’s 
domestic consolidated 
subsidiaries: 33

Directors: 9
Executive ofﬁ cers: 22
Employees: 33
Presidents of the Company’s 
domestic consolidated 
subsidiaries: 30

Number of stock options

Common stock  1,650,000

Common stock  1,710,000

Common stock  1,730,000

Common stock  1,640,000

Grant date

August 14, 2009

August 16, 2010

August 9, 2011

August 13, 2012

Vesting conditions

Service period

Exercise period

No provisions

No provisions

No provisions

No provisions

No provisions

No provisions

No provisions

No provisions

From July 31, 2011 to 
June 22, 2019

From July 31, 2012 to 
June 21, 2020

From July 26, 2013 to 
June 22, 2021

From July 28, 2014 to 
June 21, 2022

Number of grantees

2013

2014

2015

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

Directors: 8
Executive ofﬁ cers: 18
Employees: 37
Presidents of the Company’s 
domestic consolidated 
subsidiaries: 32

Number of stock options

Common stock  1,600,000

Common stock  1,480,000

Common stock  1,550,000

Grant date

August 16, 2013

August 18, 2014

August 17, 2015

Vesting conditions

Service period

Exercise period

No provisions

No provisions

No provisions

No provisions

No provisions

No provisions

From August 2, 2015 to 
June 20, 2023

From August 2, 2016 to 
June 23, 2024

From August 1, 2017 to 
June 20, 2025

104   Mitsui O.S.K. Lines

Annual Report 2016   105

16MOL英文財務p73_109_0727.indd   104-105
16MOL英文財務p73_109_0727.indd   104-105

2016/07/27   16:14
2016/07/27   16:14

 
(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

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Balance at March 31, 2015  . . . . . .

Options granted during the year  .

Options expired during the year . .

Options vested during the year  . .

Balance at March 31, 2016  . . . . . .

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

— 1,600,000 1,480,000

—

—

—

—

—

— 1,600,000

—  1,550,000 

—

—

—

—

—

— 1,480,000  1,550,000 

Vested stock options

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Balance at March 31, 2015  . . . . . . 878,000 1,443,000 1,660,000 1,730,000 1,630,000 1,710,000 1,720,000 1,357,000

—

Options vested during the year  . .

Options exercised during the year  .

—

—

—

—

—

—

—

—

Options expired during the year . . 878,000

10,000

10,000

10,000

—

—

—

—

—

—

—

— 1,600,000

28,000

32,000

10,000

10,000

—

—

Balance at March 31, 2016  . . . . . .

— 1,423,000 1,650,000 1,720,000 1,630,000 1,700,000 1,710,000 1,329,000 1,568,000

—

—

—

—

—

—

—

—

—

—

(2) Unit prices of stock options exercised during the year

Exercise price

¥762

¥841

¥1,962

¥1,569

¥639

¥642

¥468

¥277

¥447

¥412

¥427 

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Average market price of share 
 at exercise   . . . . . . . . . . . . . . . . . .

Fair value per stock option 
 at grant date. . . . . . . . . . . . . . . . .

—

—

—

—

—

—

—

¥369

¥309

—

—

— ¥219

¥   352

¥   217

¥136

¥203

¥  87

¥  67

¥172

¥132

¥94 

(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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

37.29%

Expected remaining term of the option  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

5 years and 11 months

Expected dividends  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

¥7 per share

0.15%

2015

  18. COMPREHENSIVE INCOME

For the years ended March 31, 2016 and 2015, 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:

Millions of yen

Thousands of 
U.S. dollars (Note 1)

2016

2015

2016

Unrealized holding gains (losses) on available-for-sale securities, net of tax:

Increase (Decrease) during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(22,226)

¥ 16,331

$(197,249)

Reclassiﬁ cation adjustments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sub-total, before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax effect  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Unrealized gains (losses) on hedging derivatives, net of tax:

Increase (Decrease) during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reclassiﬁ cation adjustments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjustments of acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sub-total, before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax effect  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign currency translation adjustments:

Increase (Decrease) during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reclassiﬁ cation adjustments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Remeasurements of deﬁ ned beneﬁ t plans:

Increase (Decrease) during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reclassiﬁ cation adjustments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sub-total, before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax effect  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Share of other comprehensive loss of associates
 accounted for using equity method:

Decrease during the year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reclassiﬁ cation adjustments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjustments of acquisition cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(12,791)

(35,017)

10,830

(24,187)

(31,038)

(13,985)

0

(45,023)

13,655

(31,368)

(5,247)

3,727

(1,520)

(6,483)

(1,192)

(7,675)

2,306

(5,369)

(8,186)

3,091

1,620

(3,475)

(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

(113,516)

(310,765)

96,113

(214,652)

(275,453)

(124,112)

0

(399,565)

121,184

(278,381)

(46,565)

33,075

(13,490)

(57,534)

(10,579)

(68,113)

20,465

(47,648)

(12,827)

(72,648)

3,680

(834)

(9,981)

27,431

14,377

(30,840)

Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥(65,919)

¥ 74,521

$(585,011)

106   Mitsui O.S.K. Lines

Annual Report 2016   107

16MOL英文財務p73_109_0727.indd   106-107
16MOL英文財務p73_109_0727.indd   106-107

2016/07/27   16:14
2016/07/27   16:14

Independent Auditor’s Report

  19. RELATED PARTY TRANSACTIONS

For the years ended March 31, 2016 and 2015, there are no applicable matters to report.

  20. SUBSEQUENT EVENT

There is no applica ble 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.  

108   Mitsui O.S.K. Lines

Annual Report 2016   109

16MOL英文財務p73_109_0727.indd   108-109
16MOL英文財務p73_109_0727.indd   108-109

2016/07/27   16:14
2016/07/27   16:14

The MOL Group   Mitsui O.S.K. Lines, Ltd. March 31, 2016
■ Consolidated Subsidiaries
▲ Afﬁ liated Companies Accounted for by the Equity Method

Registered 
Ofﬁ ce

MOL’s Voting 
Rights (%)*

Paid-in Capital 
(Thousands)

Registered 
Ofﬁ ce

MOL’s Voting 
Rights (%)*

Paid-in Capital 
(Thousands)

Bulkships

Containerships 

■ 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. 
■ 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  (202 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.
▲ Gearbulk Holding AG
▲ LNG Fukurokuju Shipping Corp.
▲ LNG Jurojin Shipping Corp.
▲ M.S.Tanker Shipping Ltd.
▲ T.E.N. Ghana MV25 B.V.
▲ Tartaruga MV29 B.V.
▲ Trans Paciﬁ c Shipping 2 Ltd.
▲ Trans Paciﬁ c Shipping 5 Ltd.
▲ Trans Paciﬁ c Shipping 8 Ltd.
▲ Viken MOL AS
▲ Viken Shuttle AS
▲ Shipowner/Chartering companies  (48 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 Corp.
■ 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.
■ Shanghai Huajia International Freight Forwarding Co., Ltd.
■ Shosen Koun Co., Ltd.
■ Thai Intermodal Systems Co., Ltd.
■ TraPac, LLC.
■ TraPac Jacksonville, LLC.

Japan
Panama
Netherlands
Belgium
Uruguay
Bahamas
Singapore
U.K.
U.S.A.
Japan
Panama
Panama
Singapore
Singapore
Japan
Netherlands
Netherlands
Japan
Singapore
Panama
Panama
Singapore
Japan
Singapore
U.S.A.

Singapore
Japan
Netherlands
Netherlands
Netherlands
Switzerland
Bahamas
Bahamas
Hong Kong
Netherlands
Netherlands
Bahamas
Bahamas
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
China
Japan
Thailand
U.S.A.
U.S.A.

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 
100.00 
90.00 
100.00 
100.00 
100.00 
100.00 
100.00 
100.00 
100.00 

50.00 
24.75 
20.60 
20.60 
20.60 
49.00 
30.00 
30.00 
50.00 
20.00 
20.60 
20.00 
50.00 
50.00 
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 
99.00 
100.00 
100.00 
100.00 
100.00 
76.00 
79.98 
100.00 
100.00 
100.00 

¥10,000
US$10
€91
€900
US$91,401
US$1
S$2,350
US$8,402
—
¥660,000
¥0
US$8
US$3,500,000
US$57,752
¥40,000
€18
€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
€17,503
€162,160
US$228,100
¥1,000
¥1,000
HK$2,000
€100
US$110
¥3,961,100
¥36,400
¥35,000
US$18
US$338

S$900
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
BRL3,603
US$1,960
€456
PLN5
£1,500
US$50
S$5,000
HK$1,000
RMB8,000
THB10,000
XOF50,000
EGP750
HK$40,000
€537
€414
HK$14,100
¥756,250
€3,049
S$700
NT$7,500
THB20,000
£400
US$9,814
€19
ZAR3,000
US$1,720
¥300,000
THB77,500
—
—

■ Utoc Corp.
■ Utoc Engineering Pte. Ltd.
■ Utoc Logistics Corp.
■ Utoc Stevedoring Corp.
■ Shipowner companies (17 companies) in Panama, Marshall Islands, Hong Kong and 

Japan
Singapore
Japan
Japan

Ferry & Domestic 
Transport

Associated 
Business 

Others

Liberia

■ Others (7 companies)
▲ Rotterdam World Gateway B.V.
▲ Shanghai Kakyakusen Kaisha, Ltd.
▲ Shanghai Longfei International Logistics Co., Ltd. 
▲ Tan Cang-Cai Mep International Terminal Co. Ltd.
▲ TIPS 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 company (1 company) in Panama
■ Others (5 companies)
▲ Meimon Taiyo Ferry Co., Ltd.
▲ Other (1 company)

■ Daibiru Corp.
■ 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 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.
■ 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.
■ Tokai Tugboat K.K.
■ Ube Port Service Co., Ltd.
■ Vibank-Ngt Co. Ltd.
■ White Lotus Properties Ltd.

■ Chartering company (1 company) in Panama
■ Others (3 companies)
▲ Shinyo Kaiun Corp.
▲ 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’s voting rights include voting rights of MOL and its subsidiaries

Netherlands
Japan
China
Vietnam
Thailand

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
Vietnam
Japan
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

67.55 
100.00 
100.00 
100.00 

20.00 
31.98 
22.05 
21.33 
24.44 

100.00 
100.00 
100.00 
99.00 
100.00 
100.00 

¥2,155,300
S$2,000
¥50,000
¥50,000

€368,773
¥100,000
US$1,240
VND732,966,020
THB100,000

¥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 
95.25 

100.00 

62.00 
100.00 
100.00 
100.00 
100.00 
100.00 
100.00 
100.00 
100.00 
100.00 
87.26 
100.00 
100.00 
70.00 
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
¥32,000

US$0

¥50,000
¥50,000
¥20,000
¥14,400
¥250,000
¥300,000
¥100,000
¥100,000
¥95,000
¥490,000
¥134,203
VND124,203,000
¥20,000
¥10,000
¥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$525
¥100,000
¥100,000
¥50,000
¥50,000
US$100
US$2,000

¥200,000

110   Mitsui O.S.K. Lines

Annual Report 2016   111

Worldwide Ofﬁ ces

Shareholder Information

Middle East
MOL (UAE) L.L.C.
  Head Ofﬁ ce (Dubai):  

Tel: 971-4-3573566  

Fax: 971-4-3573066

Capital:

Head ofﬁ ce:

¥65,400,351,028

1-1, Toranomon 2-chome, Minato-ku,

Tokyo 105-8688, Japan

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: 

Fax: 1-201-395-5820
Fax: 1-832-615-6480
Fax: 1-562-528-7515

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

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: 

Tel: 44-20-3764-8000  Fax: 44-20-3764-8393
Tel: 49-40-3609-7410  Fax: 49-40-8430-6105

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):  

MOL Cote d’Ivoire
  Head Ofﬁ ce (Abidjan): 

Tel: 233-22-212084  

Fax: 233-22-210807

Tel: 225-21756920

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.
  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 

MOL (Asia) Limited
  Head Ofﬁ ce (Hong Kong):   Tel: 852-2823-6800 

Fax: 852-2865-0906

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

MOL (HK) Agency Ltd. 
  Head Ofﬁ ce (Hong Kong):   Tel: 852-2823-6800 

Fax: 852-2529-9989

MOL (Korea) Co., Ltd.
  Head Ofﬁ ce (Seoul): 

Tel: 82-2-559-3001 

Fax: 82-2-561-9490

Mitsui O.S.K. Bulk Shipping (Asia, Oceania) Pte. Ltd.
  Head Ofﬁ ce (Singapore):  
  Bangkok:  
  Kuala Lumpur:  
  Chennai:  

Tel: 65-6323-1303 
Tel: 66-2-634-0807 
Tel: 60-3-5623-9772 
Tel: 91-44-4208-1020  Fax: 91-44-4208-1020

Fax: 65-6323-1305
Fax: 66-2-634-0806
Fax: 60-3-5623-3107

Number of MOL employees:

925

Number of MOL Group employees:
(The parent company and consolidated subsidiaries)

10,500

Total number of shares authorized:

3,154,000,000

Number of shares issued:

1,206,286,115

Number of shareholders:

104,202

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, 2016)

Stock Price Range (Tokyo Stock Exchange) and Volume of Stock Trade

(¥)
800

700

600

500

400

300

200

100

0

Fiscal 2013 High ¥482
¥287
Low

Fiscal 2014 High ¥450
¥308
Low

Fiscal 2015 High ¥437
¥183
Low

13
/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 3 4 5 6 7 8 9 10 11 12

16
/1 2

6543

700

600

500

400

300

200

100

0

(Million shares)
800

112   Mitsui O.S.K. Lines

Annual Report 2016   113

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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
E-mail: 
URL: 

iromo@molgroup.com 
http://www.mol.co.jp/en/

Reinvent

Annual Report 2016

Year ended March 31, 2016

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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2016/07/27   17:12
2016/07/27 17:12