For further information, please contact:
Investor Relations Office
Mitsui O.S.K. Lines, Ltd.
1-1, Toranomon 2-chome, Minato-ku,
Tokyo 105-8688, Japan
E-mail: iromo@molgroup.com
URL: http://www.mol.co.jp/en/
Forging Ahead
Annual Report 2017
Year ended March 31, 2017
This annual report is printed on Forest Stewardship Council™ (FSC)-certified paper made of wood from responsibly managed forests.
It was also printed using vegetable oil inks.
Printed in Japan
Glossary (In alphabetical order)
Ballast Voyage
Sailing to the next loading port without any cargo loaded.
Pool Arrangement
Ship operators and owners pool certain ships to conduct joint
operations.
Ballast Water
Ocean water that is taken in by the vessel to maintain ideal buoy-
ancy and control the vessel when not fully loaded with cargo.
Usually, ballast water is taken on when cargo is unloaded, and is
discharged when cargo is loaded. Ballast water transports marine
organisms across the ocean, which may have a negative impact
on the preservation of marine ecosystems and biodiversity. After
the Ballast Water Management Convention enters into force in
September 2017, ballast water treatment systems must be
installed in all ocean-going vessels within a certain period of time.
Chemical Tankers
Tankers fitted with multiple tanks to transport many different
types of liquid chemical cargo at the same time. These tankers
have complex design specifications, as they are equipped with
independent pipelines, cargo pumps and temperature regulat-
ing functions for each tank, in addition to dedicated facilities for
cleaning and other features.
Ethane Carriers
Ethane carriers are specialized for transporting liquefied ethane,
which has been cooled to around −92°C, and equipped with a
reliquefaction system. LNG carriers transport cargo at −162°C,
and LPG tankers transport cargo at −42°C, so ethane carriers fall
somewhere between the two.
FPSO (Floating Production, Storage and Offloading
System)
A floating facility for producing crude oil offshore. The crude oil is
stored in tanks in the facility and directly offloaded to shuttle
tankers for direct transport to the destination.
FSRU (Floating Storage and Regasification Unit)
A floating facility for storing and regasification of LNG offshore,
which is then pressurized and piped ashore. Plans to introduce
FSRUs in regions around the world are making steady progress
as they can be set up in less time and with less cost than conven-
tional onshore receiving terminals.
Highly Stable Profits
Profits that are fixed, from contracts of two years or more, and
projected profits from highly stable businesses. Highly stable
profits 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
If vessels procured for the mid and long term (owned or mid-
and long-term chartered vessels) operate only under short-term
cargo transport contracts, these vessels are exposed to market
rate fluctuations as a result of the mismatch between the vessel
procurement and operating periods. MOL defines the number of
mid- and long-term procured vessels operating under cargo
contracts of less than two years as “market exposure,” and moni-
tors the ratio of its market exposure with the aim of controlling
the risk of market fluctuation.
RoRo (Roll-on/Roll-off) 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.
Shuttle Tankers
Tankers that transport crude oil from offshore oil rigs, such as
FPSOs, to onshore refineries as an alternative means of pipelines.
Shuttle tankers are fitted with a unique system that enables
cargo to be loaded from the bow of the vessel, rather than from
the side like ordinary tankers, while maintaining a certain dis-
tance from the offshore platform.
Small- and Medium-sized Bulkers
In this report, small- and medium-sized bulkers consist of Pana-
max, Handymax and Small Handy dry bulkers that transport
general bulk cargo, such as coal, grain, salt, cement and steel
products.
SOx
The term “SOx” collectively refers to sulfur oxide emissions,
including sulfur dioxide (SO2), which are air pollutants emitted
during the combustion of fossil fuels containing sulfur, such as
oil and coal. In the marine transport industry, regulations requir-
ing a drastic reduction in the sulfur content of fuel will come into
effect in 2020, in order to curtail the amount of SOx in vessel
emissions.
Subsea Support Vessels
Vessels designed for arrangement and technical support work
during exploitation of offshore oil and gas fields.
“Visualization of Marine Operations”
Measures to provide visualization of the conditions of vessels
and cargo at sea using ICT, thereby achieving optimal vessel
operations, in conjunction with providing value-added services
to customers. For example, big data on weather and sea condi-
tions is analyzed and effectively utilized to achieve safer vessel
operations and optimal routing. In addition, measures will be
taken to improve the safety of vessel operations and ship man-
agement efficiency, including remotely monitoring the opera-
tional status of engines and other machinery and making
maintenance arrangements in advance.
Yield Management
In the containership business, this refers to a management tech-
nique to maximize profitability for the round-trip voyage of each
container. Freight rates are set and sales activities conducted to
maximize net proceeds (gross profits calculated by deducting
direct costs from freight revenues) rather than freight rates
themselves. Direct costs include loading and unloading costs,
feeder costs, and the costs of returning empty containers (calcu-
lated to reflect the aspect of surplus and shortage of containers
at each point).
4 MOL’s Voyage So Far
20 Message from the CEO
10
4 MOL’s History: “Spirit of Challenge and Innovation”
6 Market Position in the Industry
8 Our Fleet
Charting a Course for Further
Growth
12 Feature: MOL’s Three Compass Points
20 Message from the CEO
26 Feature: CEO and Investor Dialogue
30 Sustainability Highlights
32 At a Glance
36 Overview of Operations
48 Financial and Non-Financial Highlights
50 Key Indicators
52 Message from the Officer in Charge of Finance
55
Management Foundation
Providing MOL’s Forward Thrust
56
Board of Directors, Audit & Supervisory Board Members
and Executive Officers
58 Dialogue between Outside Directors
60 Corporate Governance
64 Safe Operation
67 Risk Management
69 Corporate Social Responsibility (CSR)
73 Data Section
74 Consolidated Financial Statements
110 The MOL Group
112 Worldwide Offices
113 Shareholder Information
MOL’s Communication Tools
MOL produces the following publications as a means of promoting communica-
tion with stakeholders. The latest versions of all reports can be found on our
website.
http://www.mol.co.jp/en/ir/
http://www.mol.co.jp/en/csr/
Annual Report
Investor Guidebook
Market Data
Safety, Environmental and Social Report
26 Feature: CEO and Investor
Dialogue
strategies
future plans,
Forward-Looking Statements
This annual report contains forward-looking statements
concerning MOL’s
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
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 30, 2017 unless otherwise specified
include, but are not
Our New Voyage Has Begun
Annual Report 2017
1
Forging Ahead
For over 130 years since its foundation, the MOL Group has grown into a world-class full-line marine
transport company with a diversified business portfolio by anticipating the demands of the times and
responding to customers’ needs.
In formulating our new management plan amid a dramatically changing management environment, we
started with our “Vision for the MOL Group Ten Years from Now.” Based on this, we will focus on our
allocation of resources, aiming to achieve sustainable growth by improving our financial position and
innovating our business portfolio.
Looking ahead, we will leverage the combined capabilities of the MOL Group as a solid, reliable partner
striving to achieve our long-term vision and to uphold the trust of our stakeholders.
Junichiro Ikeda
President & CEO
MOL GROUP CORPORATE PRINCIPLES
As a multi-modal transport group, we will:
1 actively contribute to global economic growth and development, anticipating the needs of
our customers and the challenges of this new era
2 strive to maximize corporate value through creativity, operating efficiency and promotion
of ethical and transparent management
3 nurture and protect the natural environment by maintaining the highest standards of
operational safety and navigation
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.
Challenge
Innovate through insight
Honesty
Do the right thing
Accountability
Commit to acting with a sense of
ownership
Reliability
Gain the trust of customers
Teamwork
Build a strong team
2
Mitsui O.S.K. Lines
Annual Report 2017
3
MOL’s History: “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.
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.
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 fixed exchange rate system where one U.S. dollar
equaled ¥360 to a floating 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 flagged vessels 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.
1983
Japan’s first specialized
methanol tanker, the
KOHZAN MARU is
launched.
1968
Full containership service
commenced.
1942
Mitsui & Co., Ltd. spins off its
shipping department to create
Mitsui Steamship Co., Ltd.
1964
Mitsui O.S.K. Lines (MOL) is
founded by a merger of OSK
Line and Mitsui Steamship.
1961
World’s first automated ship,
the KINKASAN MARU, is launched.
AMERICA MARU
(700TEU)
1965
Japan’s first specialized car carrier,
the OPPAMA MARU, is launched.
1945〜1970
The Devastation and Recovery of Japan’s Merchant Fleets from World War II
Japan’s private merchant shipping fleets 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 diversification and specialization of its businesses to ultimately develop into a full-line marine
transport group boasting a wide range of vessel types.
4
Mitsui O.S.K. Lines
1984
Launched the SENSHU MARU, an LNG Carrier
Demand, mainly from electric power companies, increased for imports of
liquefied natural gas (LNG), an energy source with a low environmental
burden. Requiring transport at minus 162 degrees Celsius, LNG is technically
challenging to transport. MOL rose to the challenge, entering the LNG
transport field in 1983. Since then, MOL’s fleet of LNG carriers has expanded to
a world-leading 92 (including outstanding orders) as of March 31, 2017.
2016
World’s first large ethane carrier ETHANE
CRYSTAL completed
Photo: MODEC, Inc.
2012
The world’s first hybrid car carrier,
the EMERALD ACE, is launched.
2010
The first participation in
FPSO
1989
Navix Line is established by the merger of
Japan Line and Yamashita-Shinnihon
Steamship.
2013
Japan’s first participation in FSRU project
2004
Daibiru Corporation becomes a
consolidated subsidiary of MOL.
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
(Current: MOL Chemical Tankers Pte. Ltd.)
1995
Commenced First Alliance in Containership
Services (The Global Alliance)
In containerships, massive investments are required for vessel
construction, operating a number of sea routes and other aspects of the
business. MOL commenced the industry’s first 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 frequency of stops.
Mid 2000s~2015
China’s Commodity Import Boom Surges and
Wanes
MOL’s aggressive investment in the field of natural resource and
energy transport was successful. With the unprecedented marine
transport boom brought about by China’s commodity import boom,
we recorded historic profits in fiscal 2007. However, amid slowing
economic growth worldwide and the oversupply of vessels following
the economic crisis in 2008, the marine transport market stumbled
and has continued to struggle with ongoing stagnation. To respond
to this vastly different business environment, MOL implemented two
major reforms: one in fiscal 2012 and one in fiscal 2015.
2016
Three Japanese Shipping
Companies Announce Inte-
gration of Containership
Operations
( related information on P. 7 and 17)
To enhance the competitive edge of our global network, we
decided to integrate our containership business with those of
Nippon Yusen Kabushiki Kaisha and Kawasaki Kisen Kaisha, Ltd.
The combined vessel fleet after integration will be approximately
1.43 million TEUs—sixth largest in the world with a 7% global
share. We have made steady progress in preparing for the
integration, aiming to start operations in April 2018 under the
name “Ocean Network Express.”
Early 2000s
Aggressive Investment in Resource and Energy
Transport
After the 1999 merger with Navix Lines, which was particularly strong
in transporting natural resources and energy, MOL aggressively
invested in these fields, predicting China’s economic development and
increased demand for resources. We continued to scale up our fleet of
LNG carriers, crude oil tankers, and dry bulkers which transport iron ore,
coal, etc.
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
5
20,000TEU-class containership MOL TRIUMPH
—one of the largest containerships in the world
Market Position in the Industry
MOL operates a balanced oceangoing fleet. In terms of its total fleet size and presence in individual market
Containerships
categories, MOL ranks among the world’s top class shipping companies.
As of April 2017 (existing capacity only) (Thousand TEU)
As of April 2018 (estimation including orderbook) (Thousand TEU)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0
1,000
2,000
3,000
4,000
5,000
World Major Carriers’ Fleets (All Vessel Types)
(Number of Vessels)
0
200
400
600
800
1,000
1,200
62
847
China COSCO (China)
NYK (Japan)
MOL (Japan)
Oldendorff (Germany)
K Line (Japan)
APM-Maersk (Denmark)
MSC (Switzerland)
China Merchants (China)
CMA-CGM (France)
Swiss Marine (Switzerland)
Teekay (Canada)
NITC (Iran)
Maersk
MSC
CMA-CGM
China COSCO
Evergreen
Hapag-Lloyd
OOCL
Yang Ming
Hamburg-Sud
NYK
MOL
UASC
Hyundai
K Line
529
529
375
Maersk
(+Hamburg-Sud)
MSC
CMA-CGM
China COSCO
NEW J/V
(Ocean Network Express)
Hapag-Lloyd
(+UASC)
Evergreen
OOCL
Yang Ming
Hyundai
1,743
Containership Business
Integration P.17
Global Fleet Capacity
Source: Alphaliner (As of April 2017)
Global Fleet Capacity Orderbook
Source: Alphaliner (As of April 2017)
0
20
40
60
80
100
120
(Million deadweight tons (DWT))
Dry Bulkers
Tankers
Number of Vessels Deadweight Tonnage (DWT)
Source: MOL internal estimation based on each companies’ published data, Clarkson and Alphaliner (March 2017)
(Thousand DWT)
0
10,000
20,000
30,000
40,000
50,000
60,000
(Thousand DWT)
0
5,000
10,000
15,000
20,000
20
40
60
80
100
50
26 10 3 11
Global Major Carriers’ Fleet Composition (by DWT)
(%)
0
Global Seaborne
Trade
MOL
NYK
K Line
APM-Maersk
China COSCO
Teekay
CMA-CGM
Frontline
Oldendorff
Dry Bulker Tanker LNG Carrier Car Carrier Containership
Source: Global seaborne trade = MOL estimates based on Clarkson data and others
Fleet composition = MOL estimates based on each company’s published data
and Clarkson/Alphaliner (Excluding passenger ships, ferries and tugboats)
Oldendorff
NYK
China COSCO
MOL
K Line
Swiss Marine
30,762
China COSCO
MOL
NITC
China Merchants
NYK
Bahri
Source: Companies’ published data and Clarkson (March 2017)
Source: Companies’ published data and Clarkson (March 2017)
15,942
LNG Carriers
Car Carriers
(Number of Vessels)
0
20
40
60
80
100
(Number of Vessels)
0
20
40
60
80
100
120
140
MOL
NYK
Nakilat*
K Line
Teekay
Maran Gas
92
NYK
MOL
K Line
EUKOR
GLOVIS
HOEGH
In Operation On Order
* Qatar Gas Transport Company Ltd.
Source: MOL (March 2017)
Note: The numbers include the vessels which are owned by each company (wholly or partially)
and the vessels for which vessel operation is entrusted to each company.
Source: MOL (March 2017)
Note: Excluding spot-chartered vessels
113
6
Mitsui O.S.K. Lines
Annual Report 2017
7
[Methanol Carrier]
CAJUN SUN
[FPSO]
Cidade de Caraguatatuba MV27
Photo: MODEC, Inc.
[Ferry]
SUNFLOWER IVORY
[LNG Carrier]
LNG FUKUROKUJU
[Car Carrier]
SWIFT ACE
[VLCC]
AZUMASAN
Our Fleet
[Chemical Tanker]
GINGA OCELOT
[Heavy Lifter]
VENUS TRIUMPH
[FSRU]
GNL DEL PLATA
[Tugboat]
ATSUMI MARU
[Containership]
MOL TRIUMPH
[Iron Ore Carrier]
Shinzan Maru
8
Mitsui O.S.K. Lines
[Cruise Ship]
NIPPON MARU
[Shuttle Tanker]
Madre De Deus
[Subsea Support Vessel]
Skandi Santos
[Steaming Coal Carrier]
SHIN YAHAGI MARU
[Very Large Ethane Carrier]
ETHANE CRYSTAL
Underlined words are explained in the
Glossary on the Contents page.
Annual Report 2017
9
12
Feature:
MOL’s
Three Compass Points
26
Feature:
CEO and Investor
Dialogue
20
Message from
the CEO
30
Sustainability
Highlights
32
At a Glance
48
Financial and Non-Financial
Highlights
50
Key Indicators
36
Overview of
Operations
52
Message from
the Officer in
Charge of Finance
Charting a Course
for Further Growth
10
Mitsui O.S.K. Lines
Annual Report 2017
11
Feature
MOL’s
Three Compass
Points
In the previous medium-term management plan “STEER FOR 2020,” which started in fiscal
2014, we steadily produced results by implementing our “Three Innovations” in the areas of our
Business Portfolio, Business Model, and Business Domain.
In April 2017, we launched the newly formulated management plan “Rolling Plan 2017,” under
which we will further develop the “Three Innovations” as compass points for our growth towards
realizing our “Vision for the MOL Group Ten Years from Now.” In this feature, we will describe
our accomplishments so far, and our innovations for forging ahead.
1
Innovation of
Business Portfolio ( P.14)
We will aim to build a business portfolio that enables sustainable growth by
strategically allocating management resources in businesses where we expect
high growth and stable long-term profits.
2
Innovation of
Business Model ( P.16)
Evolve to a fleet composition with high market tolerability and
competitiveness, and transform to a business model that can
deliver profits regardless of market fluctuations.
3
Innovation of
Business Domain ( P.18)
Create a value chain by expanding the marine transport business
domain vertically both upstream and downstream.
Previous medium-term management plan “STEER FOR 2020”
New management plan “Rolling Plan 2017”
12
Mitsui O.S.K. Lines
Annual Report 2017
13
AccomplishmentsForging Ahead
1
Innovation of Business Portfolio
Strategically allocate management resources
between expanding and defensive businesses
As of March 31,
2017
As of March 31,
2016
Highly specialized*
Fields for strategic resource allocation
Fleet Table (Number of vessels)
Dry Bulkers (including Steaming Coal
Carriers)
Tankers
LNG Carriers (including Ethane Carriers)
Offshore Businesses (FPSO)
Car Carriers
Containerships
Ferries & Coastal RoRo Ships
Cruise Ship
Others
Total
337
169
80
4
120
91
14
1
31
847
373
175
69
3
120
95
15
1
32
883
Note. Figures include short-term chartered vessels and vessels owned by joint ventures.
Variable profits
Business integration
by three Japanese
shipping companies
Product
Tankers
Aim to realize stable growth
through investment of management
resources in fields where MOL can leverage
its competitive edge
Chemical
Tankers
Ferries &
Coastal
RoRo Ships
LNG carriers
and offshore
businesses
Terminals and
Logistics
Businesses
Tugboats
Methanol
Tankers
Daibiru
Corporation
Car Carriers
Trading
Business
Crude Oil
Tankers
Dry Bulkers
(medium- to long-term
contracts, etc.)
Stable profits
Accomplish-
ments
• Built up long-term contracts in the
LNG carriers and offshore businesses
through concentrating resource
investment
• Scaled down market exposure of dry
bulkers, reduced vessel costs of core
fleet of small- and medium-sized dry
bulkers
Containerships
Dry Bulkers (vessels vulnerable
to market exposure)
Reduced through
Business Structural
Reforms
Less specialized*
Accomplishments
Forging Ahead
Forging Ahead
• In addition to the LNG carriers and offshore
businesses, strategically allocate resources to
methanol tankers, chemical tankers, ferries &
coastal RoRo ships, terminals, logistics, and
real estate businesses
• Sharpen cost competitiveness through the
integration of the containership business
* In plotting the vertical axis (highly to less specialized),
each business was considered comprehensively after
taking account of the perspectives in the box to the
immediate right.
• Niche or mass market
• Competitive environment
• MOL’s relative superiority
• Versatility of vessel type
14
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
15
2
Innovation of Business Model
Evolve into a fleet composition with high market
tolerability and competitiveness
Accomplishments
Forging Ahead
Innovation of the Dry Bulker Business
Integration of the Containership Business
▍ Dramatically reduced market exposure
by implementing the Business Structural Reforms
0
10
20
30
40
50
60
70
80
90
(%)
100
2013年度末
March 31, 2014
2014年度末
March 31, 2015
2015年度末
March 31, 2016
2016年度末
March 31, 2017
47%
43%
43%
Implemented the Business
Structural Reforms
27%
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
▍ Small- and medium-sized bulkers:
Shift to a business model that is resilient to market fluctuations
Past
Profit
Loss
Present
Profit
Income
Expenses
Income
Expenses
▍Scale Expansion (
P.7)
The integration of the three Company’s containership businesses will expand the scale of the business to rank
as a major global player in the industry. The newly formed company “Ocean Network Express” will have higher
net sales than the entire MOL Group, and the sixth largest fleet in the world.
FY2016
Consolidated net sales
Containership business sales*
MOL
¥1.5 trillion
¥0.6 trillion
NYK
¥1.9 trillion
¥0.6 trillion
K Line
¥1.0 trillion
¥0.5 trillion
Integrated company “Ocean Network Express”
Net sales Approx. ¥1.7 trillion
(simple sum)
* For the containership business sales for the three companies, we used the disclosed segment sales of each company for convenience.
The figure therefore includes sales of domestic terminal businesses (all three companies) and the logistics businesses (MOL, K Line),
which are not included in the integration.
▍Strengthening Competitive Advantage
Operational
Efficiency
Economy of
Scale
Competi-
tiveness
(Profitability)
Best Practices
Larger Business Size
Creation of more synergy and enhance-
ment of operational efficiency by inte-
gration of each company’s best practices
Achievement of economy of scale by
integrating the three companies
Synergy of
Approx. ¥110 billion/year
Profit stabilization by accomplishment of
synergy of approx. ¥110 billion/year
16
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
17
3
Innovation of Business Domain
Expand business domain in response to customer needs
and lead initiatives on the environment
Participated in
shuttle tanker
business
Participated in
subsea support
vessel business
Create Value Chain
Participated in
FSRU project
Commercialization
of ship
management and
crew training
services
Participated in
coastal LNG shuttle
transportation
project
in Indonesia
Respond to
Customer Needs
Operation of very
large ethane carriers
Accomplishments
Develop
Environmental
Strategy
Launched methanol-
fueled tankers
Launched a joint
study of LNG-fueled
capesize bulkers
LNG-fueled tugboat
construction
decided
Participated in
project for
installation of
offshore wind
power generation
systems
Explore the possibility of entering the tanker
terminal and tank container businesses
Pursue vertically integrated business
centered on LNG transportation
Forging Ahead
Nurture the
environment and
emission-free
businesses
Look at entry into the LNG fuel
supply ship business
Consider commercialization of
floating LNG power plants
18
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
19
Message from the CEO
Aiming to be the
Customer’s Preferred Choice
by Providing
“Stress-Free Services”
Progress and Evaluation of Medium-Term Management Plan
“STEER FOR 2020”
The overall strategy behind MOL’s last medium-term man-
agement plan, entitled “STEER FOR 2020,” was to implement
“three innovations”—Innovation of Business Portfolio, Innova-
tion of Business Model, and Innovation of Business Domain. I
think that we have made genuine and creditworthy strides
towards achieving each of those objectives. In Innovation of
Business Portfolio, we made intensive investments of our
resources in LNG carriers and offshore businesses, leading to
the accumulation of a portfolio of long-term contracts that
will generate highly stable profits over the long term. Due to
a prolonged slump in the price of energy resources, work on
new LNG development projects was suspended, and this
prevented the Company from meeting the numerical targets
originally laid out in the management plan. Nevertheless, we
have achieved significant progress in the implementation of
our overall strategy. In Innovation of Business Model, mean-
while, we reduced our market exposure, particularly in the
dry bulker business. Through the Business Structural Reforms,
we have reinvented our business model in this division with
the aim of establishing a structure that can generate stable
income even in the current stagnant market. Innovation of
Business Domain includes advances into new areas of
business. Having made inroads into shuttle tanker and
subsea support vessel operations, we are now establishing a
foundation to expand our business further in those fields.
Although these measures have significantly moved the Com-
pany toward its strategic objectives, market rates for dry
bulkers and container ship freights remain at historically low
levels. Consequently, it was necessary to book extraordinary
losses in order to implement the Business Structural Reforms,
which swiftly addressed the situation. This forced us to aban-
don the financial targets that were originally set for the final
year of the medium-term management plan.
In fiscal 2016, which was the final year of our previous
medium-term management plan, the Company decided to
introduce a single-year management plan prioritizing mea-
sures to deal with the situation in our dry bulker and contain-
ership businesses. During that fiscal year, the containership
business faced even more difficult conditions and our reform
measures were not enough to achieve a rebound in ordinary
profit. In the dry bulker business, however, our efforts to
make the fleet more competitive and more resilient in the
face of market conditions were successful, and operations
returned to the black.
Junichiro Ikeda
President & CEO
20
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
21
Message from the CEO
Containership Business Integration
New Management Plan “Rolling Plan 2017”
Since I was appointed as president in June 2015, I have made
it my top priority to rebuild the Company’s containership
business.
Containerships play an essential role as the “conveyor belt”
that keeps global trade flowing. Although the pace of growth
may not be as great as it was in the past, the business itself is
expected to continue growing in the future. Nevertheless, it
is also a business subject to fierce competition. We consider
it essential to rank within the top one third of the most com-
petitive operators in order to survive in this business. We
have had some success in efforts to reduce costs, such as
strengthening control of yield management and further
promoting rationalization of unprofitable routes. However,
there have been dramatic changes in the cost structure of
this business in recent years, and it has become essential to
enhance economies of scale. In the past, fuel and vessel costs
accounted for a predominant share of the unit cost of ship-
ping each container. However, this situation has changed as
fuel prices have declined, ships have increased in size and
scale, and vessel charter-in rates have fallen. As a result, the
costs of loading and unloading activities at port terminals
and inland transportation costs have come to account for a
larger share of the overall costs than in the past. Inland trans-
portation costs in this case refer to costs to move containers
to their final destination by means such as rail or trucks. This
has greatly increased the importance of cost competitive-
ness and negotiation capabilities that are possible for large-
scale container shipping companies. Convinced of the future
potential for growth of the containership business, we
sought to respond to changes in the business climate by
further expanding the scale of our global operations. There-
fore, the Company decided to merge its containership busi-
ness with those of two other Japanese container shipping
companies whose corporate cultures and values are most
similar to those of MOL. (The new company is due to com-
mence operations in April 2018).
This integration of the containership business represents a
further step in our efforts to innovate the Company’s busi-
ness portfolio and business model, and lays the groundwork
for even greater advances. The synergy achieved through this
merger is expected to produce a ¥110 billion reduction on
annual costs. We will strive to realize this synergy as quickly as
possible to return operations to the black and stabilize our
income going forward.
In formulating our next medium-term management plan, we
have decided to abandon the three-year planning cycle used
in the past, and to try to envision the management objec-
tives we hope to achieve ten years from now. Given the rapid
changes that affect our industry nowadays, strategies based
on a medium-term management plan fixed in three-year
periods may prevent the management from responding
flexibly to changes in the business environment. Instead, it is
more effective to adopt a broad philosophy or “vision” for the
business and consider what the Company should look like 10
years into the future. This long-term objective can then be
used to make plans related to our overall business strategy.
The investments we make in our businesses, including build-
ing vessels, need to be decided under careful consideration
of the next 10- and 15-year scenarios. Unfortunately, we
often tend to let the current market conditions and supply
and demand trends dominate our thinking, when instead,
our plans should be based on how we want to be 10 years in
the future. I believe that the new planning process is effec-
tive in helping employees to develop the right priorities, and
focus on longer-term objectives.
As a result of our planning discussions, we have formu-
lated the “Vision for the MOL Group Ten Years from Now” (see
accompanying diagram).
To achieve this vision, we must take further steps to inno-
vate in three areas: our Business Portfolio, our Business Model
and our Business Domains. We will continue to allocate
resources with the goal of selecting and focusing on areas of
core competence, while enhancing financial strength and
also reinventing the business portfolio, in order to maintain
sustainable growth.
The Group-wide priorities under this plan are comprised of
five specific themes: marine technical skills, ICT, technology
development, the environment, and workstyle reforms. We
will strive to achieve our goals in each of these areas.
1. Vision for the MOL Group Ten Years from
Now (2027)
■ The MOL Group will provide stress-free services
that are truly convenient for customers world-
wide, with the aim of serving customers as a
solid and reliable partner at all times.
■ The Group will develop the environment and
emission-free businesses into one of its future
core operations.
■ The Group will strategically allocate resources to
carefully selected businesses that have a clear
competitive edge. The goal is to make the MOL
Group a collection of businesses boasting the
highest competitiveness in their respective fields.
2. Strategies for Realizing the Vision
■ Carefully select opportunities for new investments
and pursue business models focused on cash flow
■ Prioritize resources to develop and defend business fields
■ Group-wide priorities for strengthening the MOL Group
Marine
technical skills
ICT
Provide services that fully harness the MOL Group's
marine technical skills
Provide “visualization of marine operations” (safe
and optimal vessel operation) and added value to
customers
Technology
development
Environment
Workstyle
reforms
Push ahead with the “ISHIN NEXT—MOL SMART
SHIP PROJECT—” (advanced support technologies
for safer vessel operation and technologies for
reducing environmental impact)
Develop and promote environment and emission-
free businesses as innovative, future core
businesses by staying on top of changes in the
external environment
Enhance human resources competitiveness and
achieve innovation through an organizational
culture that encourages employees to work
vibrantly and productively
3. Medium- to Long-Term Profit Levels and Key
Financial Indicators
Projected medium-term
levels
2027 Targets
¥80.0–¥100.0 billion
¥150.0–¥200.0 billion
Ordinary
profit
ROE
8–12%
Gearing ratio
2.0 or less
—
1.0
22
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
23
Message from the CEO
Providing “Stress-Free Services” and
Strengthening the Group in Five Target Areas
Cultivating a Cadre of Highly Competitive
Businesses
In the volatile business environment that prevails today, we
need to improve capital efficiency and elevate corporate
value. To do this, it is essential that we grow the most compet-
itive operations in our business portfolio that most effectively
leverage the Company’s competitive edge. We aim to focus
management resources, including human resources, in these
core business sectors from now on. In previous years, the LNG
carrier and offshore businesses and the methanol tanker
business have been contributing to highly stable profits and
accumulating long-term contracts. We will continue to priori-
tize these businesses in our future investments. We think that
the prospects for our chemical tanker business are also very
strong. Earnings in this sector are comparatively stable, and it
is a specialized business with significant barriers to market
entry, so we will be able to expand our operation scale while
maintaining our leading position in the sector. We are also
exploring possible related activities, such as entry into tanker
terminal operations, where we may be able to open up new
businesses and further enhance MOL’s strength as a full-line
marine transport group.
One segment of MOL’s business portfolio that is rather
unique is the ferry business. We also plan to make this an
area of focus. In the past, we were inclined to view domestic
ferry services as a sideline operation. However, these services
are becoming increasingly important as a way to reduce the
environmental impact of large-scale cargo transport activi-
ties. Furthermore, Japan faces a severe shortage of truck
drivers, making it even harder for domestic transport compa-
nies to manage smooth logistical operations around the
country. Increasingly, a modal shift from road transport to
coastal ocean transport is becoming noticeable. This has
greatly expanded the role that ferry services can play in
domestic logistics. MOL currently accounts for over 40% of
domestic passenger traffic by ferry, and over 40% of ferry-
based cargo truck transport as well. The Group plans to
establish itself as the clear market leader and accelerate
growth in this segment.
Among the objectives we have set for the Group in our “Vision
for the MOL Group Ten Years from Now,” the one that I person-
ally am most invested in is the goal of offering “stress-free
services” to customers. This of course includes the safety and
reliability that is provided by our marine transport services.
However, when considering the customer’s overall value
chain, marine transport services are just one part of a larger
whole. We need to understand in far greater detail the sort of
support and service that they really want from a logistics
partner with the customers’ entire value chain in mind.
The five Group-wide priorities mentioned above for
strengthening the MOL Group are essentially measures for
realizing “stress-free service.” The priority of “marine technical
skills” encompasses nearly all of the capabilities that underlie
Group operations. Improvement in this area is signified not
only by ensuring the safe operation of vessels, it also includes
utilizing know-how and expertise in marine operations. This is
in order to provide the widest possible range of services to
clients, such as optimization of port operations to make load-
ing and unloading more efficient. In “ICT,” we not only need to
analyze big data on weather and ocean conditions to support
safe operations and to select the best routes, but we will also
pursue “visualization of marine operations,” such as real-time
monitoring of data on ship engines and identification of
specific conditions. This will ensure that maintenance and
replacement of parts can be conducted before any problems
arise. “Technology development” includes not only essential
acceleration of measures to reduce CO2 and SOx emissions,
but also mechanization and automation of vessel operations
in order to improve safety levels and reduce the burden on
crews. These issues will be improved further in the future. The
“environment” field encompasses the development of envi-
ronment and emission-free businesses as one of the Group’s
core businesses in the future. Examples include the installa-
tion and maintenance of offshore wind power generation
facilities, the operation of LNG-fueled vessels and LNG fuel
supply operations. Utilizing the Group’s technological skills,
we hope to contribute to reductions in CO2 emissions, and
develop a synergy with our existing businesses to steadily
expand the scope of operations.
Finally, “workstyle reforms” will be applied to all of the
activities already mentioned. Every one of us in the Group
needs to make every possible effort to explore new, creative
and flexible ideas or solutions. I believe this means we must
make reforms to change our mindsets and our organizational
culture. Our ultimate goal is to create a business culture in
which new ideas can develop.
Improving Capital Efficiency
In Closing
Our business model is to invest in vessels, which we operate
under long-term transport contracts, as much as possible in
order to generate stable earnings. Under today’s prevailing
market conditions—which could be characterized as “slow
trade”—the business portfolio and model that the Company
has maintained in the past will not be enough for MOL to
generate returns that significantly surpass the market aver-
age. This means that the Company needs to allocate
resources and select business priorities based on a very strict
set of investment criteria. In particular, the earnings outlook
for the next three years dictates that we must limit the
burden on cash flow by investing only in top-priority projects
and business opportunities that offer high and stable returns.
Business models using chartered-in and second-hand vessels
will also be an effective option to limit cash outflows.
Although we expect to generate a negative free cash flow
over the next two fiscal years, we expect these measures to
turn it around to a positive cash flow in fiscal 2019.
As I have noted above, it appears that MOL will continue to
face a harsh business environment. New vessel deliveries in
the industry will remain at a high level, and the excess of
supply over demand is likely to persist to at least 2018. It will
be some time before we can expect a real recovery in the
supply and demand balance. On the other hand, we expect
that global marine transport volumes will continue to grow
steadily, albeit not as fast as seen before the global financial
crisis. As a full-line marine transport company, MOL’s business
portfolio includes global leaders in various segments of the
industry, including many that hold the number one position
in their segments. This enables the Group to generate stable
earnings. Over its more than 130-year history, MOL has built a
reputation for reliability and a brand strength that will be
enhanced further as we pursue environmental protection
and ICT activities. By offering “stress-free services” to custom-
ers globally, the Company will continue to earn the trust and
loyalty of customers not only in Japan, but around the world.
Looking ahead, I believe that we can further demonstrate the
superior quality of our services and make the MOL Group the
first choice of customers in all of our markets and businesses.
I would like to thank all stakeholders for their continued
understanding and support in these endeavors.
24
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
25
Feature
CEO and Investor
Dialogue
With the launch of a new management plan, which lays out our “Vision for the MOL Group Ten
Years from Now,” MOL has embarked on a series of large-scale innovations. In this section,
President & CEO Ikeda discusses with a global investor about the measures MOL is taking in
order to create corporate value over the long term.
Junichiro Ikeda
President & CEO
Akitsugu Era
Director, Head of Investment Stewardship,
BlackRock Japan Co., Ltd.
New Management Plan
“ In response to the rapidly changing business environment,
we have laid out our ‘Vision for the MOL Group Ten Years from Now’”
Era When MOL unveiled its new management plan “Rolling
Plan 2017,” I was particularly intrigued by the decision to base
plans on a vision of the Company in 10 years. I understand
that the rolling plan will be revised each year. What was
behind the decision to change from the previous approach
to planning?
Ikeda There were two basic considerations we had. First of
all, since the 1990s, MOL had been formulating medi-
um-term management plans, each covering three-year peri-
ods. It worked as a way of giving shareholders an idea of our
profit projections for each respective period. However for
MOL, the three year plan was more of an investment plan.
The problem with this approach was that vessels, the main
target of our investments, have an average operating life of
20 years. As such, our plans need to consider what conditions
will look like 10 or 15 years in the future. This disparity in the
length of our planning cycle and that of our fundamental
business model was one concern. The other was the
upheaval in the marine transport business. There was an idea
that when formulating management plans we should
assume that such major changes in the business environ-
ment will continue. What’s more, the environment doesn’t
wait three years to change—it is ever-changing. Manage-
ment plans need to be adjusted and reevaluated every year
Innovation of Business Portfolio
to quickly respond to such changes. This is why we have
adopted a “Rolling Plan” system.
Era So the point was to set a vision for 10 years from now
and then backcast from the target to determine shorter-term
plans, identifying the gaps between the current situation and
the 10-year goals. I also heard that younger employees and
managers who are expected to assume leadership roles
within the Company in 10 years’ time have played an import-
ant part in drafting “Rolling Plan 2017.”
Ikeda That’s right. After all, the investments that we make
today will have an impact on profits 10 years from now.
Therefore, we must envisage the situations and agendas that
those who steer MOL in the future will face. Our manage-
ment plans need to reflect the thinking and objectives of
young staff members and managers.
Era
I always believe that management plans need to be
more than just ideas on paper, and that they should shape
the character of the organization from its deepest levels.
From what I have heard so far, it sounds like the new plan has
garnered the commitment and understanding of the internal
stakeholders.
“ We aim to further enhance our competitive edge
in the full-line marine transport business model”
Era Most of the global firms in the marine transport indus-
try operate businesses by specializing in a particular seg-
ment, such as containerships or dry bulkers. MOL, on the
other hand, describes its business model as “full-line marine
transport operation.” My understanding is that this business
model is a reflection of the long history of how the Company
has evolved; I would further like to know how this business
portfolio will change going forward.
Ikeda Yes, MOL is somewhat unique in terms of the wide
range of businesses and vessel types it possesses in its busi-
ness portfolio. This is a reflection of the Company’s historical
role in supporting Japan’s emergence as an economic power.
We served a multitude of client industries, transporting raw
materials from overseas to domestic manufacturers and then
exporting all sorts of manufactured products. As a result, the
Company’s operations became quite diverse. Car carriers are
a case in point. Automobiles were initially exported on con-
ventional cargo ships, with a few dozen cars loaded along-
side all sorts of other cargo. But as Japanese exports
expanded, it became necessary to develop specially
designed car carriers. Naturally, our portfolio has changed in
response to global economic changes—not only Japan. In
recent years, there has been a particularly sharp change in
energy-related businesses, and LNG has really entered the
spotlight. Not surprisingly, LNG carrier operations now make
up an increasing share of MOL’s business portfolio.
The containership business has served as the backbone for
global commerce over many years, not only in Japan but
worldwide, and containerships still account for a large share
of the Company’s operations. However, it has become more
difficult to maintain a competitive advantage, and the profit-
ability of these operations is waning. This is the key issue we
must now address. We have given careful thought to the role
that this business plays, and should play, in our overall port-
folio, and concluded that the best solution is to integrate
MOL’s containership business with those of two other lead-
ing Japanese marine transport companies.
Some of the businesses in the Company’s portfolio are
subject to fluctuations in profitability driven by market cycles.
However, as a medium-term strategy, we have decided to
focus a larger share of management resources on businesses
that are comparatively resilient to market fluctuations, such
as LNG carriers, as these businesses will generate long-term
stable earnings.
26
Mitsui O.S.K. Lines
Annual Report 2017
27
“Our management plans need to reflect
the thinking and objectives of the
young employees and managers who
will guide the Company in the future.”
“I was particularly intrigued by the
decision to base planning of the
MOL Group on a vision of itself 10
years ahead.”
Decision-Making by the Board of Directors
Change was decided after thorough discussion
in the “Deliberation on Corporate Strategy and Vision”
Era At a time when the global economy is changing rap-
idly, I assume that there are also times when management
perspectives need to pivot, or the needs of MOL’s clients to
change. In response to the changing business environment,
how did the Board of Directors discuss and reach a conclu-
sion on the key decision to change the business portfolio,
such as reducing market exposure or integrating the contain-
ership business?
Ikeda The question of how to manage the impact on
earnings caused by market fluctuations has always been a
challenge for MOL’s management. In considering the inter-
ests of investors, Company employees, and other stakehold-
ers, we need to do everything possible right now to limit the
impact of market volatility and stabilize earnings trends.
These considerations were the basis for our Business Struc-
ture Reforms in fiscal 2015 through 2016 as well as the deci-
sion to integrate our containership business. The process for
these decisions naturally included vigorous discussion by the
board, including the outside directors.
Era So, the matters were discussed thoroughly at the
“Deliberation on Corporate Strategy and Vision,” which is one
of the key features of MOL’s corporate governance system?
meetings thoroughly examine issues that affect medium-
and long-term strategies, as well as any important manage-
ment issues that arise. In addition to the conventional
perspectives of people within the Company, we actively
solicit the input of outside directors, who have a broader
perspective and expert insight. We seek to reflect these in
our management decisions by encouraging everyone to
freely express their views. This is exactly how we approached
the issue of integrating our containership business.
Era From an investor’s perspective, there are sometimes
cases in which board meetings appear to be turning into a
place mainly for explaining matters to outside directors and
do not seem to be functioning effectively.
Ikeda MOL was ahead of the curve with outside directors,
appointing outsiders to the board as early as 2000, and from
my perspective at least, the outside directors seem to feel
free to express opinions. They have also made this comment
themselves. I cannot say that there is never a sense that we
are “explaining things” to the outside directors, but we aim to
use their input in an effective way, particularly when dealing
with concrete issues such as in the “Deliberation on Corpo-
rate Strategy and Vision.”
of MOL’s achievement in this context, we completed the
Company’s first methanol-fueled tanker last year, and we
have launched a project in collaboration with existing clients
to develop LNG-fueled capesize bulkers.
Era So, over the long term, these projects are expected to
ultimately lead to developments in the environment and
emission-free businesses or, at a higher level, are expected to
lead to “strengthening marine technical skills,” as set forth in
the new management plan.
Ikeda By taking our environmental response a step further
and viewing it as an environmental business, I think we have
made an even deeper commitment with the new manage-
ment plan. Actually, the idea of environment and emission-
free businesses initially came from some of our younger staff.
Their ambition to move the Company forward with a longer-
term view came across to the management. I think our
young staff members started to act in a more proactive
manner, thinking about the Company’s future and clearly
voicing their opinions. There is certainly this kind of atmo-
sphere in the Company. I believe the establishment of such a
corporate culture forms the true basis for effective manage-
ment planning.
I agree that placing corporate values and culture at the
Era
center of workstyle reforms is essential for leading real
reforms in underlying attitudes and organization.
Relationship with Investors
On another subject, ICT is also an important focus for the
Company. What are the views regarding the new develop-
ments, such as artificial intelligence (AI) and the Internet of
Things (IoT) and how will they affect marine transport in the
future?
Ikeda We see ICT as a tool for reducing the workload of
crews, and thereby improving safe vessel operations. For
example, in the case of engine maintenance, up to now we
have relied in some measure on the experience and exper-
tise of our engineers. However, if we also have ICT systems
monitoring the condition of engines in real time on shore
and performing big data analysis, we will be able to identify
potential problems before they happen, replace worn com-
ponents, and perform necessary maintenance. At MOL, we
refer to this as the “visualization of marine operations.”
I see. And what impact will this have over the medium
Era
and long term?
Ikeda Well, it is going to take some time, but ultimately we
intend to automate shipping as completely as possible,
leading to the use of “unmanned ships.” Compared to land-
based operations, ships still rely heavily on manual activities
for soft operational aspects. However, if we set high goals, I
expect that technological advances will be made much
sooner.
Ikeda Yes, we hold regular scheduled meetings of the
“Deliberation on Corporate Strategy and Vision.” These
(Details regarding “Deliberation on Corporate Strategy
P.58‒59)
and Vision”
“ I think investors help us to notice current issues”
Environmental and Safety-Related Issues
“We will make use of ICT and technological development to promote
‘visualization of marine operations,’ and develop the environment and
emission-free businesses with a view to the future”
Era One persistent trend in the marine transport industry is
the tightening of environmental regulations, such as ballast
water management and SOx emission reduction. And I
believe significant investments must be made to comply
with these new environmental rules—what would be the
strategy to ensure returns on these additional investments?
Ikeda The environmental strategy is high on the agenda in
our current management plan. In fact, we actively try to
differentiate MOL from rivals in this area. Nevertheless, we
obviously have to find a way to make the Company profit-
able even after environment-related investments. At some
point, we will have to approach customers to share
additional costs in order to support the basic cost for main-
taining shipping as a mode of transport.
Era Could you provide more details regarding how MOL
plans to differentiate itself from other competitors?
Ikeda
I think this is actually a valuable opportunity for the
Company. Customers have a great deal of latent concern for
environmental issues, some of them are already indicating a
desire for tighter environmental standards. By taking an
aggressive approach to environmental issues, I believe that
customers will naturally be inclined to select MOL as their
preferred marine transport partner. To show some examples
Era This will be my last question. In my role as an investor, I
always aim to offer corporate managers different “perspec-
tives” in the hope of helping them notice something during
meetings. Do you have any specific expectations towards
investors in supporting the growth of the business?
In a general sense, I think investors provide us with
Ikeda
a kind of tension and discipline. In the process of meeting
and talking to investors, we listen to their candid comments
about issues that concern them, while expressing our strat-
egy and way of thinking straightforwardly. Through these
discussions, we can gain a clear sense of what issues we
have when seen from the outside. Obviously, we feel tension
as we are required to deliver results in terms of the Compa-
ny’s share price and related performance figures, but it can
also serve as a good source of motivation as well. Therefore, I
look forward to having constructive discussions with inves-
tors, and I hope they will continue to make their opinions
and concerns clear.
28
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
29
Sustainability Highlights
In addition to advancing the Three Innovations, the MOL Group is taking various initiatives to build a
stronger management foundation as a marine transport company. Through these initiatives, the MOL
Group aims to become a solid and reliable enterprise that achieves sustainable growth into the future.
Human
Resources
Development
MOL Decided to Establish a Maritime Academy
in the Philippines
Continuously Training Top-Quality Seafarers for Global Top-Class Safety in Vessel
Operations
Emission-Free
Business
MOL Invests in Self-Elevating Platform Vessel Operator for
Installation of Offshore Wind Power Generation Systems
Moving into the Offshore Business Following FPSO, FSRU, Shuttle Tankers, and
Subsea Support Vessels
MOL has acquired a 5% share in Seajacks International Lim-
ited (Seajacks) Group, which owns and operates self-
elevating platform vessels for the installation of offshore wind
power generation systems. There has been significant expan-
sion in offshore wind power generation systems, led by
Europe, with Asia offering strong growth prospects for the
future. For MOL, this investment will expand the horizons of
its offshore business, along with marking its first step into the
renewable energy business field.
One of the world’s largest self-elevating platform vessels
owned and operated by Seajacks
Environmental
Initiatives
MOL Launches a Joint Study of LNG-fueled Capesize Bulker
Initiative on Environmental Protection Ahead of International Rules
In January 2017, MOL reached an agreement to launch
“Green Corridor,” a joint study of an LNG-fueled capesize
bulker with five other companies—resource and energy
majors Rio Tinto, BHP Billiton, and Woodside Energy, as well
as DNV GL, an international classification society based in
Norway and Germany, and Shanghai Merchant Ship Design &
Research Institute, a member of the China State Shipbuilding
Corporation Group. Thereafter, Australian resources major
Fortescue Metals Group and Taiwanese shipping company
U-Ming Marine Transport Corporation joined the study. The
joint study is now conducting research into the technologi-
cal and economic feasibility of an LNG-fueled capesize
bulker, in advance of international treaties calling for stricter
NOx and SOx emissions standards.
At the signing ceremony
Underlined words are explained in the Glossary on the Contents page.
In June 2018, MOL will inaugurate MOL Magsaysay Maritime
Academy Inc., a maritime academy, in Dasmariñas, Cavite in
the Philippines. With its local partner Magsaysay Maritime
Corporation, the MOL Group plans to recruit about 300 grad-
uates every year, providing continuous training programs to
develop top-quality seafarers who will be able to hit the
ground running through a four-year curriculum that encom-
passes basic education and specialized coursework.
Conceptual image of the completed maritime academy campus (provisional)
Technological
Development
MOL Launches the
“ISHIN NEXT—MOL SMART SHIP PROJECT—”
Enhancing Business Strengths and Increasing Corporate Value
In November 2016, MOL launched the “ISHIN NEXT—MOL
SMART SHIP PROJECT—,” a new technological development
project that builds on the success of the Senpaku ISHIN
Project, which was announced in 2009. Through the project,
MOL will share its technological development policies with
customers and other stakeholders, thereby capturing diversi-
fied needs and collecting various seeds of technologies. By
matching those needs with technologies, MOL intends to
develop technologies for safer vessel operation and for
reducing environmental impact, which will help to enhance
its business strengths and increase its corporate value.
Advanced support technologies for safer vessel operation
Towards autonomous sailing in the future
New technologies
in various fields
Safety & Environment
ICT
e.g. utilization of big data
Technologies for reducing environmental impact
For global environmental protection
Safe
Operation
“Project for Establishing a System to Visualize Onboard
Environments Utilizing ICT”
Proactive ICT Utilization for Safer Vessel Operation
As part of the abovementioned “ISHIN NEXT—MOL SMART
SHIP PROJECT—,” MOL will conduct the “Project for Establish-
ing a System to Visualize Onboard Environments Utilizing ICT.”
The aims of this project are to reduce workplace accidents
onboard, reduce the workload of seafarers, and enhance
crew operation and technical skills. MOL will enhance safer
operation, improving the safety awareness and skills of crew
members, by developing:
(1) The health and safety management of crew through
the use of wearable devices; and
(2) The education of crew and skill transfer using head-
mount displays, virtual reality (VR) / augmented reality
(AR) technologies, and remote support systems for use
during maintenance and repairs.
30
Mitsui O.S.K. Lines
Annual Report 2017
31
At a Glance
FY2016 Performance (Consolidated)
Revenues/Ordinary Profit by Segment
Figures are provided for reference by simply restating according to
new segmentation applied from fiscal 2017 without adjusting
inter-segment transactions
Shipping and other revenues
¥1,504.3 billion
Equity ratio
25.8%
Ordinary profit
Gearing ratio
¥25.4 billion
1.96
Total assets
Net gearing ratio
¥2,217.5 billion
1.64
Net assets
MOL’s fleet (number of vessels)
¥683.6 billion
847
Revenues by Segment
Ferries & Coastal
RoRo Ships
3%
Dry Bulkers (excluding
Steaming Coal Carriers)
18%
Associated
Businesses
and Others
6%
Product
Transport
Business
58%
Dry Bulk
Business
18%
Energy
Transport
Business
18%
Containerships
41%
Car Carriers
14%
Fleet Composition
Tankers
10%
Ordinary Profit by Segment (¥ billions)
LNG Carriers/
Offshore
Businesses
5%
Steaming Coal
Carriers
3%
Dry Bulk Business
Energy Transport Business
Product Transport Business
Containerships only
Associated Businesses
Others
Corporate/Eliminate
Total
FY2016
performance
11.9
26.7
(27.9)
(32.8)
12.3
1.8
0.5
25.4
Others
2%
Dry Bulkers
43%
Number of
ships
(847)
Containerships
11%
Dry Bulkers
50%
Deadweight
tons
(62 Million)
Car Carriers
3%
LNG Carriers
10%
Tankers
26%
Containerships
11%
Car Carriers
14%
LNG Carriers/
Offshore
Businesses
10%
Tankers
20%
32
Mitsui O.S.K. Lines
Annual Report 2017
33
At a Glance
MOL established the Dry Bulk Business Unit and the Energy Transport Business Unit
in April 2016, and the Product Transport Business Unit in April 2017. Accordingly,
MOL has reclassified
its previous disclosure segments, namely Bulkships,
Containerships, and Ferries & Coastal RoRo Ships, as the Dry Bulk Business, Energy
Transport Business and Product Transport Business from fiscal 2017. In this section,
disclosure is provided in accordance with the new disclosure segments.
Business Activities
With one of the world’s largest fleets, MOL reliably transports
such dry bulk cargo as iron ore, coal, grains, wood, wood
chips, cement, fertilizer and salt. Our fleet includes highly
versatile bulk carriers and specialized vessels for specific cargo
types.
Dry Bulk
Business
Dry Bulkers
(excluding
Steaming Coal
Carriers)
[Dry Bulker]
Capesize Bulker: JASPER DREAM
With one of the world’s largest fleets, MOL is expanding
activities globally. Our fleet includes crude oil tankers; product
tankers that carry naphtha, gasoline and other refined
petroleum products; chemical tankers that carry liquid
chemical products; and LPG tankers that carry liquefied
petroleum gas.
Tankers
Energy
Transport
Business
LNG Carriers/Off-
shore Businesses
With one of the world’s largest LNG carrier fleets, MOL safely
transports liquefied natural gas (LNG), which is experiencing
growing global demand. In addition, we are active in offshore
businesses, including FPSOs and FSRUs, which are poised for
continued growth.
Steaming Coal
Carriers
MOL transports coal for thermal power generation, mainly on
medium- to long-term transport contracts with electric
power companies in Japan. Looking ahead, we also plan to
engage aggressively in coal transport for emerging countries,
where growth is expected. As a division within the Energy
Transport Business Unit, the steaming coal carriers division
will coordinate with other divisions to meet diversifying
customer needs.
MOL is stably expanding transport services to meet the
changing needs of automakers 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.
Car Carriers
Product
Transport
Business
Containerships
Ferries & Coastal
RoRo Ships
Through MOL’s global network of sea routes, we transport
containers loaded with electric products, automotive parts,
clothes, furniture, food products and many other products to
deliver them around the world. We are expanding our
network with wider port coverage and increased service
frequency, not only on our self-operated routes but also in
joint operations with partners.
MOL develops the ferry business, which transports both
passengers and vehicles (automobiles, trucks, etc.), and the
coastal RoRo ships business which specializes in the transport
of freight vehicles. We are raising our profile as the leader of
an eco-friendly modal shift in domestic logistics.
Leveraging the know-how 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.
Associated
Businesses
34
Mitsui O.S.K. Lines
[Tanker]
VLCC: CHOKAISAN
[LNG Carrier]
LNG SATURN
[Steaming Coal Carrier]
JP MAGENTA
[Car Carrier]
GLORIOUS ACE
[Containership]
MOL TRIUMPH
[Ferry]
SUNFLOWER FURANO
[Cruise Ship]
NIPPON MARU
Year in Review
Business Environment
Market conditions are still in the process of recovering.
However, thanks to the Business Structural Reforms, we
have implemented in small- and medium-sized bulkers in
addition to reducing the numbers of capesize bulkers
operated on the spot market, profitability improved
significantly from the previous fiscal year, turning a certain
level of profit in fiscal 2016.
The tanker division focused on reducing market exposure
and soundly executing long-term contracts, in conjunction
with working to secure new contracts for crude oil and other
tankers from overseas customers. In addition, we continued
to work to improve operation efficiency and reduce costs. As
a result, although profit levels decreased significantly year on
year, we posted a certain profit in fiscal 2016.
The LNG carrier division continued to secure stable profits
from long-term contracts while increasing its profit year on
year, partly through incremental income from newly
delivered vessels, including the world’s first large ethane
carriers. In addition, the offshore project division posted
higher profit year on year due to steady FPSO operations,
including a new FPSO unit.
Cargo volumes of completed cars to the U.S. and Europe
were firm, while imports by emerging countries and
resource-producing countries continued lackluster as their
economies slowed down as a result of falling resource
prices and other factors. Against this backdrop, we worked
to reduce the fleet size and improve operation efficiency in
response to changes in trade patterns. Despite these efforts,
ordinary profit declined sharply year on year.
In addition to improving our slot utilization rates by
strengthening our sales capabilities, we continued working
to reduce costs, such as the cost of repositioning empty
containers, by bolstering yield management. These efforts
produced a certain measure of results. However, the
division’s loss increased slightly, mainly due to the
downturn in annual contracted freight rates after
historically low freight levels in January-March 2016.
Cargo volumes trended firmly as the trend toward a modal
shift in transportation—i.e., a switch from long-distance
land transport by trucks to ferry transport—accelerated
further. In terms of the number of passengers, although
certain routes were negatively impacted by the Kumamoto
Earthquakes, we secured the same level of overall profit as
in the previous fiscal year, supported in part by a decline in
fuel prices.
In the cruise ship business, ordinary profit increased year on
year due to healthy sales for the cruise ship NIPPON MARU.
Ordinary profit in the real estate business increased as well,
underpinned by a robust office leasing market. In other
areas, the tugboats, trading and certain other businesses
showed a generally firm performance trend. Consequently,
the segment’s overall ordinary profit increased year on year.
Dry Bulker Market (BDI*1)
(Jan 4, 1985=1,000)
1,600
1,200
800
400
0
15/4
16/4
17/4
Source: MOL internal calculation based on TDS and others
*1 Baltic Dry Index
VLCC*2 Market (AG - Japan)
(US$/day)
120,000
90,000
60,000
30,000
0
15/4
16/4
17/4
Source: MOL internal calculation based on Clarkson
*2 Very large crude carrier (300,000-DWT class)
Containership Market (CCFI*3)
(Jan 1, 1998=1,000)
Europe Trade U.S. West Coast Trade
U.S. East Coast Trade South America Trade
1,600
1,200
800
400
0
15/4
Source: SSE
*3 China Containerized Freight Index
16/4
17/4
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
35
Overview of Operations
Dry Bulk Business Unit
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
Fiscal 2017 Initiatives
As a result of the Business Structural Reforms, we have
achieved an appropriate fleet structure. Now we will aim for
growth while balancing risk. Having streamlined the fleet to
an appropriate scale, our strategy now is to place even
higher priority on acquiring medium- to long-term transpor-
tation contracts with our main customers. The important
points in executing this strategy will be to leverage the
advantages of the trust and brand strength that we have
built up with our customers over many years. Customers
seeking medium- to long-term contracts put a high priority
on quality of transport services and financial stability in
choosing partners. MOL is one of a limited pool of carriers
that qualify. For example, we are seeing an expansion of
demand for biomass fuel transportation, a relatively new field
in the small- and medium-sized bulker sector. Our long track
record and stance on safe operations has helped to increase
the evaluation of the MOL brand and contributed to our
gaining new contracts in this new business field. We are
creating a virtuous cycle where building a record of achieve-
ments leads to positive evaluation, and this in-turn helps to
strengthen our brand.
On the other hand, the ratio of long-term contracts for
some types of cargo is set to decline going forward, and our
business model could change. In response to this trend, the
business unit system that we launched in fiscal 2016 will
have an important role to play. The divisions within the Dry
Bulk Business Unit will share information to keep track of
what kinds of transport demand are occurring, and we
expect this will help us to acquire new contracts and deploy
vessels effectively. We also expect it to enable flexible person-
nel deployment in response to changes in the business
environment.
Another key aspect of our strategy is environmental
response. Naturally, we are responding to the Ballast Water
Management Convention and tightening of regulations on
the sulfur oxide content in fuel oil (SOx regulations). A large
number of dry bulkers were ordered during the shipping
boom in the first decade of the 2000s, but a significant
number of these vessels are believed not to meet the quality
standards. It is possible that these vessels could be with-
drawn from the market going forward as they may fail to
comply with the new environmental regulations. Customers’
awareness of environmental issues is also increasing rapidly.
MOL joined forces with major iron ore suppliers and several
other companies to start the joint research project “Green
Corridor” on LNG-fueled bulkers. Through these and other
initiatives, we are working to reduce our environmental
burden as a responsible marine transport company, and we
will continue to provide even better quality in our transport
services going forward.
Toshiaki Tanaka
Managing Executive Officer
Director General of Dry Bulk
Business Unit
Hirofumi Kuwata
Executive Officer
Deputy Director General
Dry Bulkers
Fiscal 2016 in Review
In fiscal 2016, the business unit continued to experience an
adverse business environment; however, we secured a profit
due after significantly reducing market exposure through the
Business Structural Reforms that have been underway since
fiscal 2015 while posting stable profits from long-term con-
tracts. In the Business Structural Reforms, we steadily pro-
ceeded to sell off some of our capesize bulkers and
optimized the size of our fleet. In small- and medium-sized
dry bulkers, we redelivered chartered-in vessels before their
charter contracts reached maturity, and lowered vessel costs
for the remaining core fleet to a level in line with the
then-prevailing market. These measures transformed our
fleet, making it highly competitive and streamlining it to
align with the number of cargo contracts we have accumu-
lated. The dry bulker market itself has broken out of the
record slump it had entered prior to spring 2016 and is now
showing a gradual recovery trend driven by firm shipments
of Brazilian iron ore and an increase in Chinese coal imports.
Our vessels operating under medium- and long-term cargo
contracts for iron ore and coking coal, wood chips, and so
forth continued to secure stable profits. Although losses
were recorded by certain affiliates, overall results surpassed
the plan at the start of the fiscal year.
Consolidated Revenues Breakdown (FY2016)
● Iron Ore & Coal Carrier 50%
31%
● General Bulk Carrier
11%
● Wood Chip Carrier
● General Cargo Carrier/
Heavy Lifter
8%
Dry Bulker Fleet Table (Number of vessels)
Vessel type
Standard
DWT
At the end of
Mar. 2017
At the end of
Mar. 2016
Use
Capesize
180,000
Panamax
80,000
Handymax
55,000
Small handy
33,000
Wood chip
carriers
Short sea
ships
Total
54,000
12,000
90
24
57
31
39
55
92
31
60
52
41
54
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.
296
330
Portfolio
Highly Specialized
Wood Chip
Carriers
Short Sea
Ships
V
a
r
i
a
b
e
P
r
o
l
f
i
t
s
l
S
t
a
b
e
P
r
o
f
i
t
s
Small- and Medium-
Sized Bulkers
Capesize Bulkers
Less Specialized
Global Seaborne Trade of Major Dry Bulk Cargoes
(Million tons)
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2011
2012
2013
2014
2015
2016
■ Iron Ore ■ Coking Coal ■ Steaming Coal ■ Grains ○ YoY %
Source: Clarkson
Vessels Supply (Capesize) (Number of vessels)
300
200
100
0
–100
2011
2012
2013
2014
2015
2016
■ Deliveries ■ Demolitions ○ YoY %
Source: MOL internal calculation based on IHS-Fairplay
(%)
12
10
8
6
4
2
0
–2
24%
16%
8%
0%
36
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
37
Overview of Operations
Energy Transport Business Unit
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
Fiscal 2017 Initiatives
In fiscal 2017, we expect supply to increase due to new
vessel deliveries, and the tanker market to continue facing
adverse overall conditions. In response to this environment,
we will conduct business management by clearly selecting
and concentrating our resources. In crude oil tankers, we will
focus on maintaining and renewing the medium- and long-
term contracts we have built up with oil companies in Japan
and overseas. In product tankers, where there is no apparent
demand for medium- and long-term contracts, we will con-
tinue to scale down our fleet. Meanwhile, we will scale up
our fleet in the chemical tanker field, which has high entry
barriers, as we can leverage our advantages there. In metha-
nol tankers, we intend to use our cost competitive fleet to
help capture more medium- and long-term contracts.
In addition to these vessel type-specific strategies, we will
also take steps to strengthen the MOL brand. In one instance
of making use of the MOL brand in this division to gain con-
tracts, we expanded our medium- and long-term contract for
VLCCs with Reliance Industries Limited of India to five vessels.
We have already been supplying ethane carrier services to
Reliance in the LNG carrier division, and their high evaluation
of our transport quality, including ship management, appears
to have led to the conclusion of this latest VLCC contract
expansion. This is clearly a successful result of synergies
arising from initiatives undertaken by the Energy Transport
Business Unit. We will continue to accumulate such achieve-
ments going forward, further strengthening the relationships
of trust with our customers.
The Company’s tanker division is one of the largest in the
world in terms of overall scale, and has a distinctively diverse
portfolio of various vessel types for different cargo, even
within the class of tankers. In product and LPG tankers, which
are not prominent in terms of independent vessel numbers,
we have entered pool arrangements with overseas partners
to form pools with world-class global scale overall. We will
continue to utilize scale benefits of our fleets, including these
pool arrangements, while enhancing our cost competitive-
ness and service quality, as well as steadily executing safe
vessel operations. In doing so, we will aim to earn a reputa-
tion among customers as the “go-to Company for tanker
services.”
Kenta Matsuzaka
Executive Officer
Deputy Director General
(LNG Carriers)
Takeshi Hashimoto
Senior Managing Executive Officer
Director General of Energy Transport
Business Unit
(Management and Offshore Businesses)
Hirofumi Kuwata
Executive Officer
Deputy Director General
(Steaming Coal Carriers)
Akio Mitsuta
Senior Managing Executive Officer
Deputy Director General
(Tankers)
Tankers
Fiscal 2016 in Review
In the previous fiscal year (2015), the tanker division achieved
a huge increase in profit due to favorable market conditions.
However, from the start of fiscal 2016, we operated under the
assumption that the market would soften due to an increase
in supply arising from new vessel deliveries. In fact, the
market deterioration exceeded our expectations. Under
these circumstances, we effectively minimized the negative
impact on earnings by responding appropriately for each
vessel type. In crude oil tankers, product tankers, and LPG
tankers, the spot market grew sluggish due to ongoing
easing of the supply and demand balance. However, we
steadily recorded highly stable profits from VLCCs deployed
on long-term contracts with oil companies in Japan and
overseas, as well as methanol tankers, where we replaced five
vessels with newly built vessels during fiscal 2016, including
three methanol-fueled vessels equipped with dual-fuel diesel
engines. In chemical tankers, although the spot market soft-
ened, we managed to reduce the negative impact by fixing
approximately 70% of cargoes with one- to three-year con-
tracts of affreightment (COAs) under our business policy. As a
result, profits declined substantially from fiscal 2015, when
market conditions had been extremely favorable; but we
managed to post a certain level of profit.
Consolidated Revenues Breakdown (FY2016)
● Crude Oil Tanker
● Chemical Tanker
● Methanol Tanker
● Product Tanker
● LPG Tanker
29%
39%
11%
15%
6%
Tanker Fleet Table (Number of vessels)
Vessel type
At the end of
Mar. 2017
At the end of
Mar. 2016
Vessel type under
pool management
(at the end of Mar. 2017)
Crude oil tankers
Chemical tankers*1
Methanol tankers
Product tankers*2
LPG tankers
40
51
27
43
8
42
54
25
45
9
LR1 (70,000 DWT)
MR (50,000 DWT)
VLGC (Very Large Gas
Carrier, 80,000 m3)
Total
169
175
*1 Main cargoes: xylene, benzene and vegetable oil, etc.
*2 Main cargoes: gasoline, naphtha, kerosene, jet fuel and gas oil, etc.
Portfolio
V
a
r
i
a
b
e
P
r
o
l
f
i
t
s
Highly Specialized
Chemical
Tankers
LPG Tankers
Methanol
Tankers
Crude Oil
Tankers
Product Tankers
Less Specialized
l
S
t
a
b
e
P
r
o
f
i
t
s
Crude Oil: Global Seaborne Trade by Import Country/Area (Million tons)
2,000
1,500
1,000
500
0
2011
2012
2013
2014
2015
2016*
2017**
■China ■Japan ■Other A/P ■Europe ■N. America ■Others
Source: Clarkson
* Estimate
** Forecast
Vessels Supply (VLCC) (Number of vessels)
75
50
25
0
–25
2011
2012
2013
2014
2015
2016
■Deliveries ■Demolitions ○ YoY %
Source: MOL internal calculation based on IHS-Fairplay
15%
10%
5%
0%
38
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
39
Overview of Operations
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
LNG Carriers/Offshore Businesses
Fiscal 2016 in Review
Our vessels in this division are basically operated under long-
term contracts with customers, so the division reported
stable profits as always in fiscal 2016. In particular, fiscal 2016
saw the completion of construction of six LNG carriers, one
FPSO unit, and five very large ethane carriers, which have
now started contributing to profits. On the other hand, we
were unable to achieve remarkable progress in securing new
long-term contracts. The LNG carriers/offshore businesses
division uses a business model of incorporating transport
demand generated from new resource development proj-
ects; however, the development of such new projects has
almost ground to a complete halt due to the ongoing slump
in energy prices such as oil and gas since 2015. In this situa-
tion, we spent the year focusing on bringing the investments
of the past few years to fruition. Even amid a general slump
in the marine transport market, the division performed its
role as expected by steadily posting long-term, highly stable
profits.
Fiscal 2017 Initiatives
The start of execution of the long-term contracts that we
have already built up will contribute to the expansion of our
fleet and ensure the expansion of highly stable profits over
the next few years. In our efforts to acquire new long-term
contracts, we expect to see adverse conditions continue in
fiscal 2017; however, oil prices have been stable since the
previous year-end, and oil majors are starting to invest in
energy resource development projects again. We will follow
these movements very closely to obtain new contracts.
By its nature, the global shipping business itself is a cyclical
industry. However, a special feature of this division is the
ability to achieve stable cash flow through long-term con-
tracts. Looking ahead, we plan to use this to contribute to
stable earnings for the Company overall by expanding
investments that can secure highly stable profits. As energy
consumption in Japan declines over the medium to long
term, we will need to approach regions where consumption
is set to grow in the future, such as India, China, Southeast
Asia, and Central and South America. In such countries and
regions, alliances with local partners will become important
for smoothly rolling out business operations. As this division’s
strongpoint, it has built firm relationships with local partners
in every country through its achievements to date. Even now
MOL has established a strong position in the LNG carrier field.
When all of the LNG carriers that we currently have under
construction are delivered, our fleet of over 90 vessels will be
the largest in the world, with an unrivalled scale. Based on
the benefits of scale, we will strengthen our customer rela-
tionships even further and expand our other energy trans-
port businesses such as tankers and steaming coal carriers in
India, China and other growth regions. By establishing the
New Projects Starting Operation in FY2017
LNG Carriers
Tokyo Gas
ex. USA
To Japan
1 vessel
SINOPEC (China)
ex. Australia
To China
3 vessels
Yamal (Russia)
ex. Russia
To China
1 vessel
Offshore Businesses
Petrobras
Brazil
Tullow Ghana
Ghana
Ethane Carriers
FPSO
FPSO
1 unit
1 unit
Reliance (India)
ex. USA
To India
1 vessel
Portfolio
V
a
r
i
a
b
e
P
r
o
l
f
i
t
s
Highly Specialized
Offshore Businesses
(Medium- to long-
term contracts)
LNG Carriers
(medium- to
long-term
contracts)
Steaming Coal
Carriers
Less Specialized
l
S
t
a
b
e
P
r
o
f
i
t
s
LNG: Demand Forecast by Area
13%
7%
6%
9%
32%
2016
265 million tons
6%
12%
15%
17%
21%
9%
4%
2025 (forecast)
395 million tons
9%
15%
20%
■Japan ■Korea ■Europe ■America
■China ■Taiwan ■India ■Others
Source: MOL internal calculation based on Wood Mackenzie
5%
Energy Transport Business Unit structure and chief country
representatives, we have created a framework for providing
customers with optimal solutions from an energy transport
perspective. We will continue working to leverage synergies
between the divisions and strengthen our sales capabilities.
In offshore businesses, we expect to see an increase in
demand for FSRUs for emerging countries, and we will
actively work to address this need. As upstream investment
resumes, we will aim to capture new FPSO projects, mainly
those off the coast of Brazil and West Africa. In February 2017,
MOL entered the self-elevating platform vessel business,
providing offshore wind power generation installation ser-
vices. Offshore wind power generation is already being rolled
out in large scale in Europe, and is expected to expand in
Japan, Taiwan, and other Asian counties going forward. We
therefore plan to proceed steadily in this field.
LNG: Seaborne Trade (Million tons)
400
350
300
250
200
150
100
50
0
2012
2013
2014
2015
2016
2017*
2018*
2019*
2020*
2021*
2022*
2023*
■■Middle East ■■Australia ■■Other A/P ■■North America
■■Africa ■■South America ■■Europe
Source: MOL internal calculation based on Wood Mackenzie
2025*
2024*
* Forecast
Steaming Coal Carriers
The steaming coal carrier division, which is developing its
business mainly in medium- to long-term contracts with
electric power companies in Japan, encountered a generally
adverse environment in fiscal 2016, due to the impacts of the
slump in dry bulker market conditions and shortening trend
of transportation contracts in association with the deregula-
tion of Japan’s electric power industry. However, rigorous
implementation of efficient vessel operations and cost
reductions enabled the division to secure a profit.
In Japan, there is a growing movement to reorganize the
electric power industry and revise the composition of electric
power sources through the separation of power generation
and transmission, which will take place in 2020. Despite
these uncertainties, we believe that there is solid demand for
coal-fired power plants as a stable source of power. We will
therefore work to expand our market share through our
strengths in taking a hands-on approach and proposal-based
sales. Meanwhile, demand for steaming coal is soaring in
emerging countries such as Southeast Asian countries and
India. The division is actively engaged in sales activities tar-
geting this new demand. These have produced concrete
results such as the acquisition in June 2017 of a coal trans-
port contract for Thermal Powertech Corporation India Lim-
ited, an Indian independent power producer.
Looking ahead, the steaming coal carrier division will
utilize its accumulated expertise in safe, reliable transporta-
tion of coal to Japan and firmly capture anticipated growth in
demand for energy transport to emerging countries, foster-
ing cooperation with the tanker division and LNG carrier/
offshore businesses division within the Energy Transport
Business Unit.
40
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
41
Overview of Operations
Product Transport Business Unit
Toshiya Konishi
Managing Executive Officer
Deputy Director General
(Terminals & Logistics)
Naotoshi Omoto
Managing Executive Officer
Deputy Director General
(Car Carriers)
Masahiro Tanabe
Executive Vice President
Director General of Product
Transport Business Unit
Koichi Yashima
Managing Executive Officer
Deputy Director General
(Ferries & Coastal RoRo
Ships)
Akihiko Ono
Senior Managing Executive
Officer
Deputy Director General
(Containerships)
Portfolio
Highly Specialized
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ロジスティクス
関連事業
（海事）
Car Carriers
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Less Specialized
Main Routes
Car Carriers
Fiscal 2016 in Review
In fiscal 2016, the division faced an extremely difficult operat-
ing environment compared with the past few years. Global
auto sales volumes and marine transport volumes were little
changed from the previous year; however, the business
environment was substantially changed by the emergence
of regional differences. Cargo volumes from Japan increased,
reflecting firm auto sales in North America and Europe, which
have a powerful influence over marine transport route orga-
nization. On the other hand, cargo volumes declined sharply
to emerging and oil-producing regions such as the Middle
East, Africa, South America, and Southeast Asia, reflecting an
economic downturn due to slumping crude oil prices. The
drop in cargo volumes has affected cargoes from Europe and
the United States, as well as East Asia. Previously, we were
able to achieve efficient vessel deployment and reduce
ballast voyages by transporting cargoes from Europe and the
United States to the Middle East and Africa on the return
voyage after carrying cargoes from East Asia to Europe and
the United States . However, the decline in return-voyage
cargoes has caused voyage profitability to deteriorate rapidly.
In addition, a decline of more than 10% in overseas exports
from South Korea saw an easing of the overall vessel supply
and demand balance, prompting a fall in the level of freight
rates and causing fiercer competition. In response to these
changes, the car carrier division has taken steps to improve
operation efficiency, such as reducing the number of vessels
deployed and coping with the increase in cargo volumes to
Europe and the United States by chartering space on other
companies’ vessels for one way of the voyage only. Despite
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
these efforts however, profits deteriorated significantly from
the previous fiscal year, also affected by the impact of the
yen’s appreciation in foreign exchange rates.
Fiscal 2017 Initiatives
In fiscal 2017, global auto sales volumes are expected to
increase steadily, albeit with regional differences. On the
assumption that the trade pattern in marine transport will
not change significantly from the previous fiscal year, we aim
to enhance the efficiency of our operational fleet by continu-
ing to reduce fleet size from the current 120 car carriers to
achieve an appropriate scale, mainly through the retirement
of aging vessels. Moreover, in fiscal 2017 and fiscal 2018, we
plan to launch four new vessels capable of efficiently carrying
diverse vehicles such as construction machinery by using
multiple internal decks with adjustable heights. These will
gradually begin to enhance our earning capability.
In recent years, trade patterns for vehicles have been
growing more complex as Japanese automakers expanded
their overseas manufacturing bases and then engaged in
locally optimized mass production to cover demand from
the regions around these bases. The car carrier division will
respond flexibly to diversifying customer needs and trends
by using our network, which is one of the largest in the
world. At the same time, we will examine business develop-
ment in Asia and other regions with potential for major
expansion in vehicle production and imports going forward.
One of the major issues we face is response to environ-
mental issues. Customers are also rapidly becoming more
aware of the environment. We are currently examining devel-
opment of new vessels with LNG-fueled engines, which can
reduce CO2 emissions by as much as 25% compared to con-
ventional diesel engines.
From fiscal 2017, we established the Product Transport
Business Unit, and the car carrier division became one of the
divisions in this business unit, alongside containerships,
terminals and logistics, and ferries and RoRo ships. Previously,
the division shared information with the containerships sales
teams to respond to customer needs. Now we are looking to
extend this further to cooperate with the Port Projects &
Logistics Business Division on the expanding onshore auto-
mobile logistics business. Looking ahead, we will continue
working to provide optimal solutions to customers as “One
MOL” by leveraging synergies between business divisions to
capture new growth opportunities.
Global Car Seaborne Trade (Thousand units)
16,000
12,000
8,000
4,000
0
2011
2012
2013
2014
2015
2016
■ex. Japan ■ex. Korea ■Others
Source: MOL internal calculation based on Trade Statistics of Japan (MOF), etc.
(excluding CKD)
Car Export from Japan by Destination (Thousand units)
6,000
4,500
3,000
1,500
0
2011
2012
2013
2014
2015
2016
■N. America ■Europe ■Middle East ■Oceania ■Asia
■Latin America ■Africa
Of which, Car Export for the Middle East, Central and South America,
and Africa (Thousand units)
800
600
400
200
0
2011
2012
2013
2014
2015
2016
■Middle East ■Central and South America ■Africa
Source: MOL internal calculation based on Trade Statistics of Japan (MOF)
(excluding CKD)
42
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
43
Overview of Operations
Containerships
Fiscal 2016 in Review
The containership business posted a loss of ¥32.8 billion in
fiscal 2016. Regrettably, we were unable to improve the loss
from the previous fiscal year. With freight rates sinking to a
historical low during January to March 2016, our business
operated amid particularly adverse conditions for the first
half of the fiscal year. In the second half, signs of a recovery
trend emerged. Around the start of autumn, the collapse of a
major overseas container shipping company resulted in an
increase in idle containerships and a decrease in capacity
supplied. Due to that incident, customers have been show-
ing an increasing preference for shipping companies with
financial soundness. We also saw stronger growth than usual
in cargo movements before the Chinese New Year at the end
of January 2017.
By route, the Asia-North America route saw firm cargo
movements, but earnings were weighed down throughout
the fiscal year by a sharp decline in annual contract freight
rates, renewals of which coincided with a marked slump in
spot freight rates. On the Asia-Europe route, the declining
trend in cargo movements due to inventory adjustments and
other factors in Europe was halted, and activity began to
resume gradually. However, the upticks in freight rates were
short-lived and the market generally remained at a low level.
On the other hand, the Asia-East Coast of South America
route, which posted a significant loss in fiscal 2015, saw a firm
freight rate market resulting from improvements in the
supply and demand situation.
To improve our earnings, we reduced vessel costs through
the Business Structural Reforms. We also took every measure
possible to increase the yield per container and enhance cost
competitiveness, improved the slot utilization rate by bolster-
ing sales capabilities, and continuously strengthened yield
management to reduce the cost of returning empty contain-
ers. These efforts have produced some results, but these
were outweighed by the impact of lower revenues due to
the decline in freight rates, causing the loss to expand from
fiscal 2015.
Fiscal 2017 Initiatives
In fiscal 2017 and beyond, the issue of excessive vessel
supply is expected to continue due to deliveries of new Ultra-
Large Containerships (ULCSs). However, we expect that the
increase in supply may be slower than initially predicted as
some deliveries appear to have been pushed back. Mean-
while, an expanding trend has emerged in cargo move-
ments. Movements of outbound cargoes from Asia to North
America and Europe are expected to remain firm, and car-
goes on the backhaul from North America and Europe to
Asia have also been growing. This will increase revenue while
simultaneously working directly to reduce the cost of return-
ing empty containers by reducing the imbalance between
outbound and inbound cargoes. In addition, North-South
Consolidated Revenues Breakdown (FY2016)
● North America Trade 45%
26%
● Europe Trade
10%
● North-South Trade
19%
● Intra-Asia Trade
Portfolio
Highly Specialized
Terminals
Logistics
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Containerships
Less Specialized
Global Containership Capacity (Thousand TEU)
20,000
15,000
10,000
5,000
0
2011
2012
2013
2014
2015
2016
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20%
15%
10%
5%
0%
■14,000TEU~ ■11,000~13,999TEU ■8,000~10,999TEU ■5,100~7,999TEU
■4,300~5,099TEU ■~4,299TEU ○ YoY %
Source: MOL internal calculations based on Alphaliner / IHS-Fairplay
routes, including the Asia-East Coast of South America route
which returned to profitability in fiscal 2016, are expected to
see firm cargo movements overall.
Under these conditions, MOL started services under a new
alliance called “THE Alliance” in April 2017. THE Alliance has
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
adopted a “best ship” approach in which the optimal vessels
are deployed for each route among the vessels supplied by
the alliance partners. Furthermore, each partner is scheduled
to launch a series of state-of-the-art ULCSs, by which the
alliance plans to form an extensive network and enhance
direct services to provide competitive, high-frequency ser-
vices. Moreover, in addition to strengthening the hard
aspects of the business, we will also take steps to differenti-
ate our services and improve earnings through the imple-
mentation of various soft aspects such as ongoing efforts to
bolster our sales capabilities and to further deepen our yield
management.
The glut in the vessel supply is expected to take some
time to clear. However, orders for new deliveries are already
on hold, while recent growth in cargo movements is already
leading to tighter demand in some routes. We believe that
signs of improvement are beginning to appear for the con-
tainership industry overall.
In October 2016, MOL announced the integration of its
containership business with two other Japanese shipping
companies. A holding company is to be established in Tokyo
with an operating company established in Singapore, and
the integration is proceeding steadily ahead of the planned
start of operations in April 2018, under the trade name
“Ocean Network Express.” In fiscal 2017, the Company will
strengthen the competitiveness of its own containership
business and strive to hand it over to the new company with
the best possible improvement to earnings.
Terminals & Logistics
In the Terminals & Logistics business, which is expected to
grow and secure relatively stable earnings, our earnings for
fiscal 2016 continued to be in line with expectations. Domes-
tic terminals saw a significant increase in the number of
containers handled, mainly at the Kobe Port terminal, which
is now one of the largest in Japan after having had its berths
extended. In overseas terminals, our key strengths are lead-
ing-edge automated container handling terminals at each of
the largest North American and European ports in terms of
container volume. At our TraPac terminal at the Port of Los
Angeles, an on-dock rail service started operation, connect-
ing the inside of the terminal with the inland railway network
for even greater efficiency. The form of the Company’s termi-
nal business operations is set to change with the transfer of
the overseas terminal business to the new joint company for
integrating container shipping businesses; however, we will
seek further growth opportunities by examining entry into
new business domains, such as terminals that handle cargo
other than containers.
Underlined words are explained in the Glossary on the Contents page.
Asia-North America Container Trade Cargo Movements (Million TEU)
(Excluding Canada cargo)
16
12
8
4
0
2011
2012
2013
2014
2015
2016
■Outbound ■Inbound
Source: Piers/JoC, etc.
Asia-Europe Container Trade Cargo Movements (Million TEU)
(Including Mediterranean cargo)
16
12
8
4
0
2011
2012
2013
2014
2015
2016
■Outbound ■Inbound
Source: Drewry
Following the integration of the containership business,
the MOL brand service in the transport of individual products
will be assumed by the logistics business. We will aggres-
sively invest management resources to strengthen our exist-
ing businesses while aiming to expand through M&As and so
forth in the field of locally tailored logistics services, mainly in
Southeast Asia and the Americas. In March 2017, we
expanded our network in Asia by investing in a major logis-
tics company in Malaysia, where stable growth is anticipated.
In the logistics business, we have been working to expand
our cargoes handled in one-stop services encompassing
containerships, multipurpose cargo ships and RoRo ships
under the unified brand “MOL Project & Heavy Cargo.” In
addition to this project, we will work to maintain and expand
our presence in transport of individual products by further
developing our collaboration between divisions, including
new alliances with existing local partners in various countries.
To this end, we make use of the newly established Product
Transport Business Unit and a system of chief country/
regional representatives.
44
Mitsui O.S.K. Lines
Annual Report 2017
45
Overview of Operations
Ferries & Coastal RoRo Ships
Fiscal 2016 in Review
The division continued to post stable profits in fiscal 2016.
Cargo volumes were firm, as a modal shift from long-distance
land transport by trucks to ocean transport by ferries was
accelerated by a shortage and aging of truck drivers and
enforcement of legitimate labor management in addition to
efforts to reduce environmental load. For the overall business
of the division, we secured the same level of profit as the
previous fiscal year due to the above factors and support
from the fall in bunker fuel prices, despite the impact on
passenger services of the Kumamoto Earthquakes and sailing
cancellations due to typhoons, primarily in Hokkaido. In this
division, we responded to a vehicle deck fire that occurred
on the SUNFLOWER DAISETSU in 2015 by taking steps to
prevent a recurrence. We conducted a comprehensive
review of soft aspects such as formulation of a firefighting
plan and seafarer drill plan for the vehicle deck, and made
further enhancements to our safe operation systems. We are
also looking at hard aspects for strengthening safety man-
agement even further such as installing the latest firefighting
equipment on newly built vessels going forward.
Fiscal 2017 Initiatives
In fiscal 2017, our plan is to continue capturing firm demand
and steadily accumulating stable profits. We are also plan-
ning to launch two new ferries on the Eastern Japan route
this fiscal year. We already launched the new SUNFLOWER
FURANO in May, and plan to launch the new SUNFLOWER
SAPPORO this autumn. The new vessels use contra-rotating
propellers and a hybrid propulsion system to enhance sailing
performance, shortening voyage times and dramatically
increasing customer convenience. At the same time, the
ferries are designed from the passenger’s perspective. Passen-
ger comfort has been greatly improved through measures
such as increasing the ratio of individual cabins to around
50% (from around 30% in current vessels) to provide com-
fortable private spaces, while barrier-free features have also
been increased. In 2018, we plan to launch two more new
ferries on the Western Japan route, and we will engage in
digital marketing based on big data while further promoting
the division’s core strategy of acquiring passengers.
The strength of MOL’s ferries and coastal RoRo ships busi-
ness lies in offering Japan’s most extensive maritime network.
We connect each area of the country, from Hokkaido in the
north to Kagoshima in the south. With a 40-50% share of the
domestic long-distance ferry market in both passengers and
trucks, we serve as an artery for domestic distribution sup-
porting Japan’s regional economies. We will continue working
to expand our diverse services to meet customer needs
while reinforcing safe operations and transportation quality,
thereby strengthening MOL’s brand.
l
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Portfolio
Highly Specialized
V
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Ferries & Coastal
RoRo Ships
Less Specialized
Increased the ratio of individual cabins (SUNFLOWER FURANO has 20
“Premium” class cabins)
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
Associated Businesses
entire vessel. Moreover, in the tugboat and trading busi-
nesses, we will continue entering new fields, mainly those
peripheral to offshore businesses and environmental busi-
nesses, such as specialty tugboats that assist in installing
wind power generation facilities and after-installation main-
tenance operations. Through these measures, we plan to
expand the segment’s contribution to profits.
Portfolio
Highly Specialized
Koichi Yashima
Managing Executive
Officer
V
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Trading
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Daibiru
Corporation
Less Specialized
Fiscal 2016 in Review
This segment comprises MOL’s real estate, cruise ship, tug-
boat, trading and other businesses. In fiscal 2016, the main-
stay real estate business saw a year-on-year increase in profits
at Daibiru Corporation, the core company of the business,
supported by a firm office leasing market, mainly in Tokyo.
Daibiru currently owns and operates 12 office buildings in
Tokyo, 12 in Osaka, and 2 overseas in Vietnam. In fiscal 2015,
initial expenses relating to the completion of the Shin-Daib-
iru Building in Osaka were posted; however in fiscal 2016, the
building contributed to profits with an occupancy ratio of
nearly 100%. Meanwhile, in the cruise ship business, NIPPON
MARU performed well in attracting guests, increasing its
profits year on year, while other businesses such as the tug-
boat and trading businesses also performed solidly overall.
As a result, the associated businesses overall recorded an
increase in profits.
Fiscal 2017 Initiatives
In fiscal 2017, we expect to continue steadily accumulating
highly stable profits through solid business development,
with results on par with the previous fiscal year. At the two
office buildings in Vietnam, Daibiru has been developing
tenant services that suit the preferences of Japanese compa-
nies expanding locally, using knowledge and expertise culti-
vated over years from its domestic operations, and we expect
steady growth in the future. Daibiru is accumulating profits in
line with the targets of its current medium-term manage-
ment plan, “Design 100” Project, which is making steady
progress. Daibiru is also planning to invest in projects over-
seas going forward. In the cruise ship business, we will con-
tinue making efforts to attract more guests. The diligent
efforts to offer high-class service and customer- oriented
hospitality by the crew on the NIPPON MARU are bearing
fruit, and in addition to ordinary cruises, we will enhance our
charter cruise business offerings, where we charter-out an
The new SUNFLOWER FURANO
Shin-Daibiru Building
46
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
47
Financial and Non-Financial Highlights
MOL STEP
MOL ADVANCE
GEAR UP! MOL
RISE 2013
STEER FOR 2020
2007/3
2008/3
2009/3
2010/3
2011/3
2012/3
2013/3
2014/3
2015/3
2016/3
2017/3
Millions of yen
For the year:
Shipping and other revenues
Shipping and other expenses
Selling, general and administrative expenses
Operating profit (loss)
Ordinary profit (loss)
Income (loss) before income taxes and minority interests
Profit (loss) attributable to owners of parent
Free cash flow [(a) + (b)]
Cash flows from operating activities (a)
Cash flows 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:
Profit (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 (%)
¥1,568,435
1,300,038
¥1,945,697
1,544,109
¥1,865,802
1,564,486
¥1,347,965
1,228,479
¥1,543,661
1,328,960
¥1,435,221
1,368,795
¥1,509,194
1,432,014
100,324
168,073
182,488
197,854
120,940
20,369
156,418
(136,049)
68,581
1,639,940
847,660
569,417
620,989
550,764
¥101.20
459.55
20.00
1.04
0.94
33.6
11.7
24.8
19.8
110,303
291,285
302,219
318,202
190,321
23,291
283,359
(260,068)
74,481
1,900,551
1,047,825
601,174
751,652
679,315
¥159.14
567.74
31.00
0.88
0.79
35.8
17.1
30.9
19.5
104,105
197,211
204,511
197,732
126,988
(71,038)
118,984
(190,022)
78,156
1,807,080
1,106,746
702,617
695,022
623,714
¥106.13
521.23
31.00
1.13
0.99
34.5
11.0
19.5
29.2
20,374
10,012
98,547
20,939
24,235
27,776
12,722
(40,055)
93,428
(133,484)
88,366
1,861,312
1,209,176
775,114
735,702
659,507
¥ 10.63
551.70
3.00
1.18
1.05
35.4
1.3
2.0
28.2
18,684
9,707
91,300
123,401
121,622
95,367
58,277
46,970
181,755
(134,785)
77,446
1,868,741
1,257,823
724,259
740,247
660,795
¥ 48.75
552.83
10.00
1.10
1.00
35.4
6.5
8.8
20.5
90,886
(24,460)
(24,320)
(33,516)
(26,009)
(129,298)
5,014
(134,313)
85,624
1,946,162
1,293,803
869,619
717,909
637,422
¥ (21.76)
533.27
5.00
1.36
1.23
32.8
(1.3)
(4.0)
—
92,946
(15,766)
(28,568)
(137,939)
(178,847)
(25,285)
78,956
(104,241)
94,685
2,164,611
1,303,967
1,046,865
619,493
535,423
¥(149.57)
447.76
—
1.96
1.58
24.7
(1.4)
(30.5)
—
20,053
19,435
19,053
9,438
9,431
9,465
¥1,729,452
¥1,817,070
¥1,712,223
¥1,504,374
1,587,902
100,458
41,092
54,986
71,710
57,394
(25,615)
94,256
(119,871)
83,984
2,364,695
1,379,245
1,094,081
783,549
679,160
¥ 47.99
567.90
5.00
1.61
1.35
28.7
2.4
9.5
10.4
18,860
10,289
1,683,795
116,025
17,250
51,330
58,332
42,356
(66,656)
92,495
(159,151)
87,804
2,624,050
1,498,028
1,183,401
892,435
782,557
¥ 35.42
654.26
7.00
1.51
1.35
29.8
2.1
5.8
19.8
18,803
10,508
1,594,569
115,330
2,324
36,269
(154,385)
(170,448)
182,509
209,190
(26,681)
92,772
2,219,587
1,376,432
1,044,980
646,925
540,951
¥(142.50)
452.28
5.00
1.93
1.64
24.4
1.5
(25.8)
—
18,676
10,500
1,388,265
113,551
2,558
25,426
23,303
5,257
(56,318)
17,624
(73,942)
87,191
2,217,529
1,323,665
1,122,400
683,621
571,983
Yen
¥ 4.40
478.23
2.00
1.96
1.64
25.8
1.1
0.9
45.5
18,204
10,794
CO2 emissions of MOL fleet (Thousand tons)
18,392
20,065
Number of MOL Group employees
(the parent company and consolidated subsidiaries)
8,621
9,626
* Ordinary profit (loss) / Average total assets at the beginning and the end of the fiscal year
48
Mitsui O.S.K. Lines
Annual Report 2017
49
Key Indicators
Shipping and Other Revenues/Ordinary
Profit (Loss)
Total Assets/Net Assets
Ordinary Profit (Loss) by Segment
Interest-Bearing Debt / Net Interest-
Bearing Debt / Shareholders’ Equity
Gearing Ratio / Net Gearing Ratio /
Equity Ratio
FY2016
Shipping and Other Revenues ¥1,504.3 billion
¥25.4 billion
Ordinary Profit
FY2016
Total Assets
Net Assets
¥2,217.5 billion
¥683.6 billion
(¥ billions)
(¥ billions)
FY2016
Bulkships
Containerships
Other Segments, etc.
(¥ billions)
¥39.0 billion
¥(32.8) billion
¥19.2 billion
FY2016
Interest-Bearing Debt
Net Interest-Bearing Debt*
Shareholders’ Equity**
(¥ billions)
¥1,122.4 billion
¥935.5 billion
¥571.9 billion
FY2016
Gearing Ratio
Net Gearing Ratio
Equity Ratio
2,000
1,500
1,000
500
0
12/3
13/3
14/3
15/3
16/3
17/3
200
150
100
50
0
−50
3,000
2,400
1,800
1,200
600
0
1,000
800
600
400
200
160
120
80
40
0
12/3
13/3
14/3
15/3
16/3
17/3
0
–40
12/3
13/3
14/3
15/3
16/3
17/3
Shipping and other revenues (left scale)
Ordinary profit (loss) (right scale)
Total assets (left scale)
Net assets (right scale)
Bulkships Containerships
Other segments, etc.
Ordinary profit decreased ¥10.8 billion, mainly due
to a sharp downturn in the tanker market, as well
as the yen’s appreciation and high fuel prices, plus
worsening profitability in the car carrier business
due to changes in trade patterns. However, dry
bulkers achieved a return to profitability due to the
positive effects of the Business Structural Reforms.
Total assets as of March 31, 2017 were mostly
unchanged from a year earlier, as an increase in
cash and cash equivalents was largely offset by a
decrease in vessels. Net assets increased ¥36.6
billion from a year earlier, primarily due to an
increase in unrealized gains on hedging
derivatives, net of tax.
In the bulkships segment, ordinary profit
decreased year on year as the decrease in profits in
the tanker division and car carriers significantly
exceeded the improvement in profits in the dry
bulker division. The containerships segment
posted a larger ordinary loss. In other segments,
etc., ordinary profit increased due to profit growth
in the strong-performing real estate business.
1,200
1,000
800
600
400
200
0
13/3
12/3
14/3
Interest-bearing debt Net interest-bearing debt
Shareholders’ equity
16/3
17/3
15/3
* Interest-bearing debt – cash & cash equivalents
** “Shareholders’ equity” in this section comprises the total
of owners’ equity and accumulated other comprehensive
income (loss).
Interest-bearing debt increased ¥77.4 billion to
¥1,122.4 billion due to increases in short- and
long-term bank loans. Meanwhile, shareholders’
equity increased ¥31.0 billion to ¥571.9 billion due
to an increase in unrealized gains on hedging
derivatives, net of tax.
1.96
1.64
25.8%
(%)
40
30
20
10
0
2.00
1.50
1.00
0.50
0
12/3
13/3
14/3
15/3
16/3
17/3
Gearing ratio (left scale) Net gearing ratio (left scale)
Equity ratio (right scale)
The gearing ratio worsened 0.03 of a point and the
equity ratio improved 1.4 points, reflecting the ¥77.4
billion increase in interest-bearing debt, the ¥2.0
billion decrease in total assets, and the ¥31.0 billion
increase in shareholders’ equity.
Credit Ratings (As of June 2017)
Type of rating
Short-term debt
rating (CP)
Long-term senior
debt (issuer) rating
Long-term debt
rating
Issuer rating
Short-term debt
rating (CP)
Long-term debt
rating
Corporate family
rating
Rating
J–1
A–
A–
BBB
a–2
BBB
Ba1
JCR
R&I
Moody’s
R&I
JCR
Moodyʼs
A–
BBB
Ba1
MOL has maintained its current ratings, reflecting
steady, albeit gradual, improvement in the overall
marine transport market and in MOL’s business
performance. Going forward, MOL will continue
working to bolster its profitability and improve its
financial standing, in an effort to enhance its
ratings.
ROA (based on Ordinary Profit)/ROE
Capital Expenditure
CO2 Emissions of MOL Fleet
1.1 %
0.9 %
FY2016
Capital Expenditure
¥126.0 billion
FY2016
CO2 Emissions of MOL Fleet 18,204 thousand tons
Net Income (Loss)* per Share/Cash Dividends
Applicable to the Year/Dividend Payout Ratio
Cash Flows
FY2016
Net Income (Loss)* per Share
Cash Dividends Applicable to the Year
Dividend Payout Ratio
(Yen)
FY2016
Cash Flows from Operating Activities ¥17.6 billion
Cash Flows from Investing Activities ¥(73.9) billion
¥4.40
¥2.00
45.5%
(%)
(¥ billions)
150
100
50
0
–50
–100
–150
12/3
13/3
14/3
15/3
16/3
17/3
60
40
20
0
250
200
150
100
50
0
–50
–100
–150
–200
–250
12/3
13/3
14/3
15/3
16/3
17/3
Net income (loss)* per share (left scale)
Cash dividends applicable to the year (left scale)
Dividend payout ratio (right scale)
Cash flows from operating activities
Cash flows from investing activities
Free cash flow
MOL restored net income*, achieving a year-on-
year improvement of ¥175.7 billion from the net loss
posted in the previous fiscal year, when expenses
related to the Business Structural Reforms were
recorded. MOL paid dividends for the fiscal year of
¥2 per share, a year-on-year decrease of ¥3 per
share. (The year-end dividends were forgone.)
* Profit (loss) attributable to owners of parent
50
Mitsui O.S.K. Lines
Net cash provided by operating activities was
down ¥191.5 billion year on year, while net cash
used in investing activities was up ¥47.2 billion,
resulting in negative free cash flow.
FY2016
ROA
ROE
(%)
20
10
0
–10
–20
–30
–40
ROA
ROE
12/3
13/3
14/3
15/3
16/3
17/3
ROA decreased year on year, as ordinary profit
declined while total assets remained flat. ROE
improved dramatically year on year as MOL
restored net income* in the absence of an
extraordinary loss recorded in the previous fiscal
year in connection with the Business Structural
Reforms.
* Profit (loss) attributable to owners of parent
(¥ billions)
(thousand tons)
200
150
100
50
0
12/3
13/3
14/3
15/3
16/3
17/3
20,000
15,000
10,000
5,000
0
12/3
13/3
14/3
15/3
16/3
17/3
Capital expenditure represented here is the net
amount calculated by deducting proceeds from
the sale of vessels when delivered from “Tangible/
intangible fixed 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.
Annual Report 2017
51
Message from the Officer in Charge of Finance
Takashi Maruyama
Managing Executive Officer
Investment Plans and Outlook for Cash Flows
Under our new management plan, we are projecting total
cash flow from investing activities to reach a net outflow of
around ¥400 billion over the next three years (excluding
investment in the containership business integration). Of this,
¥250 billion is planned for existing projects and ¥150 billion
for new projects. The new projects will be further selected
with greater scrutiny, giving consideration to the status of
operating cash flow. In our medium-term management plans
of the past, the investment plan amount was based on the
investment that would be decided in the three years covered
by the plan. However, the figures in the new plan are based
on the amounts actually to be paid and reflected in the cash
flow statements for the period. This concept was adopted in
line with “pursue business models focused on cash flow” as
stated in the new plan. To achieve Innovation of the Business
Portfolio, we will concentrate investment in businesses that
can generate relatively stable profits and where the Com-
pany can leverage its strengths. Those businesses include
chemical tankers, methanol tankers, terminals, logistics, and
ferries and coastal RoRo ships, in addition to LNG carriers and
offshore businesses, which have also been main investment
targets in the past few years.
FY2017–2019 Investment Cash Flows (Three-Year Total) Excluding invest in the containership joint venture
Existing projects
New projects
(to be selected with greater scrutiny)
Total
約2,500億円
¥250 billion
約1,500億円
¥150 billion
約4,000億円
¥400 billion
Chemical/Methanol Tankers
LNG Carriers &
Offshore Businesses
Ferries/Associated Businesses/
Terminals/Logistics
Other Vessels
12%
39%
24%
25%
Chemical/Methanol Tankers
LNG Carriers &
Offshore Businesses
Ferries/Associated Businesses/
Terminals/Logistics
Other Vessels
Environment/IT
19%
32%
15%
4%
30%
Chemical/Methanol Tankers
LNG Carriers &
Offshore Businesses
Ferries/Associated Businesses/
Terminals/Logistics
Other Vessels
Environment/IT
15%
36%
21%
17%
11%
Financial Foundation
Due to the slump in profit levels in the recent few years, the
Company’s equity ratio deteriorated to around 26% and its
gearing ratio to nearly 2.0 at the end of fiscal 2016. As we are
expecting negative free cash flow for the next two years, the
gearing ratio is unlikely to improve; however, we will strive to
prevent it from deteriorating further by pursuing a business
model that can mitigate cash outflows, such as utilizing
chartered-in and second-hand vessels.
As the synergy effect of the containership business inte-
gration emerges and our highly stable profits expand, we
believe that our ordinary profit, ROE, and gearing ratio tar-
gets, which are projected in medium-term levels, will be well
within reach. As we accumulate profits, we will restore our
equity.
Medium-Term Profit Levels and Key Financial Indicators
Ordinary profit
ROE
Gearing ratio
Projected medium-term levels
¥80.0–100.0 billion
8–12%
2.0 or less
Meanwhile, net cash provided by operating activities for
fiscal 2017 and 2018 is not expected to cover cash flows from
investing activities, resulting in negative free cash flow over
these two years. This is a tough situation, but we believe that
we need to invest around ¥100 billion each year to maintain
our business scale and achieve further growth. We also need
to achieve positive free cash flow from fiscal 2019 onward by
lifting our profit levels through the current strategies while at
the same time rigorously selecting investments necessary for
ensuring stable profits in the future. An internal hurdle rate
for investments has been set with profit margins that will
enable an envisaged medium-term ROE of 8 to 12%. We will
also focus on cash flow generation capability when making
investment decisions.
Fund Procurement
We don’t anticipate any issues with procuring funds for capi-
tal investment through borrowings from financial institu-
tions. We have established good relationships with financial
institutions and our investments over the next three years
will be mainly in blue chip projects that are backed by stable
revenues over the long term.
In addition, in October 2016, we undertook a large-scale
fund procurement in the form of hybrid loan*. The hybrid loan
by its nature has helped to shore up MOL’s financial strength,
which had been influenced by implementing the Business
Structural Reforms. The loan can also be effectively utilized to
fund meticulously selected investments. As we prepare to
take bold steps under the new management plan to return
to a growth trajectory, we have succeeded in conducting a
large-scale fund procurement with favorable conditions.
* Long-term bank loans that are treated as borrowings in accounting terms,
but a portion of which are treated as capital surplus by financial institutions
and ratings agencies assessing the Company’s debt.
Highly Stable Profits and Other Variable Profits (Losses)
Highly Stable Profits + Other Variable Profits (Losses) = Ordinary Profit
Highly stable profits: Dry bulkers/Tankers (medium- to long-term contracts), LNG carriers/Offshore businesses, and Associated businesses
Other variable profits (losses): Dry bulkers/Tankers (spot operations), Car carriers, Containerships, Terminals & Logistics, and Ferries/Coastal RoRo ships
Roadmap to Improving Other Variable Profits (Losses)
5.0
55.0
10.0
55.0
55.0
FY2017: Losses will continue
Containership profitability has yet to improve significantly.
Assume a sluggish recovery in the dry bulker market.
FY2018: Get closer to the breakeven point
Synergies from the integration of the containership business will be partly realized.
Expand the scale of operation in the chemical tanker and logistics businesses.
FY2019: Restore profitability of several tens of billions of yen
Significantly improve profitability in the containership business.
Increase profits in the chemical tanker, logistics and ferry businesses.
The dry bulker market will likely recover to some extent.
2017
¥110/$
2018
¥110/$
2019
¥110/$
Highly stable profits (existing) Highly stable profits (stretch target)
Other variable profits (losses)
(¥ billion)
80.0
60.0
40.0
20.0
0
–20.0
–40.0
52
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
53
Message from the Officer in Charge of Finance
Impact of Exchange Rates and Bunker Prices
on Financial Results
As for exchange rates, our financial 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 fiscal
2017, we project that each ¥1-per-dollar change against the
assumed ¥110-to-U.S. dollar yearly average exchange rate
will have an impact of approximately ¥700 million in ordinary
profit. (If the yen weakens, it will improve profitability.)
Turning to bunker prices, the yearly average price was
assumed to be US$350 per metric ton, and we calculated at
the beginning of the fiscal year that every dollar deviation
would have an impact of ¥170 million. (If the price falls, it will
improve profitability.) However, MOL will continue to strate-
gically utilize hedging in order to control the effect of fluctu-
ating bunker prices going forward. With the progress made
in placing hedges, the degree of impact from fluctuating
bunker prices will become smaller.
Impact of Exchange Rate
Fluctuations (Model)
Impact=1+2
Revenues
Expenses
Impact of Bunker Price
Fluctuations (Model)
I
m
p
a
c
t
Profit
2
Exposure
U.S. Dollar Revenue
U.S. Dollar Expense
1
Japanese Yen
Expense
Japanese Yen Revenue
T
o
t
a
l
C
o
n
s
u
m
p
t
i
o
n
Hedged Portion
Recoverable
by Surcharge, etc.
Status of Credit Ratings
MOL’s credit ratings are still under downward pressure,
reflecting the impact on its financial standing due to the
Business Structural Reforms and the protracted severe busi-
ness environment. We are exchanging information more
closely with the credit rating agencies. With the aim of recov-
ering our credit ratings going forward, I think we need to
steadily carry out the new management plan and improve
our profit level. We also need to precisely explain our timeline
and course to implement our growth strategies and improve
our financial standing.
Under the new management plan, we are concentrating
our investment on businesses that can generate stable prof-
its based on sound long-term transport contracts with highly
credible customers, and on businesses where we can lever-
age the Company’s strengths. The ratings agencies have
evaluated these investments as contributing to further
growth and the accumulation of long-term highly stable
profits.
Change in Reporting Segments
From fiscal 2017, we have changed our reporting segments.
This change is in line with a newly established structure
comprising three business units through the establishment
of the Product Transport Business Unit in fiscal 2017, adding
to the Dry Bulk Business Unit and Energy Transport Business
Unit established in fiscal 2016. The change was also intended
to help shareholders and investors acquire a deeper and
more accurate understanding of the Company’s manage-
ment structure. As the officer responsible for finance,
accounting and IR, I will work to engage in constructive
dialogue with shareholders and investors through accurate,
fair, and prompt disclosure.
Shareholders’ Equity / Interest-Bearing Debt (¥ billion)
Gearing Ratio* / Equity Ratio
1,122.4
1,203.2
1,044.9
540.9
571.9
567.0
1,400
1,050
700
350
2.50
2.00
1.50
1.93
24%
1.96
26%
0
FY2015
(Result)
Shareholders’ equity Interest-bearing debt
FY2016
(Result)
FY2017
(Forecast)
1.00
FY2015
(Result)
Gearing ratio (left scale) Equity ratio (right scale)
* Interest-bearing debt / Shareholders’ equity
FY2016
(Result)
Management Foundation
Providing MOL’s Forward Thrust
56
Board of Directors, Audit & Supervisory Board Members
and Executive Officers
58 Dialogue between Outside Directors
60 Corporate Governance
64 Safe Operation
67 Risk Management
69 Corporate Social Responsibility
(%)
40
30
20
2.12
25%
FY2017
(Forecast)
54
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
55
Board of Directors, Audit & Supervisory Board Members
and Executive Officers
(At the end of June 2017)
Board of Directors
Audit & Supervisory Board Members
Takashi Nakashima Born 1959
Audit & Supervisory Board Member
Kenji Jitsu
Audit & Supervisory Board Member
Born 1960
Apr. 1982 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2009 General Manager of Research Office
Jun. 2011 General Manager of General Affairs
Division
Jun. 2015 Audit & Supervisory Board Member of
Mitsui O.S.K. Lines, Ltd. (current)
Apr. 1984 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2009 General Manager of CSR and Environment
Office, Corporate Planning Division
Jun. 2013 General Manager of Investor Relations
Office
Jun. 2015 General Manager of Accounting Division
Jun. 2017 Audit & Supervisory Board Member of
Mitsui O.S.K. Lines, Ltd. (current)
Koichi Muto
Representative Director
Born 1953
Junichiro Ikeda
Representative Director
Born 1956
Masahiro Tanabe
Representative Director
Born 1957
Apr. 1976 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2002 General Manager of Bulk Carrier Division
Jan. 2003 General Manager of Corporate Planning Division
Jun. 2004 Executive Officer, General Manager of Corporate Planning Division
Jun. 2006 Managing Executive Officer
Jun. 2007 Director, Managing Executive Officer
Jun. 2008 Director, Senior Managing Executive Officer
Jun. 2010 Representative Director, President and Executive Officer
Jun. 2015 Representative Director, Chairman, Executive Officer (current)
Apr. 1979 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2004 General Manager of Human Resources Division
Jun. 2007 General Manager of Liner Division
Jun. 2008 Executive Officer
Jun. 2010 Managing Executive Officer
Jun. 2013 Director, Senior Managing Executive Officer
Jun. 2015 Representative Director, President, Chief Executive Officer
(current)
Apr. 1979 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2003 General Manager of Logistics Business Division
Jun. 2008 Executive Officer, Managing Director of MOL (Europe) B.V.
Jun. 2011 Managing Executive Officer
Jun. 2013 Director, Managing Executive Officer
Jun. 2015 Director, Senior Managing Executive Officer
Apr. 2017 Representative Director, Executive Vice President, Executive Officer
(current)
Independent Officers
Hiroyuki Itami
Outside Audit & Supervisory Board
Member
Jun. 2010 Outside Corporate Auditor of JFE Holdings,
Inc. (current)
Jun. 2011 Audit & Supervisory Board Member of
Mitsui O.S.K. Lines, Ltd. (current)
Shizuo Takahashi
Director
Born 1959
Takeshi Hashimoto
Director
Born 1957
Takashi Maruyama
Director
Born 1959
Apr. 1981 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2006 General Manager of Corporate Planning Division
Jun. 2008 Executive Officer, General Manager of Corporate Planning Division
Jun. 2010 Executive Officer
Jun. 2011 Managing Executive Officer
Jun. 2014 Director, Managing Executive Officer
Jun. 2015 Director, Senior Managing Executive Officer (current)
Apr. 1982 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2008 General Manager of LNG Carrier Division
Jun. 2009 Executive Officer, General Manager of LNG Carrier Division
Jun. 2011 Executive Officer
Jun. 2012 Managing Executive Officer
Jun. 2015 Director, Managing Executive Officer
Apr. 2016 Director, Senior Managing Executive Officer (current)
Apr. 1983 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2010 General Manager of Finance Division
Jun. 2011 Executive Officer, General Manager of Finance Division
Jun. 2015 Managing Executive Officer
Jun. 2017 Director, Managing Executive Officer (current)
Independent Officers
Masayuki Matsushima
Outside Director
Jun. 2011 Director of Mitsui O.S.K. Lines, Ltd. (current)
Jun. 2011 Outside Director of Mitsui Fudosan Co., Ltd. (current)
Nov. 2012 Chairman of NWIC Co., Ltd. (current)
Sept. 2014 Senior Advisor of Integral Corporation (current)
Jun. 2016 Outside Director of JGC Corporation (current)
Hideto Fujii
Outside Director
Jun. 2015 Adviser of Sumitomo Corporation (current)
Jun. 2016 Director of Mitsui O.S.K. Lines, Ltd. (current)
Etsuko Katsu
Outside Director
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)
Nov. 2016 Administrative Board Member of International Association of
Universities (current)
Executive Officers
Koichi Muto
Chairman, Executive Officer
Junichiro Ikeda
President, Chief Executive Officer
Masahiro Tanabe
Executive Vice President, Executive Officer
(Assistant to President,
Chief Compliance Officer,
Product Transport Business Unit,
Liner Division, Port Projects & Logistics
Business Division, New Business
Creation and Group Business Division,
Internal Audit Office, General Affairs
Division)
Shizuo Takahashi
Senior Managing Executive Officer
(Chief Information Officer,
Safety Operations Headquarters,
Secretaries Office, Corporate Planning
Division, Smart Shipping Office, MOL
Information Systems, Ltd.)
Takeshi Hashimoto
Senior Managing Executive Officer
(Energy Transport Business Unit,
Steaming Coal Carrier Division, LNG
Carrier Division, Energy Business
Strategy Office, Bunker Business Office,
Offshore Project Division)
Akihiko Ono
Senior Managing Executive Officer
(Product Transport Business Unit, Liner
Division)
Akio Mitsuta
Senior Managing Executive Officer
(Energy Transport Business Unit,
Tanker Division, Tanker Safety
Management Office,
Bunker Business Office)
Toshiya Konishi
Managing Executive Officer
(Product Transport Business Unit,
Europe, Africa and the Americas Area,
Port Projects & Logistics Business
Division, Chief Executive Representative
for Americas)
Takashi Maruyama
Managing Executive Officer
(Finance Division, Accounting Division,
Investor Relations Office)
Naotoshi Omoto
Managing Executive Officer
(Product Transport Business Unit,
Car Carrier Division)
Yoshikazu Kawagoe
Managing Executive Officer
(Technical Division,
Smart Shipping Office)
Koichi Yashima
Managing Executive Officer
(Product Transport Business Unit,
Kansai Area, Human Resources Division,
New Business Creation and Group
Business Division)
Mitsujiro Akasaka
Managing Executive Officer
(Asia, Middle East and Oceania Area,
Chief Executive Representative for Asia,
Middle East and Oceania,
Managing Director of MOL (Asia
Oceania) Pte. Ltd.)
Toshiaki Tanaka
Managing Executive Officer
(Dry Bulk Business Unit,
Dry Bulk Business Planning &
Co-ordination Office,
Dry Bulk Carrier Division (A),
Dry Bulk Carrier Division (B),
Dry Bulk Carrier Supervising Office)
Masanori Kato
Managing Executive Officer
(Safety Operations Headquarters,
Human Resources Division, Marine
Safety Division,
Smart Shipping Office)
Kenta Matsuzaka
Executive Officer
(Energy Transport Business Unit,
LNG Carrier Division, LNG Safety
Management Office,
Offshore Project Division)
Masanori Kobayashi
Executive Officer
(Safety Operations Headquarters,
Dry Bulk Carrier Supervising Office,
Tanker Safety Management Office,
LNG Safety Management Office,
Marine Safety Division,
Smart Shipping Office)
Hideki Yamashita
Outside Audit & Supervisory Board
Member
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 Corp. (current)
Jun. 2014 Audit & Supervisory Board Member of
Mitsui O.S.K. Lines, Ltd. (current)
Yutaka Hinooka
Executive Officer
(General Manager of Liner Division)
Masato Koike
Executive Officer
(General Manager of Tanker Division)
Kayo Ichikawa
Executive Officer
(Corporate Communication,
Diversity Promotion,
Work Efficiency Improvement, Public
Relations Office,
Corporate Planning Division,
Human Resources Division, Investor
Relations Office)
Hikaru Isegawa
Executive Officer
(New Business Creation and Group
Business Division)
Toshinobu Shinoda
Executive Officer
(Finance Division)
Hirofumi Kuwata
Executive Officer
(Dry Bulk Business Unit,
Energy Transport Business Unit,
Steaming Coal Carrier Division,
Dry Bulk Carrier Division (B))
Nobuo Shiotsu
Executive Officer
(Dry Bulk Carrier Division (A))
56
Mitsui O.S.K. Lines
Annual Report 2017
57
Dialogue between Outside Directors
Hideto Fujii
Outside Director
Etsuko Katsu
Outside Director
“We made our active and open exchange of opinions in the ‘Deliberation on
Corporate Strategy and Vision’”
Theme: Impressions of MOL and evaluation of the “Deliberation on Corporate Strategy and Vision” initiative
Fujii The impression I have of MOL’s Executive Committee and its discussions is that people seem to feel free to speak their mind.
I also feel that MOL maintains great transparency in explaining matters to stakeholders. Furthermore, the Company seems to have
been working sincerely on its corporate citizenship activities.
Katsu My initial impression of MOL was that there are many upstanding individuals in the Company. As a global marine trans-
port organization, their corporate culture is forward-thinking, open, and proactive. I also was impressed by their very flexible
approach to strategic issues.
Fujii When I took part in MOL’s unique “Deliberation on Corporate Strategy and Vision” initiative, I felt that the greater the uncer-
tainty in the business environment going forward, the more important it is for the Company to focus on its comprehensive strate-
gies for each business. It is necessary for the Company to hold thorough discussions on fundamental issues such as which
businesses to prioritize when it strives to differentiate itself from rivals, and what strategies should be adopted in divisions such as
dry bulkers or tankers. I think the frank and open discussions that take place in the “Deliberation on Corporate Strategy and Vision”
are ideal for this purpose.
I hold the new management plan, which adopts a rolling plan format, in very high regard. At a time of such global eco-
Katsu
nomic and political uncertainty, a company should not cling to plans which have been decided simply but should be flexible
enough to respond as appropriate in its management plan. I think MOL’s creation of this kind of structure is highly commendable.
In particular, after the critical decision to integrate its containership business with those of two other companies, it is now more
important to decide which business to designate as the cornerstone of MOL operations in the medium to long term. By discussing
these questions in the “Deliberation on Corporate Strategy and Vision,” all directors can share their vision on which businesses are
most important.
“By offering a critical, third-party perspective, I focus on the process by which
MOL maximizes its corporate value.”
Theme: Outside directors’ perspectives on the important issues deliberated during fiscal 2016
Fujii For me, the most important management issue was the adoption of a new format for management planning—the selec-
tion of a ten-year time axis on which to base long-term plans. Now the question is how to earn the trust of all stakeholders, and
help them to understand that these plans are appropriate. It is also essential that MOL follow through and implement the plans
successfully, and deliver results. I expressed my opinion on this issue in the discussions, and I think the other directors shared my
views. The new management plan has a clear overall vision and includes strategies that need to be implemented.
Katsu Several important decisions were discussed in fiscal 2016, including not just
the new management plan but also the integration of the containership business and
large-scale investment decisions. As outside directors, I believe that our role is to cri-
tique such issues from an unbiased perspective. Of course, it is important to ensure
that our corporate value is maximized in a way that is acceptable to shareholders, but
we also focused on the Company’s process of creating corporate value in terms of
environmental and social responsibilities. Outside directors also have to play an
important supervisory role to ensure that the management process addresses issues of
compliance, risk management and enhancement of its financial ground.
“We need swift decision-making in response to the changing situation.”
“It is essential that human resource development and employee commit-
ments be brought into line with global standards.”
Theme: What we expect for MOL in the execution of its new management plan
In a time of global economic and political uncertainty, it is essential that MOL
Fujii
constantly collect and analyze information, not only to monitor its own position, but to
respond flexibly and make adjustments whenever necessary. In order to achieve its
overarching goal of boosting corporate value, I think the most important point is to
adopt flexible means of decision-making to allow swift reaction to changes in condi-
tions or methods.
Katsu For MOL to grow further in the future, I think that human resource develop-
ment will be very important. MOL is planning to open a maritime academy in the
Philippines, and while this kind of global personnel training is important for enhancing corporate value, it is also essential to bring
employee commitments and human resource systems into line with global standards. In addition, the Company needs to enhance
its financial ground and accumulate the capacity necessary to assume business risks going forward. MOL should continue to focus
carefully on the allocation of resources, taking aggressive or defensive stances as conditions dictate, while maintaining an ade-
quate capacity to take advantage of investment opportunities as they arise. This will become increasingly important going
forward.
MOL’s “Deliberation on Corporate Strategy and Vision”
At MOL, three hours are set aside for board meetings, 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.
List of Agenda Items for “Deliberation on Corporate Strategy and Vision”
Fiscal 2015
Fiscal 2016
April, May, July
MOL’s corporate governance
April
Strategy for the car carrier division
Agenda
Agenda
September, October The advancement of global personnel
September
December
Portfolio of the tanker business and busi-
ness policy going forward
January, February
The future of containership business
March
Strategy for the LNG carriers and offshore
businesses
January
February
Discussion on formulation of the next medium-
term management plan
Outline proposal for the next medium-term
management plan
Outline proposal for the next medium-term
management plan (continued)
58
Mitsui O.S.K. Lines
Annual Report 2017
59
Corporate Governance
System of governance
Company with an
audit &
supervisory board
Total directors
9
Outside directors (ratio)
3 (1/3)
Independent officers
(directors and Audit &
Supervisory Board Members)
5
Number of Board Meetings
held in fiscal 2016
11
Total Audit & Supervisory
Board Members
4
Outside Audit & Supervisory
Board Members (ratio)
2 (1/2)
Attendance rate of outside
directors for Board Meetings
in fiscal 2016
100%
Term of directors
1 year
Stock option system
Yes
Retirement benefit system
No
Anti-takeover measures
No
Compliance rules
Yes
External compliance advisory
service desk
Yes
HISTORY
2000
Management organization reform:
1. Introduced a system of executive officers
2. Established an Executive Committee
3. Reformed the Board of Directors (redefined its
duties as the highest-ranking decision-making
body and the supervision of business activities)
and reduced membership from 28 to 12
4. Elected two outside directors
5. Established the Corporate Visionary Meeting
Established the IR Office
Started holding the Annual General Shareholders’
Meeting on a day relatively free of other
shareholders’ meetings
2001
Established the Compliance Policy and
Compliance Committee
2011
Revised MOL’s Compliance Policy and Rules of
Conduct
2014
Revised the Compliance Policy and established
a chief compliance officer (CCO)
2015
Established the Nomination Advisory
Committee and Remuneration Advisory
Committee (chaired by outside directors)
2017
Established independence determination
standards for outside directors and Audit &
Supervisory Board Members
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 firmly 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 officer system. We are
reaping the benefits 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 profits 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 officer. 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.
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
decision-making body, discusses and decides on basic policies
and the most important matters connected with MOL Group
management.
The Board of Directors consists of six (6) inside directors and
three (3) outside directors who have no stake in the Company.
Outside directors confirm the appropriateness of management
decisions and check the management of business operations
from an independent position based on their individual experi-
ence and knowledge, while playing a major role in revitalizing
the Board of Directors by expressing helpful insights regarding
overall management. We also provide a system to support out-
side directors in such ways as providing them with preliminarily
explanations of proposals before Board of Directors meetings
and reports on important matters related to business operations
on a case-by-case basis. In addition, we also hold the “Delibera-
tion on Corporate Strategy and Vision”, in which opinions are
freely exchanged about management strategies, our long-term
vision, and overall management, with both outside directors and
outside Audit & Supervisory Board members.
Nomination Advisory Committee and Remuneration
Advisory Committee
MOL established the Nomination Advisory Committee and the
Remuneration Advisory Committee as discretionary organiza-
tions under the Board of Directors. Both committees are chaired
by an outside director, consist of three outside directors and two
internal directors, and aim to enhance outside directors’ supervi-
sion of directors responsible for business execution. The commit-
tees conduct investigations from an objective standpoint
emphasizing the perspective of shareholders, the Nomination
Advisory Committee regarding the selection of directors and
executive officers and the Remuneration Advisory Committee
regarding the status of remuneration of directors, including
incentives for long-term improvement of corporate value. The
Board of Directors respects the content of reports from both
committees, and uses it in formulating necessary resolutions.
Executive Committee and Committees
Within the scope of the basic policy approved by the Board of
Directors, MOL transfers significant authority to implement
projects to the Executive Committee. This helps to speed up
decision-making on individual projects by the executive officers
supervised by the president.
MOL has also established the following sub-committees of
the Executive Committee to study and discuss especially import-
ant 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 finance, business, and academia in
Corporate Governance Organization (as of June 27, 2017)
Japan. MOL has adjudged that all three individuals are indepen-
dent and have neutral positions with no conflicts of interest with
the Company. The outside directors draw on their individual
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
Board Member of Japan-United
States Educational Commission
Vice President of Center for Entrance
Examination Standardization
Administrative Board Member of
International Association of
Universities
(As of June 30, 2017)
MOL adjudged that he has a neutral position with
no conflicts of interest with the Company as well as
extensive, wide-ranging experience in and
knowledge of finance 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 conflicts 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 conflicts 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 finance. She will thus
be able to offer advice on the Company’s manage-
ment and business execution from an independent
perspective and contribute to the maintenance and
reinforcement of corporate governance.
Elect and appoint/dismiss
Board of Directors [11] Outside directors: 3 Internal directors: 6 Total: 9
Elect and appoint/supervise
General Shareholders’ Meeting
Business audit/
accounting audit
Accounting audit
Audit & Supervisory Board Outside members: 2 Internal members: 2 Total: 4
Elect and appoint/dismiss
Elect and appoint/
dismiss
Audit & Supervisory Board Office
Accounting Auditors
Submit basic management policies and
other issues for discussion
Nomination Advisory Committee
Outside directors: 3 Internal directors: 2 Total: 5
Remuneration Advisory Committee Outside directors: 3 Internal directors: 2 Total: 5
Chaired by outside directors
Executive Committee [50]
Internal directors and executive officers: 9
Submit to executive Committee after preliminary deliberations
Instruction
Provide direction
on important
business issues
Committees under the Executive Committee
STEER Committee, Budget Committee, Investment and Finance Committee, Operational Safety Committee, CSR Committee,
Compliance Committee, One MOL Business Strategy Committee, SOx 2020 Regulation Response Committee
Submit for discussion and/or 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 and Executive Committee during fiscal 2016.
Business audit/
accounting audit
Audit plan/
audit report
Communicate and coordinate
with Audit & Supervisory Board Members
and the Accounting Auditors
Internal Audit Office
60
Mitsui O.S.K. Lines
Annual Report 2017
61
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 conflicts 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 Office 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
Reason for appointment
Position
Hiroyuki
Itami
Outside Corporate Auditor,
JFE Holdings, Inc.
Hideki
Yamashita
Attorney-at-Law and Patent
Attorney,
YAMASHITA & TOYAMA
LAW AND PATENT OFFICE,
Outside Corporate Auditor of
I-Cell Networks Corp.
(As of June 30, 2017)
MOL adjudged that he has a neutral position with
no conflicts of interest with the Company, and that
he has wide-ranging experience and knowledge for
checking the appropriateness of management
decisions and supervising the execution of business
operations from the shareholders’ perspective based
on his specialist knowledge as a scholar of business
administration.
MOL adjudged that he has a neutral position with
no conflicts of interest with the Company, and that
he has wide-ranging experience and knowledge for
checking the appropriateness of management
decisions and supervising the execution of business
operations from the shareholders’ perspective based
on his specialist knowledge as an attorney at law.
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 fiscal 2016 is shown in the follow-
ing table.
The Company has granted stock options to all directors, exec-
utive officers, general managers of divisions and branch offices
and managers in similar positions, as well as to presidents of
consolidated subsidiaries, to motivate them to carry out opera-
tions for the benefit 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
6
2
6
¥256
$2,281
55
48
490
427
Compensation for the Accounting Auditors
Compensa-
tion for audit
operations
(¥ millions)
Compensa-
tion for
non-audit
operations
(¥ millions)
Total
(¥ millions)
(Thousands
of U.S.$)
Parent company
¥116
Consolidated
subsidiaries
Total
106
¥223
¥87
2
¥89
¥203
108
¥312
$1,809
963
$2,781
Independent Officers
MOL has designated its three outside directors and two outside
Audit & Supervisory Board members as independent officers
because there is no concern about a conflict of interest with
general investors in conformity with the criteria for independent
officers of listed securities exchanges. Each of these individuals
plays a major role in corporate governance by checking the
appropriateness of management decisions and supervising the
execution of business operations from the shareholders’ per-
spective based on their experience and insight.
Internal Control System
MOL has established a basic policy on the establishment of
internal control systems* and goes beyond the scope required
by law to promote activities to further enhance MOL Group
management effectiveness, efficiency and transparency, namely
ensuring the appropriateness of business operations and the
trustworthiness of financial reporting. We have chosen two
extracts from the policy and introduce them below: 1. Compli-
ance 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 officer, and formulated the
Compliance Policy. General managers of divisions and offices are
appointed as Compliance Officers. They are responsible for
enforcing compliance regulations and are also required to report
to the Compliance Committee in the event of a compliance
breach. The Internal Audit Office, a body that operates inde-
pendently of the Company’s divisions and offices, provides a
counseling service. The Internal Audit Office undertakes investi-
gations 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 direc-
tors, executive officers and employees report to the Audit &
Supervisory Board members on the Company’s operations and
important matters that may impact business performance. These
rules also safeguard appropriate frameworks for reporting legal
violations and other compliance issues to Audit & Supervisory
Board members. Furthermore, the representative directors strive
to regularly meet with Audit & Supervisory Board members, and
the Internal Audit Office 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
Anticompetitive Practices, headed by the president. The
committee has examined and executed various concrete
policies to prevent a recurrence of cartel activities, including
revising the compliance system and reforming the corpo-
rate culture. The measures resolved by the Review Commit-
tee of Recurrence Prevention Measures for Anticompetitive
Practices are now being carried on by the Compliance
Committee.
Annual General Shareholders’ Meeting
MOL aims to hold open Annual General Shareholders’ Meetings.
In addition to sending the notice of the Annual General Share-
holders’ Meeting 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
voting, 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
financial 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 reflect their opinions in management. The
distinguishing feature of our investor relations activities is that
the president takes the lead in their implementation. In fiscal
2016, 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.
In releasing its quarterly financial results, the Company releases
the financial results in Japanese and English on the Tokyo Stock
Exchange’s TDnet, while simultaneously posting the Japanese
and English drafts of presentation materials on its website. This
information is e-mailed on the same day to foreign investors
registered with the Company. MOL actively disseminates
information about management strategy, investment plans,
market conditions and other information 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
regularly provided to management with regard to the content of
discussions held with investors and analysts. Going forward, MOL
will further bolster the quality and quantity of communication
while being mindfully aware of fair disclosure.
The responsibility to provide information is not limited to
management and financial issues. MOL’s basic stance is to
quickly disclose information, even if it is negative such as infor-
mation on accidents, to all stakeholders. Furthermore, we hold
regular drills for responding to the media in emergencies and are
working to strengthen our ability to quickly and properly dis-
close information.
MOL will continue working to raise confidence in its business
policies and management through close communication with
various stakeholders.
IR Activities in Fiscal 2016 (April 2016–March 2017)
Business performance
presentations
Frequency
Details
4 times
Quarterly results/forecasts
2 times
Held for analysts in Japan
President’s small
meetings
Overseas investor
road shows
4 times
Activity
For securities
analysts and
institutional
investors
For overseas
institutional
investors
Conferences held by
securities companies
4 times
For individual
investors
Corporate presenta-
tions for individual
investors
3 times
Once in North America,
twice in Europe, once in
Asia (Hong Kong and
Singapore)
Attended conferences in
Japan and held individual
meetings
Attended seminars for
individual investors in
Tokyo, Osaka and Nagoya,
once in each city
IR Materials (available on MOL’s website)
Material
Japanese
English
Financial reports
Stock exchange filings (financial 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
No
Yes
Yes
Yes
62
Mitsui O.S.K. Lines
Annual Report 2017
63
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
operation of every vessel type, reinforcing company-wide opera-
tional safety measures, and developing an organizational struc-
ture 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 oceango-
ing personnel are united to strive to maximize operating safety,
with the goal of becoming the world leader in safe operation.
Organizational Structure Supporting Safe Operation
Executive Committee
Operational Safety Committee
Safety Assurance
Committee
Ship Standard
Specification
Committee
Manning
Committee
Safety Operations Headquarters
Marine Safety Division
Ship management coordinating divisions
Marine technical teams supporting vessel opera-
tions 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 special-
ists, including an experienced MOL captain. They use the FMS.
Safety system, which was developed in cooperation with Weath-
ernews Inc., to monitor weather and related developments
where our vessels are operating. FMS.Safety is used to check on
the weather, sea, and other conditions surrounding the approxi-
mately 850 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.
Safety Operation Supporting Center (SOSC)
Accident Response Drills
MOL regularly conducts accident response drills on vessels while
at sea. These drills simulate various situations such as an onboard
fire or water immersion, or acts of piracy or terrorism, so that
seafarers can respond swiftly and appropriately in an emergency.
The Head Office conducts serious marine incident emergency
response drills once a year with the cooperation of the Regional
Coast Guard Headquarters. The drills involve MOL’s president,
other corporate officers, representatives of relevant departments
and ship management companies, and vessels. In November
2016, we conducted an emergency response drill based on the
premise of an iron ore carrier colliding with a breakwater and
becoming stranded offshore from Kashima Port.
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
strengthen 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 measur-
ing safety levels, and also set the following numerical targets,
including the Four Zeroes.
1. Four Zeroes (an unblemished record in terms of serious marine
incidents, oil pollution, fatal accidents and cargo damage)
2. LTIF*1 (Lost Time Injury Frequency): 0.7 or below
3. Operational stoppage time*2: 24 hours/ship or below
4. Operational stoppage accident rate*3: 1.0/ship or below
In fiscal 2016, 2–4 above were achieved, but we did not
achieve 1 as unfortunately two fatal workplace accidents
occurred. We will nevertheless continue to work toward achiev-
ing these targets.
Preventing New or a Recurrence of Serious Incidents
MOL is constantly and repeatedly implementing and raising
awareness of fundamental matters while striving to thoroughly
keep fresh the memory of serious incidents we have experi-
enced and prevent a recurrence of serious incidents while giving
due consideration to improving teamwork, safety awareness,
awareness of relevant parties and vessel management quality.
We will continue to adapt our accident prevention system by
making improvements related to both seafarer training and ship
facilities to break the chain of errors in which minor factors
combine and ultimately 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
experience” 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
problems as well as close calls*5 and by using videos, photos and
illustrations to appeal to the visual sense of seafarers. In terms of
ship facilities, we are working to equip ships with error-resistant
equipment and promoting the adoption of information technol-
ogy. This involves promoting the fail-safe design concept by
providing shipyards and equipment manufacturers with feed-
back from vessels in operation on areas of non-conformance and
areas in need of improvement.
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 Com-
pany regularly broadcasts “Safety Alerts”—information pertaining
to safe operation, including work-related incidents involving
casualties—to every vessel. MOL conducts “Safety Operation
Meetings” and “Safety Campaigns” involving vessels, shipowners,
ship management companies and even the sales division to
deepen understanding of its safety standards and to discuss
safety 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.
Lost Time Injury Frequency (LTIF)
Average Operational Stoppage Time and Operational Stoppage Accident Rate
(Hours/ship)
(Accidents/ship)
1.8
1.5
1.2
0.9
0.6
0.3
0
2016 average for all industries: 1.63
MOL target: 0.7 or below for 2015 onward
0.38
0.44
0.30
0.53
0.50
2012
2013
2014
2015
2016
(FY)
40
30
20
10
0
Average operational stoppage time
target: 24 hours or below
28.45
25.04
19.04
0.66
0.52
0.51
Operational stoppage accident rate
target: 1.0 or below
25.56
0.99
22.53
0.91
2012
2013
2014
2015
2016
(FY)
2.0
1.5
1.0
0.5
0
○ Average operational stoppage time (left scale)
○ Operational stoppage accident rate (right scale)
64
Mitsui O.S.K. Lines
Annual Report 2017
65
Safe Operation
Risk Management
ESG-Based IR Meetings
In March 2015, 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
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 sophisti-
cated, we expect to see more activity for these seafarers. As the
culmination of MOL’s initiatives aimed at safe operations, we will
establish the largest self-operated university of merchant
marines in the Asia-Pacific region as we plan to reinforce efforts
to secure and train excellent seafarers and achieve the world's
safest operations.
Third-Party Evaluations
Safe Operation, Including Evaluations of Seafarer
Educational Programs
Standard Training Courses for liquefied gas transportation
certified by DNV GL AS
The LNG Carrier Standard Training Course and the LEG/LPG
Carrier Standard Training Course implemented globally by MOL
were certified 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.*6
Management program for seafarer education and training
acquired certification from DNV GL AS
MOL’s management program for sea-
farer education and training was recog-
nized to be effective and certified 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 calculations,
we originally included only workplace illnesses and injuries
requiring disembarkation from the ship. The LTIF criteria was
strengthened from fiscal 2015, and now includes any work-
place 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 (2016) was 1.63; for shipping
industry, 1.51; for transportation equipment manufacturing
industry, 0.39. (Source: 2016 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.
*6 Society of International Gas Tanker and Terminal Operators Ltd.
The Company identifies the risks surrounding the MOL Group,
such as fluctuations 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 Com-
pany transparently quantifies its comprehensive risk.
Fluctuations of Cargo Volume, Fleet Supply and Freight Rates
The global shipping business, like many other industries, is
greatly affected by trends in the global economic cycle, and is
thus subject to both macroeconomic risk, as well as business risk
associated with trends in specific industries. There are a multi-
tude of factors that are subject to change, such as fluctuations in
the economies of individual countries, changes in trade struc-
tures, vessel supply and demand balance, market conditions and
cargo volumes. Achieving the best performance hinges on
objectively analyzing 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 profits” by aligning its fleet to
match international marine transport demand in the transport of
both raw materials and finished goods. In this way, we strive to
maximize returns and sustain profit growth. In accordance with
our internal market risk management regulations, we appropri-
ately reduce risks related to fluctuation, especially those arising
from freight rates, bunker prices, exchange rates, and interest
rates. The Investment and Finance Committee also identifies,
analyzes and evaluates risks related to such material issues as
investment in ships.
Variation of Procurement and Contract Terms
(as of March 2017)
0
20%
40%
60%
80%
100%
Dry Bulkers
(337 ships)
Tankers
(169)
LNG Carriers
(80)
Car Carriers
(120)
Containerships
(91)
46%
27%
27%
36%
55%
9%
100%
95%
5%
80%
20%
■ 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 2017)
Total number of
fleet
Market exposure
Capsize
Small- and medium-sized bulkers
VLCCs
Product tankers
LPG tankers
90
112
31
43
8
17%
9%
16%
84%
50%
Underlined words are explained in the Glossary on the Contents page.
Diversifying Operations to Reduce Risk
MOL operates a “full-line marine transport group.” As of the end
of March 2017, we operated around 850 vessels, ranging from
dry bulkers, tankers, and LNG carriers to car carriers and contain-
erships, capable of transporting a diverse range of raw materials
and finished goods. Each type of ship and each type of cargo
have particular supply and demand trends, and create particular
markets. While some of these markets are highly correlated with
each other, others are negatively correlated depending mainly
on the economic environment, so the impact in one sector
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
optimum business portfolio, which allows the Company to
pursue higher profits while mitigating risks.
Building Up Highly Stable Profits through the Use of
Medium- and Long-Term Contracts and Other Means
The Company pursues medium- and long-term contracts won
based on long-standing relationships of trust with customers.
These contracts ensure a stable future cash flow that will help
reduce the risk that market fluctuations could have on its results.
International marine transportation is 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 profit. 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 flow.
Exchange Rate Fluctuations
Although MOL has concluded transport contracts on a yen-
denominated basis with some Japanese clients, most transac-
tions 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 currently 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 fiscal 2017, we project
that each ¥1-per-dollar change in the yen-U.S. dollar exchange
rate will have an impact of approximately ¥0.7 billion on consoli-
dated ordinary profit.
Interest Rate Fluctuations
MOL depends mainly on the issuance of corporate bonds and
funds borrowed from banks and other financial institutions to
meet working capital and capital expenditure requirements.
Loans are denominated in either yen or U.S. dollars, with funds
procured at variable interest rates affected by interest rate fluctu-
ations. As of March 31, 2017, interest-bearing debt totaled
¥1,122.4 billion, and around 30% of that loan principal is locked
in at a fixed 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
66
Mitsui O.S.K. Lines
Annual Report 2017
67
Risk Management
Corporate Social Responsibility (CSR)
annual consolidated ordinary profit by no larger than approxi-
mately ¥4.0 billion. Although MOL has benefited from ultra-low
interest rates in the aftermath of the financial crisis, the Company
is taking steps to mitigate the risk of a future interest rate rise. It
plans to flexibly adjust the ratio of variable- and fixed-rate loans
through interest rate swaps and other means according to
changes in financial conditions, taking into consideration the
balance between variable- and fixed-rate interest.
Bunker Price Fluctuations
The market price of bunker is generally linked to the price of
crude oil, and any increase in bunker prices has a negative
impact on earnings for the MOL Group. The Group operates a
fleet of approximately 850 vessels, whose annual fuel consump-
tion amounts to around 5.7 million tons of bunker. The Company
is able to pass on about 60% of the risk to customers. Therefore,
an increase of US$1 per metric ton in the average annual price of
bunker would lower earnings by approximately ¥0.17 billion (net
of hedging) at the maximum.
Stricter regulation to reduce SOx emissions generated by
ships will be introduced in 2020. This regulation would require
the use of low-sulfur fuel oil containing less than 0.5% sulfur, the
installation of SOx scrubbers on vessels to remove sulfur, or the
use of alternative fuels such as LNG, LPG, and methanol, which
could have an impact on fuel costs or capital costs. In this case,
the Company plans to recover these additional costs by raising
freight rates and other fees.
Sensitivity of Earnings to Exchange Rate/Interest Rate/Bunker
Price Fluctuations
Exchange rate
(¥/US$)
A ¥1 appreciation reduces ordinary profit by approximately
¥0.7 billion
Interest rate (%)
A 1 percentage point rise in both yen- and U.S. dollar-de-
nominated interest-bearing debt reduces ordinary profit by
approximately ¥4.0 billion
Bunker price
(US$/MT)
A US$1/MT increase reduces ordinary profit by approxi-
mately ¥0.17 billion
Average Bunker Price (US$/MT)
800
600
400
200
0
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
17/3
Vessel Operations
MOL operates a fleet of approximately 850 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 sufficient insurance coverage
so that its financial results will not be materially impacted, should
the Company or a third party suffer damages in the unlikely
event of an MOL-operated vessel being involved in a collision,
sinking, fire or other marine incident.
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 financial 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, offices and facilities, as well as employees,
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, financial
preparation, securing required personnel, and other matters.
Furthermore, for some years, MOL has been conducting regular
disaster-preparedness drills on and off premise at its Head Office,
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
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 sustain-
ably and harmoniously while earning the support and trust of
stakeholders, including shareholders, customers, business part-
ners, employees and local communities. In order to fulfill these
responsibilities, MOL deliberates on CSR-related policies and
measures, primarily through the three committees under the
Executive Committee.
The MOL Group’s initiatives and policies regarding overall CSR
are deliberated on by the CSR Committee, which then sets
single-year, medium- and long-term targets and conducts regu-
lar 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
violations, and establishing a structure for protecting and man-
aging personal information.
To further ensure sustainable growth, MOL CHART was estab-
lished in 2015 as a set of values to be passed down between
MOL Group employees indefinitely. For more information on
MOL CHART, see page 3.
Organizational Framework
for CSR Initiatives
Chief Execu-
tive Officer
(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 first Japanese shipping company to
participate in the United Nations (UN) Global Compact in 2005.
Since then, MOL has worked to support and practice the 10
principles in 4 areas of the UN Global Compact, which shares the
same values as MOL’s Rules of Conduct, which were established
as a set of guidelines for executives and employees.
10 Principles of the UN Global Compact
Human
Rights
Principle
1. Business should support and respect the protection
of internationally proclaimed human rights; and
2. Make sure that they are not complicit in human
rights abuses.
Labour
3. Businesses should uphold the freedom of association
and the effective recognition of the right to collective
bargaining;
4. The elimination of all forms of forced and compul-
sory labour;
5. The effective abolition of child labour; and
6. The elimination of discrimination in respect of
employment and occupation.
Environ-
ment
7. Businesses should support a precautionary approach
to environmental challenges;
8. Undertake initiatives to promote greater environ-
mental responsibility; and
9. Encourage the development and diffusion of envi-
ronmentally friendly technologies.
Anti-
Corruption
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 coop-
eration of business partners. In this way, we aim to contribute
towards the realization of sustainable societies together.
The MOL Group Basic Procurement Policy
The MOL Group procures goods and/or services in accor-
dance 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 execution of such goods and/or services, that meet high
safety standards.
3. We conduct fair trade, and endeavor to establish trusting
relationships with contractors.
We work to make sure that our contractors understand our
Basic Procurement Policy, with the aim of contributing
towards the realization of sustainable societies together.
68
Mitsui O.S.K. Lines
Underlined words are explained in the Glossary on the Contents page.
Annual Report 2017
69
Corporate Social Responsibility (CSR)
Initiatives on the Environment
In April 2017, we formulated MOL Group Environmental Vision 2030 to present our cutting-edge initiatives for environmental preservation.
Environmental Regulations
Schedule of Environmental Regulations by IMO, etc
MOL Group Environmental Vision 2030
Shipping companies are responsible for undertaking the
marine transportation vital to the infrastructure underpinning
people’s daily lives worldwide.
Meanwhile, the effectuation of the Paris Agreement on
climate control has unified efforts by the international com-
munity to mitigate global warming. With this in mind, the
MOL Group believes that it has a social obligation to take
innovative steps to help solve environmental issues such as
greenhouse gas emissions, air pollution and biodiversity
impediments. The MOL Group will grasp the environmental
needs of customers and other stakeholders and provide
solutions, in tandem with developing its environment and
emission-free businesses into future core operations, with the
aim of contributing to global environmental preservation.
The MOL Group targets reduction of greenhouse gas emis-
sions per unit load by 25% by 2030 and by 50% by 2050 com-
pared to fiscal 2014.
CO2 Emissions (Per Unit Load) (Fiscal 2014 = 100)
Environmental Investments
100
95
90
85
100.0
96.7
10.2% reduction
compared with
fiscal 2014
89.8
2014
2015
2016
(FY)
Key Environmental Issues
In March 2014, we identified the highest-priority environmental
issues and set about addressing those issues in a proactive
manner. To identify these priorities, we analyzed issues from
international conditions regarding environmental issues; the
opinions of stakeholders including customers, investors, and so
on; as well as our own internal viewpoints. Finally, through dis-
cussions in the CSR Committee, we formulated the following
eight action plans.
1. Promote use and innovation of technologies for reducing
environmental impact and advanced support technologies
for safer vessel operation through the “ISHIN NEXT—MOL
SMART SHIP PROJECT—.”
2. Participate in projects to build vessels that run on alterna-
tive fuels such as LNG and supply alternative fuels.
3. Reduce greenhouse gas emissions by using ICT to optimize
sailing even further.
4. Utilize renewable energy such as wind and solar power for
vessel propulsion and at Group-related facilities in Japan
and overseas.
5. Create environment and emission-free businesses.
6. Investigate emissions trading as a way to achieve green-
house gas reduction targets.
7. Respond appropriately and proactively to air pollution
prevention and the Ballast Water Management Convention.
8. Promote modal shift in transportation by enhancing the
ferry and coastal shipping business in Japan.
70
Mitsui O.S.K. Lines
Environment-related R&D activities
Utilization and expansion of
existing environmental
technologies
Responses to environmental
regulations
Initiatives to save bunker fuel
Initiatives of Group companies
Total
Fiscal 2014
0.7
Fiscal 2015
0.3
(Billions of yen)
Fiscal 2016
0.4
2.1
0.5
0.9
0.2
4.3
0.9
2.2
1.0
0.3
4.6
0.5
3.1
1.1
0.3
5.4
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 president. The CSR Committee assesses environment-
related risks and opportunities involving MOL, identifies the
highest-priority issues in the Group’s environmental manage-
ment, and sets environmental targets. As an environmentally
advanced company, MOL will actively strive to grasp stakehold-
ers’ environmental needs.
In February 2016, MOL established the Technology, Innovation
and Environment Committee, which is tasked with promoting
technology innovation and proposal of strategies for environ-
mental measures, followed by the Ballast Water Treatment System
Installation Committee, which is responsible for responding
properly to the Ballast Water Management Convention. Further-
more, in November 2016, the Company established the SOx 2020
Regulation Compliance Committee, which is to respond to
stricter regulation on sulfur content in fuel oil scheduled for 2020.
Organizational Structure to Promote Environmental Initiatives
Executive Committee
CSR Committee
Technology, Innovation and
Environment Committee
(Secretariat Office:
Corporate Planning Division, CSR and Environment Office)
Director responsible for environmental
management (Chairman of CSR Committee)
Executive officer of CSR Committee (Vice-
Chairman of CSR Committee)
Divisions/Offices
Divisions/Offices General Manager (Personnel
responsible for environmental management)
Ballast Water Management Convention
SOx Regulation
2016
2017
2018
2019
2020
2021
2016
2017
2018
2019
2020
2021
(Adopted in 2004)
Mandatory
(For existing vessels: within seven years from September 2017
For new vessels: completed from September 2017 onward)
A convention to prevent cross-border transfer of foreign marine
organisms through vessel ballast water was adopted in 2004 and
will be in effect from September 2017.
Vessels are mandated to install ballast water treatment sys-
tems, which cost US$1-2 million, by the first special survey (Dry
Dock) which will come within seven years after it takes effect (as
of July 2017).
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
MOL’s Initiatives
• In fiscal 2014, MOL set a Company-wide policy to install ballast
water management systems on our vessels before the conven-
tion took effect.
• We have already completed installation on more than 87
owned vessels (as of June 2017).
Sulfur limit: 3.5%
Sulfur limit: 0.5%
Regulate the sulfur content in fuel oil to control SOx volume in
exhaust emissions. The sulfur limit will be tightened from 3.5% or
less to 0.5% or less from 2020. Ship owners/operators have to
choose a method from the following menu:
Method
Advantages
Disadvantages/Issues
Low-sulfur fuel oil
No initial costs
SOx scrubber
Lower fuel costs
• High fuel cost
• Supply availability in question
• High initial cost
• Large space required
Alternative fuel
(LNG, etc.)
Effective for other
environmental
regulations
• High equipment cost
• Insufficient supply system
• Difficult modifications
MOL’s Initiatives
• MOL has been studying low-sulfur fuel oil and SOx scrubbers as
both are subject to future fuel prices.
• MOL teamed up with BHP Billion, Rio Tinto, etc., on a joint
research project for an LNG-fueled capesize bulker.
• MOL took delivery of three methanol tankers equipped with
dual-fuel, low-speed diesel engines that can run on methanol
(a world first).
• In 2019, MOL will take delivery of a tugboat with a dual-fuel
(bunker A/LNG) engine.
Others
Regulations
2016
2017
2018
2019
Tackling global
warming
GHG emissions
EEDI*1
SEEMP*2
Phase 1
Mandatory
2020
Phase 2
2025
Phase 3
* Introduction of MRV (Monitoring, Reporting and Verification 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
Marine environ-
ment protection
Minimizing the transfer of invasive
aquatic species by shipping*5
(Guideline adopted in 2011)
Ship Recycling Convention*6
(Adopted in 2009: not ratified)
*1 EEDI (Energy Efficiency Design Index) is a measure of a ship’s energy efficiency (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 Efficiency 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 onboard 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 the USA
and Canada (NOx/SOx) 2. The USA Caribbean Sea area (NOx/SOx) 3. The Baltic Sea and the
North Sea areas (currently only SOx). (From 2021 onward, new shipbuilding will be subject
to third-generation NOx regulations.)
Underlined words are explained in the Glossary on the Contents page.
*5 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 of marine organisms and other measures. (It remains as a voluntary guideline during
the review period.)
*6 The convention prohibits and restricts the fitting and use of treaty-specified 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 conven-
tion shall enter into force 24 months after the following conditions are met:
Conditions: Ratification by not less than 15 countries representing a combined total G/T
of more than 40% of the world’s merchant fleet and an annual ship recycling volume not
less than 3% of the combined tonnage of the ratifying countries. (As of March 2017, 5
countries have ratified.)
Annual Report 2017
71
Data Section
74 Consolidated Financial Statements
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
110 The MOL Group
112 Worldwide Offices
113 Shareholder Information
Corporate Social Responsibility (CSR)
Third-Party Evaluations (Environment-Related)
ISO 14001 Certification
MOL has used its own environmental management system MOL EMS21 since April 2001, and also holds ISO 14001 certification,
an international standard for environmental management. (Since 2003)
ISO 50001 Certification
MOL acquired ISO 50001 certification for its energy management system and ISO 14001 certification for its environmental manage-
ment system. Certified companies: MOL Ship Management Co., Ltd., MOL Ship Management (Singapore) Pte. Ltd., MOL Ship Manage-
ment (Hong Kong) Company, Limited and Magsaysay MOL Ship Management, Inc.
Recognized by CDP as a 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 indepen-
dent assessment through CDP, an international non-profit organization. This marks the third time MOL has received
this distinction (2015).
External Recognition (Overall, CSR-Related)
CSR Rating by the Dow Jones Sustainability Indices (DJSI)
Since 2003, MOL has been included in the DJSI Asia Pacific, a designation 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 respon-
sible investment index.
FTSE Blossom Japan
MOL has been included in the FTSE Blossom Japan Index. The index was developed in 2017 by
FTSE and targets Japanese companies making a superior response to environment, social, and
governance (ESG) issues.
MSCI ESG Leaders Indexes
MOL has been included in the MSCI ESG Leaders Indexes for its superior efforts on measures
taken for risks and opportunities related to ESG. (Since 2010; index name changed in 2017)
MSCI Japan ESG Select Leaders Index
MOL has been included in the Japan ESG Select Leaders Index, which was newly developed in
2017 and targets companies with a superior ESG evaluation relatively speaking for each industry.
MSCI Japan Empowering Women Index (WIN)
MOL has been included in the MSCI Japan Empowering Women Index (WIN), which was newly
developed in 2017 and targets companies in all industries with superior performance in promot-
ing gender diversity.
THE INCLUSION OF Mitsui O.S.K. Lines, Ltd. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX
NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF Mitsui O.S.K. Lines, Ltd. BY MSCI OR ANY OF ITS
AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS
OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.
SMBC Sustainability Assessment Loan
In 2016, MOL received the highest rating for SMBC Sustainability Assessment Loans from
Sumitomo Mitsui Banking Corporation (SMBC), winning specific praise for timely and accurate
disclosure of environmental, social, and governance (ESG) issues and for its initiatives on
sustainability.
SMBC Nadeshiko Assessment Loan
MOL continued to be approved for an SMBC Nadeshiko Assessment Loan by Sumitomo Mitsui
Banking Corporation (SMBC), receiving praise for being a leading company where women play
an active role thanks to its initiatives for creating a workplace where women can play a more
active role (2017).
72
Mitsui O.S.K. Lines
Annual Report 2017
73
Consolidated Financial Statements
Consolidated Balance Sheets
Mitsui O.S.K. Lines, Ltd. March 31, 2017 and 2016
ASSETS
Current assets:
Cash and cash equivalents (Note 3)
Trade receivables (Note 3)
Inventories (Note 5)
Deferred and prepaid expenses
Deferred tax assets (Note 15)
Other current assets (Notes 3 and 6)
Allowance for doubtful accounts
Total current assets
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
2016
2017
¥ 186,844
130,420
36,358
60,889
1,274
66,122
(429)
481,478
¥ 159,450
130,293
27,860
66,101
1,449
72,297
(975)
456,475
$ 1,665,425
1,162,492
324,075
542,731
11,356
589,375
(3,824)
4,291,630
Vessels, property and equipment,
net of accumulated depreciation (Notes 7 and 13):
Vessels
Buildings and structures
Machinery, equipment and vehicles
Furniture and fixtures
Land
Vessels and other property under construction
Others
Net vessels, property and equipment
756,930
153,768
26,630
5,366
221,343
156,935
2,693
1,323,665
822,270
159,483
22,828
4,482
221,614
143,342
2,413
1,376,432
6,746,858
1,370,603
237,365
47,830
1,972,930
1,398,832
24,004
11,798,422
LIABILITIES AND NET ASSETS
Current liabilities:
Trade payables (Note 3)
Bonds due within one year (Notes 3 and 7)
Short-term bank 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
Other current liabilities (Note 6)
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)
Net defined benefit liabilities (Note 16)
Directors’ and corporate auditors’ retirement benefits
Reserve for periodic drydocking
Provision for contract loss
Provision for environmental measures
Other non-current liabilities (Note 6)
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
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
2016
2017
¥ 125,119
20,000
133,155
6,642
32,259
1,188
4,403
154
2,753
1,239
56,545
383,457
210,595
738,163
18,372
56,678
12,446
1,459
18,566
226
620
93,326
1,150,451
1,533,908
¥ 127,172
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
13,442
1,659
14,854
—
—
107,455
1,108,868
1,572,662
$ 1,115,242
178,269
1,186,870
59,203
287,539
10,589
39,246
1,373
24,539
11,044
504,011
3,417,925
1,877,128
6,579,579
163,758
505,197
110,937
13,005
165,487
2,014
5,526
831,857
10,254,488
13,672,413
65,400
45,382
355,263
(6,820)
459,225
28,354
54,327
27,178
2,899
112,758
2,447
109,191
683,621
¥2,217,529
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
¥2,219,587
582,940
404,510
3,166,619
(60,790)
4,093,279
252,732
484,241
242,250
25,840
1,005,063
21,811
973,269
6,093,422
$19,765,835
Annual Report 2017
75
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 defined benefit assets (Note 16)
Deferred tax assets (Note 15)
Other non-current assets (Note 6)
Allowance for doubtful accounts
Total investments, intangibles and other assets
Total assets
See accompanying notes.
74
Mitsui O.S.K. Lines
31,288
231,978
62,797
6,825
15,390
3,536
62,661
(2,089)
412,386
¥2,217,529
33,483
215,056
49,015
3,565
13,292
4,422
69,908
(2,061)
386,680
¥2,219,587
278,884
2,067,724
559,738
60,834
137,178
31,518
558,527
(18,620)
3,675,783
$19,765,835
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 defined benefit plans, net of tax
Total accumulated other comprehensive income
Share subscription rights
Non-controlling interests
Total net assets
Total liabilities and net assets
Consolidated Financial Statements
Consolidated Statements of Operations and
Consolidated Statements of Comprehensive Income
Consolidated Financial Statements
Consolidated Statements of Changes in Net Assets
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2017 and 2016
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2017 and 2016
(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 affiliated 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 shares of subsidiaries and associates
Others
Total other gains
Other losses:
Loss on sales and disposals of vessels, property, equipment and others
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 on available-for-sale securities, net of tax
Unrealized gains on hedging derivatives, net of tax
Foreign currency translation adjustments
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income (loss) of associates
accounted for using equity method
Comprehensive income
Comprehensive income
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests
(AMOUNTS PER SHARE OF COMMON STOCK)
Net income (loss)
Diluted net income (Note 2)
Cash dividends applicable to the year
See accompanying notes.
Millions of yen
2017
¥1,504,374
1,388,265
116,109
113,551
2,558
2016
¥1,712,223
1,594,569
117,654
115,330
2,324
Thousands of
U.S. dollars (Note 1)
2017
$13,409,163
12,374,231
1,034,932
1,012,131
22,801
5,918
6,022
5,544
24,180
3,875
45,539
19,037
3,634
22,671
25,426
6,125
20,008
9,073
35,206
1,260
22,274
6,490
7,305
37,329
23,303
4,079
6,131
9,178
23,908
7,452
50,748
14,576
2,227
16,803
36,269
9,431
817
19,764
30,012
629
—
179,291
40,746
220,666
(154,385)
52,750
53,677
49,416
215,527
34,540
405,910
169,685
32,392
202,077
226,634
54,595
178,340
80,871
313,806
11,231
198,538
57,848
65,113
332,730
207,710
13,324
(626)
10,605
5,348
¥ 5,257
11,134
261
(165,780)
4,668
¥ (170,448)
Millions of yen
2017
¥10,605
2016
¥(165,780)
8,768
13,072
2,463
2,944
4,101
31,348
¥41,953
(24,187)
(31,368)
(1,520)
(5,369)
(3,475)
(65,919)
¥(231,699)
¥35,184
6,769
¥(233,644)
1,945
118,763
(5,580)
94,527
47,669
$ 46,858
Thousands of
U.S. dollars (Note 1)
2017
$ 94,527
78,153
116,517
21,954
26,241
36,554
279,419
$373,946
$313,611
60,335
Yen
2017
¥4.40
4.06
2.00
2016
¥(142.50)
—
5.00
U.S. dollars (Note 1)
2017
$0.04
0.04
0.02
Millions of yen
Unrealized
holding gains
on available-
for-sale
securities,
net of tax
Treasury
stock,
at cost
Unrealized
gains on
hedging
derivatives,
net of tax
Foreign
currency
translation
adjustments
Remeasure-
ments of
defined
benefit plans,
net of tax
Share
subscription
rights
Non-
controlling
interests
Total
net assets
Common
stock
Capital
surplus
Retained
earnings
Balance at April 1, 2015
¥65,400
¥44,469
¥ 533,485
¥(6,823)
¥ 44,261
¥ 68,770
¥27,673
¥ 5,322
¥2,553
¥107,325
¥ 892,435
Issuance of new shares—exercise of subscription
rights to shares
Dividends paid
Net income (loss) attributable to owners of parent
Due to change in affiliated 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
—
—
—
—
—
—
—
—
—
—
—
—
—
—
920
—
—
(8,971)
(170,448)
141
—
(27)
—
—
7
—
—
—
(47)
15
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(7)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(8,971)
(170,448)
141
(47)
(12)
920
(23,311)
(33,736)
(787)
(5,362)
136
(4,033)
(67,093)
Balance at March 31 and April 1, 2016
¥65,400
¥45,389
¥ 354,180
¥(6,848)
¥ 20,950
¥ 35,034
¥26,886
¥ (40)
¥2,682 ¥103,292
¥ 646,925
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
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
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(7)
—
—
(4,186)
5,257
36
—
(24)
—
—
5
—
—
—
(23)
46
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(5)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,186)
5,257
36
(23)
22
(7)
7,404
19,293
292
2,939
(230)
5,899
35,597
Balance at March 31, 2017
¥65,400
¥45,382
¥ 355,263
¥(6,820)
¥ 28,354
¥ 54,327
¥27,178
¥ 2,899
¥2,447 ¥109,191
¥ 683,621
Thousands of U.S. dollars (Note 1)
Unrealized
holding gains
on available-
for-sale
securities,
net of tax
Treasury
stock,
at cost
Unrealized
gains on
hedging
derivatives,
net of tax
Foreign
currency
translation
adjustments
Remeasure-
ments of
defined
benefit plans,
net of tax
Share
subscription
rights
Non-
controlling
interests
Total
net assets
Common
stock
Capital
surplus
Retained
earnings
Balance at April 1, 2016
$582,940 $404,573
$3,156,966
$(61,040)
$186,737
$312,274 $239,647
$ (357)
$23,906 $920,688
$5,766,334
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
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, 2017
See accompanying notes.
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(63)
—
—
(37,312)
46,858
321
—
(214)
—
—
45
—
—
—
(205)
410
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(45)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(37,312)
46,858
321
(205)
196
(63)
—
65,995
171,967
2,603
26,197
(2,050)
52,581
317,293
$582,940 $404,510
$3,166,619
$(60,790)
$252,732
$484,241 $242,250
$25,840
$21,811 $973,269
$6,093,422
76
Mitsui O.S.K. Lines
Annual Report 2017
77
Consolidated Financial Statements
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2017 and 2016
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2017 and 2016
Cash flows 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 affiliated companies, net
Various provisions (reversals)
Decrease (Increase) in net defined benefit assets
Increase (Decrease) in net defined benefit liabilities
Interest and dividend income
Interest expense
Loss (Gain) on sales and disposal of vessels, property and equipment, net
Gain on sales of shares of subsidiaries and associates, net
Foreign exchange loss (gain)
Changes in operating assets and liabilities:
Trade receivables
Inventories
Trade payables
Others, net
Sub total
Interest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows 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
Net decrease (increase) in short-term loans receivables
Disbursements for long-term loans receivables
Collections of long-term loans receivables
Others, net
Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term 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
Cash dividends paid by the Company
Cash dividends paid to non-controlling interests
Others, net
Net cash provided by (used in) financing 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.
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
2016
2017
¥ 23,303
¥(154,385)
$ 207,710
87,191
22,274
6,490
(5,544)
(20,054)
1,996
(756)
(11,940)
19,037
(4,516)
(19,946)
(25,818)
(1,683)
(8,691)
(574)
(31,167)
29,602
15,352
(18,778)
(8,552)
17,624
(14,534)
27,738
(143,178)
71,351
(6,653)
(21,375)
9,832
2,877
(73,942)
9,907
—
239,075
(119,253)
10,000
(45,000)
(4,258)
(1,018)
(2,323)
87,130
(3,454)
27,358
159,450
36
¥ 186,844
92,772
—
179,291
(9,178)
(1,096)
(454)
(233)
(10,210)
14,576
(8,643)
(817)
(25,084)
47,462
21,185
(38,943)
118,754
224,997
14,099
(14,306)
(15,600)
209,190
(7,919)
16,371
(123,840)
69,202
(5,459)
(32,984)
49,311
8,637
(26,681)
(40,010)
(5,500)
80,885
(152,552)
—
(15,600)
(8,928)
(1,116)
(5,914)
(148,735)
(3,126)
30,648
128,802
—
¥ 159,450
777,173
198,538
57,848
(49,416)
(178,750)
17,791
(6,739)
(106,427)
169,685
(40,253)
(177,788)
(230,127)
(15,001)
(77,467)
(5,116)
(277,805)
263,856
136,840
(167,377)
(76,228)
157,091
(129,548)
247,241
(1,276,210)
635,984
(59,301)
(190,525)
87,637
25,644
(659,078)
88,306
—
2,130,983
(1,062,956)
89,135
(401,105)
(37,953)
(9,074)
(20,707)
776,629
(30,788)
243,854
1,421,250
321
$ 1,665,425
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the
Japanese Financial Instruments and Exchange Act and its related accounting regulations, and in conformity with accounting
principles generally accepted in Japan (together “Japanese GAAP”), which are different in certain respects as to application and
disclosure requirements of International Financial Reporting Standards. The accounts of overseas subsidiaries are made revisions
according to ASBJ PITF No. 18.
The accompanying consolidated financial statements have been restructured and translated into English (with some expanded
descriptions) from the consolidated financial statements of Mitsui O.S.K. Lines, Ltd. (the “Company”) prepared in accordance with
Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instru-
ments and Exchange Act. Some supplementary information included in the statutory Japanese language consolidated financial
statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan,
using the prevailing exchange rate at March 31, 2017, which was ¥112.19 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 financial statements include the accounts of the Company and 368 subsidiaries for the year ended March 31,
2017 (362 subsidiaries for the year ended March 31, 2016). All significant inter-company balances, transactions and all material
unrealized profit within the consolidated group have been eliminated in consolidation.
Investments in unconsolidated subsidiaries and affiliated companies are accounted for by the equity method. Companies
accounted for using the equity method include 76 affiliated companies for the year ended March 31, 2017 and 2016. Investments
in other subsidiaries and affiliated 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
liabilities in foreign currencies into the currency used for financial reporting in accordance with accounting principles generally
accepted in their respective countries.
All the items in financial statements of subsidiaries, which are stated in currencies other than Japanese yen, were translated into
Japanese yen at the year-end exchange rate, except for owners’ equity which is translated at historical rates. Translation differences
arising from the application of more than one exchange rate are presented as foreign currency translation adjustments in the net
assets section of the consolidated balance sheets.
(3) CASH AND CASH EQUIVALENTS
In preparing the consolidated statements of cash flows, cash on hand, readily-available deposits and short-term highly liquid
investments with maturities not exceeding three months at the time of purchase are considered to be cash and cash equivalents.
(4) FREIGHT REVENUES AND RELATED EXPENSES
1. Containerships
Freight revenues and the related voyage expenses are recognized by the multiple transportation progress method.
2. Vessels other than containerships
Freight revenues and the related voyage expenses are recognized mainly by the completed-voyage method.
(5) SECURITIES
Securities are classified into (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended to
be held to maturity (hereafter, “held-to-maturity debt securities”), (c) equity securities issued by subsidiaries and affiliated compa-
nies, or (d) for all other securities that are not classified in any of the above categories (hereafter, “available-for-sale securities”).
78
Mitsui O.S.K. Lines
Annual Report 2017
79
Trading securities are stated at fair market value. Unrealized gains and losses from market value fluctuations are recognized as gains
or losses in the period of the change. Held-to-maturity debt securities are stated at amortized cost, net of the amount considered not
collectible. Equity securities issued by subsidiaries and affiliated companies which are not consolidated or accounted for using the
equity method are stated at moving-average cost. Available-for-sale securities with fair market values are stated at fair market values,
and the corresponding unrealized holding gains or losses, net of applicable income taxes, are reported as separate component of net
assets. Available-for-sale securities of which fair value is not readily determinable are stated at moving-average cost.
(6) INVENTORIES
Inventories are stated principally at cost determined by the moving-average method (with regard to the book value of inventories
on the balance sheet, by writing the inventories down based on their decrease in profitability of assets).
(7) DEPRECIATION AND AMORTIZATION
Depreciation of vessels and buildings is computed mainly by the straight-line method. Depreciation of other property and equip-
ment is computed mainly by the declining-balance method. Amortization of intangible assets is computed by the straight-line
method. Computer software is amortized by the straight-line method based principally on the length of period it can be used
internally (five years).
Depreciation of finance lease that transfer ownership to lessees is computed mainly by the identical to depreciation method
applied to self-owned non-current assets. Depreciation of finance lease that do not transfer ownership to lessees is computed
mainly by straight-line method on the assumption that the lease term is the useful life and an estimated residual is zero. With
regard to finance lease that do not transfer ownership for which the starting date for the lease transaction is prior to March 31,
2008, they are continuously accounted for by a method corresponding to that used for ordinary operating lease contracts.
(8) AMORTIZATION OF BOND ISSUE EXPENSE AND STOCK ISSUE EXPENSE
Bond issue expense and stock issue expense are charged to income as incurred.
(9) INTEREST CAPITALIZATION
In cases where a vessel’s construction period is long and the amount of interest accruing during this period is significant, such
interest expenses are capitalized as a part of the acquisition cost which amounted to ¥1,408 million ($12,550 thousand) for the year
ended March 31, 2017.
(10) ALLOWANCE FOR DOUBTFUL ACCOUNTS
Allowance for doubtful accounts is provided in an amount sufficient to cover probable losses on collection. It consists of the
estimated uncollectible amount with respect to certain identified doubtful receivables and an amount calculated using the actual
percentage of the Company’s collection losses.
(11) ALLOWANCE FOR BONUSES
Allowance for bonuses to employees is based on the estimated amount of future payments attributed to the fiscal 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 business liquidations to be carried out.
(14) PROVISION FOR CONTRACT LOSS
The Company recognizes provision for contract loss to cover potential losses with higher probability for the future performance of
contract due to a decision made over contract, etc.
(15) DIRECTORS’ AND CORPORATE AUDITORS’ RETIREMENT BENEFITS
The domestic subsidiaries of the company recognize liabilities for retirement benefits for directors and corporate auditors at an
amount required in accordance with the internal regulations.
(16) RESERVE FOR PERIODIC DRYDOCKING
Reserve for periodic drydocking is based on the estimated amount of expenditures for periodic drydocking in the future.
(17) PROVISION FOR ENVIRONMENTAL MEASURES
Provision for environmental measures is based on the estimated amounts of future obligations associated with polychlorinated
biphenyl (PCB) waste.
(18) EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITS
The Company and its consolidated subsidiaries (the “Group”) recognized net defined benefit assets and net defined benefit
liabilities for employees’ severance and retirement benefits based on the estimated amounts of projected benefit obligation
and the fair value of the plan assets at end of the year. Projected benefit obligations are attributed to each period by the
straight-line method.
Actuarial gains and losses are recognized in the statements of operations using the straight-line method over the average of
the estimated remaining service lives of mainly 10 years commencing with the following period. Past service costs are chiefly
accounted for as expenses in lump-sum at the time of occurrence.
(19) INCOME TAXES
The Group recognizes tax effects of temporary differences between the financial statement basis and the tax basis of assets and
liabilities. The provision for income taxes is computed based on the pretax income included in the consolidated statements of
operations. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax
consequences of temporary differences.
(20) AMOUNTS PER SHARE OF COMMON STOCK
Net income per share of common stock is computed based upon the weighted-average number of shares outstanding during
the year.
Fully diluted net income per share of common stock assumes exercise of the outstanding stock options at the beginning of the
year or at the date of issuance. For the year ended March 31, 2016 fully diluted net income per share is not disclosed because of
the Company’s net loss position.
Cash dividends per share have been presented on an accrual basis and include dividends to be approved after the balance
sheet date, but applicable to the year then ended.
(21) DERIVATIVES AND HEDGE ACCOUNTING
Companies are required to state derivative financial instruments at fair value and to recognize changes in the fair value as gains or
losses unless derivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedging instruments and meet certain hedging criteria, the Group defers recogni-
tion of gains or losses resulting from changes in fair value of derivative financial instruments until the related losses or gains on the
hedged items are recognized.
If interest rate swap contracts are used as hedging instruments and meet certain hedging criteria, the net amount to be paid or
received under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for which the
swap contract was executed (“special treatment”).
If foreign exchange forward contracts are used as hedging instruments and meet certain hedging criteria, hedged foreign
currency assets and liabilities are translated at the rate of these contracts (“allocation method”).
The following summarizes hedging derivative financial instruments used by the Group and items hedged:
Hedging instruments:
Loans payable in foreign currencies
Forward foreign exchange contracts
Currency option contracts
Currency swap contracts
Hedged items:
Foreign currency future transactions
Foreign currency future transactions
Foreign currency future transactions
Charterage and foreign currency loans payable
Interest rate swap contracts
Interest rate cap contracts
Fuel oil swap contracts
Freight futures
Interest on loans and bonds payable
Interest on loans
Fuel oil
Freight
The derivative transactions are executed and managed by the Company in accordance with the established policies in order to
hedge the Group’s exposure to interest rate increases, fuel oil increases, freight decreases, and foreign currency exchange rate risk.
The Company evaluates hedge effectiveness by comparing the cumulative changes in cash flows from or the changes in fair
value of hedged items and the cumulative changes in cash flows from or the changes in fair value of hedging instruments.
(22) RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 2017 presentation.
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Annual Report 2017
81
(23) CHANGES IN ACCOUNTING POLICIES
(Adoption of Practical Solution on a change in depreciation method due to Tax Reform 2016)
Due to amendments to the Japanese Corporation Tax Act, the Company and its domestic subsidiaries adopted “Practical Solution
on a change in depreciation method due to Tax Reform 2016” (Practice Issue Task Force No. 32, June 17, 2016) from the current
fiscal year and changed the depreciation method for buildings, facilities attached to buildings and structures, which were acquired
since April 1, 2016, from the declining-balance method to the straight-line method.
The effect of these changes on the consolidated financial statement is immaterial.
(24) ADDITIONAL INFORMATION
(Adoption of the Revised Implementation Guidance on Recoverability of Deferred Tax Assets)
The Company and its domestic subsidiaries adopted “Revised Implementation Guidance on Recoverability of Deferred Tax Assets”
(ASBJ Guidance No. 26, March 28, 2016) from the current fiscal year.
(Conclusion of Agreements on the Integration of Container Shipping Businesses)
Following a resolution passed at a meeting of the Board of Directors on October 31, 2016, the Company concluded a business
integration contract and a shareholder agreement with Nippon Yusen Kabushiki Kaisha and Kawasaki Kisen Kaisha, Ltd., subject to
regulatory approval from the authorities, on establishing a joint-venture company to integrate container shipping businesses
(hereinafter the “Integration”). An overview of the Integration is as follows.
I. Overview of Integration
Although growing modestly, the container shipping industry has struggled in recent years due to a decline in container growth
rate and a rapid influx of newly built vessels. These two factors have contributed to an imbalance of supply and demand, which
has destabilized the industry and has created an environment that is adverse to container line profitability. To combat these
factors, industry participants have sought to gain economies of scale through mergers and acquisitions and, consequently, the
structure of the industry is changing significantly. Under these circumstances, the Company has decided on a business integration
to secure stable and sustainable operations of the container shipping businesses.
II. Overview of the joint-venture company (planned)
i) Shareholders/Contribution Ratio: Mitsui O.S.K. Lines, Ltd.
ii) Amount of contribution
iii) Business domain
iv) Fleet size
31%
31%
38%
Kawasaki Kisen Kaisha, Ltd.
Nippon Yusen Kabushiki Kaisha
Approximately ¥300 billion (including fleets, share of terminals as investment in kind)
Container shipping business (including terminal operating business excluding Japan)
Approx. 1.4 million TEU (*)
Note: Figures are total fleet size of three companies as of October 2016 (excluding undelivered orders).
(*TEU: Twenty-foot Equivalent Unit)
III. Schedule
i) Agreement date:
ii) Establishment of the new-joint venture company: July 1, 2017 (planned)
April 1, 2018 (planned)
iii) Business commencement:
October 31, 2016
3. FINANCIAL INSTRUMENTS
(1) Qualitative information on financial instruments
I. Policies for using financial instruments
We raise capital investment funds to acquire vessels and other fixed assets primarily through bank loans and corporate bonds.
In addition, we secure short-term operating funds primarily through bank loans. Furthermore, we have established commitment
line with Japanese banks to maintain a sufficient 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 financial instruments / Risk and its management
Trade receivables are exposed to the credit risks of customers. We strive to mitigate such risks in accordance with internal 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 fluctuation risk. We identify the market value of listed stocks on a quarterly basis.
Trade payables are due within a year.
Short-term bank loans and commercial papers are primarily used for raising short-term operating funds, while long-term loans
and bonds are mainly for capital investments. Although several items with variable interest rates are exposed to the interest rate
risk, a certain portion of such variable interest rates is fixed with the use of interest rate swaps or interest rate caps.
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 bank loans, and
corporate bonds.
* Interest rate swap contracts/Interest rate cap contracts:
To avoid interest rate risk arising out of interest payment of long-term bank loans and corporate bonds.
* Fuel oil swap contracts:
To hedge fluctuation of fuel oil price.
With regard to the detail of hedge accounting (hedging instruments, hedged items, the way of evaluating hedge effectiveness),
see Note 2 (21) to the consolidated financial statements.
Derivative transactions are executed and managed in accordance with our internal regulations and dealt only with highly rated
financial institutions to mitigate credit risks.
On the other hand, as trade payables, bank loan payables, bonds, and commercial papers are exposed to the risk of financing
for repayment, we manage the risk by planning cash management program monthly, having established commitment lines with
several financial institutions, and adjusting funding period (balancing short-term/long-term combination), in consideration of
market circumstances.
III. Supplemental information on fair value
Fair value of financial instruments that are actively traded in organized financial markets is determined by market value.
For those where there are no active markets, it is determined by reasonable estimation. Reasonably estimated value might vary
depending on condition of calculation as several variation factors are included in the calculation. On the other hand, derivative
transactions mentioned in following (2) do not indicate the market risk of such derivatives.
(2) Fair values of financial instruments
Book values and fair values of the financial instruments on the consolidated balance sheet at March 31, 2017 were the following;
Assets
Cash and cash equivalents
Time deposits with a maturity of more than three months
Trade receivables
Short-term loans receivable
Investment securities
Available-for-sale securities
Long-term loans receivable (*1)
Total
Liabilities
Trade payables
Short-term bank loans
Bonds (*2)
Long-term bank loans (*3)
Total
Derivative financial instruments (*4)
Millions of yen
Book value
Fair value
Difference
¥ 186,844
3,102
130,420
17,263
¥ 186,844
3,102
130,420
17,263
98,675
70,799
¥ 507,103
98,675
74,695
¥ 510,999
¥ 125,119
39,164
230,595
832,154
¥1,227,032
¥ 18,746
¥ 125,119
39,164
231,950
849,862
¥1,246,095
¥ 18,593
¥ —
—
—
—
—
3,896
¥ 3,896
¥ —
—
1,355
17,708
¥19,063
(153)
¥
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Mitsui O.S.K. Lines
Annual Report 2017
83
Assets
Cash and cash equivalents
Time deposits with a maturity of more than three months
Trade receivables
Short-term loans receivable
Investment securities
Available-for-sale securities
Long-term loans receivable (*1)
Total
Liabilities
Trade payables
Short-term bank loans
Bonds (*2)
Long-term bank loans (*3)
Total
Derivative financial instruments (*4)
Thousands of U.S. dollars (Note 1)
Book value
Fair value
Difference
$ 1,665,425
27,650
1,162,492
153,873
$ 1,665,425
27,650
1,162,492
153,873
879,535
631,063
$ 4,520,038
879,535
665,790
$ 4,554,765
$ 1,115,242
349,086
2,055,397
7,417,363
$10,937,088
$ 167,092
$ 1,115,242
349,086
2,067,475
7,575,203
$11,107,006
$ 165,728
$
—
—
—
—
—
34,727
$ 34,727
$
—
—
12,078
157,840
$169,918
$ (1,364)
*1 The book value of long-term loans receivable includes current portion amounting to ¥8,002 million ($71,325 thousand).
*2 The book value of bonds includes current portion amounting to ¥20,000 million ($178,269 thousand).
*3 The book value of long-term bank loans includes current portion amounting to ¥93,991 million ($837,784 thousand).
*4 Amounts of derivative financial instruments are net of asset and liability. Negative amount stated with (
) means that the net amount is liability.
Book values and fair values of the financial instruments on the consolidated balance sheet at March 31, 2016 were the following;
Assets
Cash and cash equivalents
Time deposits with a maturity of more than three months
Trade receivables
Short-term loans receivable
Investment securities
Available-for-sale securities
Long-term loans receivable (*1)
Total
Liabilities
Trade payables
Short-term bank loans
Bonds (*2)
Long-term bank loans (*3)
Total
Derivative financial instruments (*4)
Millions of yen
Book value
Fair value
Difference
¥ 159,450
6,810
130,293
10,988
87,319
59,132
¥ 453,992
¥ 127,172
30,275
265,840
725,818
¥1,149,105
¥ 16,405
¥ 159,450
6,810
130,293
10,988
87,319
64,561
¥ 459,421
¥ 127,172
30,275
261,864
746,600
¥1,165,911
¥ 16,187
¥ —
—
—
—
—
5,429
¥ 5,429
¥ —
—
(3,976)
20,782
¥16,806
(218)
¥
*1 The book value of long-term loans receivable includes current portion amounting to ¥10,117 million.
*2 The book value of bonds includes current portion amounting to ¥45,000 million.
*3 The book value of long-term bank loans includes current portion amounting to ¥77,701 million.
*4 Amounts of derivative financial instruments are net of asset and liability. Negative amount stated with (
) means that the net amount is liability.
The following is a description of the valuation methodologies used for the assets and liabilities measured at the fair value.
Cash and cash equivalents, Time deposits with a maturity of more than three months, Trade receivables and
Short-term loans receivable
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.
Investment securities
The fair value of stocks is evaluated at market prices at stock exchange at the end of the years and the fair value of bonds is evalu-
ated at market prices at the stock exchange or at the value provided by financial institutions as at the end of the years.
Long-term loans receivable
The fair value of long-term loans receivable with variable interests rates is evaluated at the book value because the interest rate
reflects the market rate in a short term and the fair value is almost equal to the book value, unless the creditworthiness of the
borrower has changed significantly because the loan was made. The fair value of long-term loans receivable with fixed interest
rates, for each category of loans based on the type of loans, and maturity length, is evaluated by discounting the total amount of
principal and interest using the rate which would apply if similar loans were newly made.
Trade payables and short-term bank loans
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 is evaluated on their market price.
Long-term bank loans
The fair value of long-term bank loans with variable interest rates is evaluated at the book value because the interest rate reflects
the market rate in a short term and there has been no significant change in the Company’s creditworthiness before and after such
bank loans were made. The fair value of long-term bank loans with fixed interest rates, for each category of bank loans based on
types of bank loans, and maturity length, is evaluated by discounting the total amount of principal and interest using the rate
which would apply if similar bank loans were newly made. The fair value of long-term bank loans qualifying for allocation method
of currency swap is evaluated at the book value because such bank loans were deemed as the variable interest rates bank loans
and the interest rate reflects the market rate in a short term.
Derivative financial instruments
Please refer to Note 6 to the consolidated financial statements.
The following table summarizes financial instruments whose fair value is extremely difficult to estimate.
Unlisted stocks
Investments in unconsolidated subsidiaries and affiliated companies
Others
Total
Millions of yen
Thousands of
U.S. dollars (Note 1)
Book value
Book value
Book value
2017
¥ 7,663
125,628
12
¥133,303
2016
¥ 7,063
120,668
6
¥127,737
2017
$ 68,304
1,119,779
106
$1,188,189
The above items are not included in the amount presented under the line “Investments securities” in the table summarizing fair
value of financial instruments, because the fair value is extremely difficult to estimate as they have no quoted market price and the
future cash flow cannot be estimated.
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Mitsui O.S.K. Lines
Annual Report 2017
85
At March 31, 2017, the aggregate annual maturity of monetary claims and securities was as follows;
4. SECURITIES
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
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
Within a year
¥186,844
3,102
130,420
17,263
—
—
8,002
¥345,631
Within a year
$1,665,425
27,650
1,162,492
153,873
—
—
71,325
$3,080,765
Millions of yen
After one year
through five years
¥ —
—
—
—
After five years
through ten years
¥ —
—
—
—
10
200
3,853
¥4,063
—
—
5,785
¥5,785
Thousands of U.S. dollars (Note 1)
After one year
through five years
$ —
—
—
—
After five years
through ten years
$ —
—
—
—
89
1,783
34,344
$36,216
—
—
51,564
$51,564
At March 31, 2016, the aggregate annual maturity of monetary claims and securities was as follows;
Cash and cash equivalents
Time deposits with a maturity of more than three months
Trade receivables
Short-term loans receivable
Marketable securities and investments securities
Available-for-sale securities (Governmental/municipal bonds)
Available-for-sale securities (Corporate bonds)
Long-term loans receivable
Total
Within a year
¥159,450
6,810
130,293
10,988
—
—
10,117
¥317,658
Millions of yen
After one year
through five years
¥ —
—
—
—
After five years
through ten years
¥ —
—
—
—
10
200
9,572
¥9,782
—
—
4,283
¥4,283
After ten years
¥ —
—
—
—
—
—
53,159
¥53,159
$
After ten years
—
—
—
—
—
—
473,830
$473,830
After ten years
¥ —
—
—
—
—
—
35,160
¥35,160
86
Mitsui O.S.K. Lines
A. The following tables summarize acquisition costs, book values and fair values of securities with available fair values at March 31,
2017 and 2016.
Available-for-sale securities:
Securities with book values exceeding acquisition costs at March 31, 2017
Type
Equity securities
Bonds
Total
Type
Equity securities
Bonds
Total
Securities with book values exceeding acquisition costs at March 31, 2016
Type
Equity securities
Bonds
Total
Securities with book values not exceeding acquisition costs at March 31, 2017
Type
Equity securities
Total
Type
Equity securities
Total
Securities with book values not exceeding acquisition costs at March 31, 2016
Type
Equity securities
Total
Acquisition cost
¥43,975
210
¥44,185
Millions of yen
Book value
Difference
¥89,266
222
¥89,488
¥45,291
12
¥45,303
Thousands of U.S. dollars (Note 1)
Acquisition cost
$391,969
1,872
$393,841
Book value
$795,668
1,979
$797,647
Difference
$403,699
107
$403,806
Acquisition cost
¥33,086
210
¥33,296
Millions of yen
Book value
Difference
¥66,378
225
¥66,603
¥33,292
15
¥33,307
Acquisition cost
¥11,066
¥11,066
Millions of yen
Book value
¥9,187
¥9,187
Difference
¥(1,879)
¥(1,879)
Thousands of U.S. dollars (Note 1)
Acquisition cost
$98,636
$98,636
Book value
$81,888
$81,888
Difference
$(16,748)
$(16,748)
Acquisition cost
¥23,494
¥23,494
Millions of yen
Book value
¥20,716
¥20,716
Difference
¥(2,778)
¥(2,778)
B. Total sales of available-for-sale securities sold in the years ended March 31, 2017 and 2016 and the related gains and losses were
as follows:
Proceeds from sales
Gross realized gains
Gross realized losses
Millions of yen
2017
¥3,346
2,250
406
2016
¥15,279
12,934
2
Thousands of
U.S. dollars (Note 1)
2017
$29,824
20,055
3,619
Annual Report 2017
87
C. Impairment losses of securities
For the year ended March 31, 2017, the Company reduced the book value on the securities and booked the reductions as
impairment losses of ¥13 million ($116 thousand).
For the year ended March 31, 2016, the Company reduced the book value on the securities and booked the reductions as
impairment losses of ¥26,285 million.
With regard to the impairment losses, the Company principally reduces the book value on the securities to the amount which is
considered the recoverability etc. in the event the fair market value declines more than 50% in comparison with the acquisition cost.
5. INVENTORIES
Inventories at March 31, 2017 and 2016 consisted of the following:
Fuel and supplies
Others
Total
Millions of yen
2017
¥34,685
1,673
¥36,358
2016
¥26,603
1,257
¥27,860
Thousands of
U.S. dollars (Note 1)
2017
$309,163
14,912
$324,075
6. DERIVATIVE TRANSACTIONS
The Group enters into derivative transactions to hedge the Group’s exposure to interest rate increases, fuel oil increases, freight
decreases, and currency exchange fluctuations, in accordance with the guidance determined by the management of the Company.
I. Hedge accounting not applied
The following tables summarize the outstanding contract amounts and fair values of financial derivatives of the Group at March 31,
2017 and 2016, 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
(2) Interest related
Interest rate swaps
Receive floating, pay fixed
Contracts outstanding
Fair values
Receive fixed, pay floating
Contracts outstanding
Fair values
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Mitsui O.S.K. Lines
Millions of yen
2017
2016
Thousands of
U.S. dollars (Note 1)
2017
¥1,563
5
¥ 41
0
¥ 25
(0)
¥ 1
0
¥260
(9)
¥ 24
1
$13,932
45
$ 365
0
$ 223
(1)
Millions of yen
2017
2016
Thousands of
U.S. dollars (Note 1)
2017
¥22,826
(1,684)
¥15,590
(616)
¥25,435
(2,090)
¥9,034
200
$203,458
(15,010)
$138,961
(5,491)
(3) Others
a. Fuel oil swaps
Receive floating, pay fixed
Contracts outstanding
Fair values
b. Freight futures
Contracts outstanding
Fair values
Millions of yen
2017
2016
Thousands of
U.S. dollars (Note 1)
2017
¥ 375
(168)
¥ 240
(8)
¥—
—
¥—
—
$ 3,343
(1,497)
$ 2,139
(71)
Note: Fair values are measured based on forward exchange rates prevailing at the end of the year and information provided by financial institutions, etc.
II. Hedge accounting applied
The following tables summarize the outstanding contract amounts and fair values of financial derivatives of the Group at March 31,
2017 and 2016, for which hedge accounting has been applied.
(1) Deferred hedge accounting
a. Forward currency exchange contracts to hedge the risk
for the foreign currency transactions
Sell (U.S. dollar):
Contracts outstanding
Fair values
Buy (U.S. dollar):
Contracts outstanding
Fair values
b. Currency swaps contracts to hedge the risk for charterages
Sell (U.S. dollar):
Contracts outstanding
Fair values
Buy (U.S. dollar):
Contracts outstanding
Fair values
c. Interest rate swaps to hedge the risk for the long-term bank loans
and charterages
Receive floating, pay fixed
Contracts outstanding
Fair values
d. Interest rate caps to hedge the risk for the long-term bank loans
Buy
Contracts outstanding
Fair values
e. Fuel oil swaps to hedge the risk for the fuel oil
Receive floating, pay fixed
Contracts outstanding
Fair values
Millions of yen
2017
2016
Thousands of
U.S. dollars (Note 1)
2017
¥ 67,676
136
¥ 49,932
(854)
$ 603,227
1,212
¥ 62,955
(990)
¥ 55,421
(2,323)
$ 561,146
(8,824)
¥ 5,078
(905)
¥ 6,458
(1,397)
$ 45,263
(8,067)
¥164,417
40,852
¥185,023
49,596
$1,465,523
364,132
¥282,033
(18,206)
¥307,776
(25,858)
$2,513,887
(162,277)
¥ 23,892
(48)
¥ —
—
$ 212,960
(428)
¥ 5,918
378
¥ 2,669
(861)
$ 52,750
3,369
Annual Report 2017
89
Millions of yen
2017
2016
Thousands of
U.S. dollars (Note 1)
2017
(2) LONG-TERM DEBT
Long-term debt at March 31, 2017 and 2016 consisted of the following:
(2) Special treatment
Interest rate swaps to hedge the risk for the long-term bank loans
Receive floating, pay fixed
Contracts outstanding
Fair values
(3) Allocation method
Currency swaps to hedge the risk for the foreign bonds and long-term bank loans
Contracts outstanding
Fair values
¥20,618
(153)
¥20,758
(218)
$183,778
(1,364)
Millions of yen
2017
2016
Thousands of
U.S. dollars (Note 1)
2017
¥6,285
—
¥13,700
—
$56,021
—
Notes: 1. Fair values are measured based on forward exchange rates prevailing at the end of the year and information provided by financial institutions, etc.
2. Currency swaps which allocation method are applied to are recorded as the combined amount of such currency swaps and their hedge items. Therefore, their
fair values are included in fair values of such hedge items.
7. SHORT-TERM DEBT AND LONG-TERM DEBT
(1) SHORT-TERM DEBT
Short-term debt at March 31, 2017 and 2016 consisted of the following:
Short-term bank loans
Total
Millions of yen
2017
¥39,164
¥39,164
2016
¥30,275
¥30,275
Thousands of
U.S. dollars (Note 1)
2017
$349,086
$349,086
Average interest rates on short-term bank loans at March 31, 2017 and 2016 were 0.88% and 0.46%, respectively.
Bonds:
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
0.000% U.S. dollars bonds due April 24, 2020*
1.398% yen bonds due May 28, 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
0.850% yen bonds due December 15, 2031
Long-term bank loans due within one year:
Long-term bank loans due within one year at average interest rate of
1.22% and 0.87% at March 31, 2017 and 2016, respectively
Long-term bank loans due after one year:
Long-term bank loans due through 2076 at average interest rate of
1.73% and 1.50% at March 31, 2017 and 2016, respectively
Amount due within one year
* Zero coupon convertible bonds, details are as follows.
The 2018 Bonds
The 2020 Bonds
(1) Exercise period
From May 8, 2014 to April 10 2018
From May 8, 2014 to April 9, 2020
(2) Conversion price
U.S.$5.31 per share
U.S.$4.78 per share
Millions of yen
2017
2016
Thousands of
U.S. dollars (Note 1)
2017
¥
—
—
—
20,000
33,657
18,500
10,000
22,438
15,000
17,800
5,000
8,700
10,000
15,000
29,500
15,000
10,000
¥ 10,000
15,000
20,000
20,000
33,804
18,500
10,000
22,536
15,000
17,800
5,000
8,700
10,000
15,000
29,500
15,000
—
$
—
—
—
178,269
300,000
164,899
89,134
200,000
133,702
158,660
44,567
77,547
89,134
133,702
262,947
133,702
89,134
93,991
77,701
837,784
738,163
1,062,749
113,991
¥ 948,758
648,117
991,658
122,701
¥868,957
6,579,579
9,472,760
1,016,053
$8,456,707
At March 31, 2017, the aggregate annual maturity of long-term debt was as follows:
Year ending March 31
2018
2019
2020
2021
2022
2023 and thereafter
Total
Millions of yen
¥ 113,991
145,722
97,728
127,773
98,218
479,317
¥1,062,749
Thousands of
U.S. dollars (Note 1)
$1,016,053
1,298,886
871,094
1,138,898
875,461
4,272,368
$9,472,760
90
Mitsui O.S.K. Lines
Annual Report 2017
91
(3) ASSETS PLEDGED AND SECURED DEBT
At March 31, 2017 and 2016, the following assets were pledged as collateral for short-term debt and long-term debt.
(A) SHARES ISSUED AND OUTSTANDING
Changes in number of shares issued and outstanding during the years ended March 31, 2017 and 2016 were as follows:
Assets pledged
Vessels
Vessels and other property under construction
Investment securities
Total
Secured debt
Long-term bank loans due within one year
Long-term bank loans due after one year
Total
Millions of yen
2017
¥216,193
—
83,030
¥299,223
2016
¥245,710
26,108
76,623
¥348,441
Millions of yen
2017
¥ 12,175
160,119
¥172,294
2016
¥ 14,500
158,772
¥173,272
Thousands of
U.S. dollars (Note 1)
2017
$1,927,025
—
740,084
$2,667,109
Thousands of
U.S. dollars (Note 1)
2017
$ 108,521
1,427,213
$1,535,734
8. COMMITMENTS AND CONTINGENT LIABILITIES
(A) COMMITMENT
At March 31, 2017 and 2016, certain subsidiaries had loan commitment agreements. The nonexercised portion of loan commit-
ments was as follows:
Total loan limits
Loan executions
The nonexercised portion of loan commitments
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
¥16,268
16,268
¥ —
2016
¥13,522
9,578
¥ 3,944
2017
$145,000
145,000
—
$
(B) CONTINGENT LIABILITIES
At March 31, 2017 and 2016, 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 ¥159,430 million ($1,421,071 thousand)
and ¥148,653 million, respectively.
9. NET ASSETS
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 dividend
or the excess, if any, of 25% of common stock over the total of additional paid-in-capital and legal earnings reserve must be set
aside as additional paid-in-capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompa-
nying consolidated balance sheets.
Under the Act, appropriations (legal earnings reserve and additional paid-in-capital could be used to eliminate or reduce a
deficit or could be capitalized) generally require a resolution of the shareholders’ meeting.
Balance at April 1, 2015
Increase during the year
Decrease during the year
Balance at March 31 and April 1, 2016
Increase during the year
Decrease during the year
Balance at March 31, 2017
(B) SHARE SUBSCRIPTION RIGHTS
Share subscription rights at March 31, 2017 and 2016 consisted of the following:
Stock options
Total
(C) DIVIDENDS
(1) Dividends paid for the year ended March 31, 2017 were as follows:
Approved at the shareholders’ meeting held on June 21, 2016
Approved at the board of directors held on October 31, 2016
Total
Shares of
common stock
(Thousands)
1,206,286
—
—
1,206,286
—
—
1,206,286
Shares of
treasury stock
(Thousands)
10,186
140
(104)
10,222
86
(76)
10,232
Millions of yen
2017
¥2,447
¥2,447
2016
¥2,682
¥2,682
Thousands of
U.S. dollars (Note 1)
2017
$21,811
$21,811
Millions of yen
¥1,794
¥2,392
¥4,186
Thousands of U.S.
dollars (Note 1)
$15,991
$21,321
$37,312
There were no dividends included in the retained earnings at March 31, 2017 and to be paid in subsequent periods.
10. IMPAIRMENT LOSS
For the year ended March 31, 2017, the Group recorded an impairment loss on the following asset group.
Application
Assets for operations
Assets to be disposed of by sale
Total
Type
Vessels and Other
Vessels
Millions of yen
¥21,007
1,267
¥22,274
Thousands of U.S.
dollars (Note 1)
$187,245
11,293
$198,538
The Group grouped operating assets based on management accounting categories, and also grouped assets to be disposed of
by sale and idle assets by asset unit.
For the year ended March 31, 2017, since profitability 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
impairment loss.
For the year ended March 31, 2017, 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
reductions as impairment loss.
The recoverable amount for these asset groups were evaluated based on the asset’s net selling price. And the asset’s net
selling price was appraised based on the appraisal value reasonably calculated by a third party and the target price of assets to
be disposed of by sale.
92
Mitsui O.S.K. Lines
Annual Report 2017
93
11. BREAKDOWN OF COSTS OF BUSINESS STRUCTURAL REFORMS
(B) FUTURE LEASE PAYMENTS UNDER OPERATING LEASES FOR ONLY NON-CANCELABLE CONTRACTS AT MARCH 31, 2017
Mainly for the year ended March 31, 2016, the Company recognized costs of business structural reforms arising from the business struc-
tural reforms for bulk carriers and containerships which mainly consist of impairment loss and provision for loss on business liquidation.
A breakdown of the costs was as follows:
Impairment loss (*)
Provision for loss on business liquidation
Loss on cancellation fee for chartered vessels
Adjustment due to foreign exchange rate fluctuations
Others
Total
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
¥ —
—
—
6,490
—
¥6,490
2016
¥ 90,308
71,008
9,459
—
8,516
¥179,291
2017
$ —
—
—
57,848
—
$57,848
* 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
33,859
The Group grouped operating assets based on management accounting categories, and also grouped assets to be disposed
of by sale and idle assets by asset unit.
For the year ended March 31, 2016, since profitability 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 of business structural reforms.
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
reductions as costs of business structural reforms.
The recoverable amount for these asset groups were evaluated based on the asset’s net selling price. And the asset’s net selling price
was appraised based on the appraisal value reasonably calculated by a third party and the target price of assets to be disposed of by sale.
12. LEASES
AS LESSEE:
(A) INFORMATION ON FINANCE LEASES ACCOUNTED FOR AS OPERATING LEASES:
(1) Lease payments, depreciation equivalent and interest equivalent
Lease payments
Depreciation equivalent
Interest equivalent
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
¥13
10
0
2016
¥126
41
2
2017
$116
89
0
(2) 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.
(3) 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.
AND 2016:
Amount due within one year
Amount due after one year
Total
Millions of yen
2017
¥ 45,022
284,385
¥329,407
2016
¥ 51,195
286,547
¥337,742
Thousands of
U.S. dollars (Note 1)
2017
$ 401,301
2,534,852
$2,936,153
AS LESSOR:
(A) FUTURE LEASE INCOME UNDER OPERATING LEASES FOR ONLY NON-CANCELABLE CONTRACTS AT MARCH 31, 2017
AND 2016:
Amount due within one year
Amount due after one year
Total
13. RENTAL PROPERTIES
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
¥17,717
34,958
¥52,675
2016
¥14,146
42,867
¥57,013
2017
$157,920
311,596
$469,516
The Company and some of its consolidated subsidiaries own real estate for office lease (including lands) in Tokyo, Osaka and
other areas.
Information about the book value and the fair value of such rental properties was as follows:
For the year ended March 31
Book value
Balance at beginning of the year
Changes during the year
Balance at end of the year
Fair value at end of the year
Millions of yen
2017
2016
Thousands of
U.S. dollars (Note 1)
2017
¥311,092
(6,525)
304,567
458,711
¥317,018
(5,926)
311,092
444,844
$2,772,903
(58,160)
2,714,743
4,088,698
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, 2016, the primary increase was mainly due to the renewal construction of office buildings (¥1,367 million), and
the additional acquisition of land near Akihabara Station (¥724 million), while the primary decrease was mainly due to the depreciation of existing properties
(¥7,782 million).
4. Of changes during the year ended March 31, 2017, the primary decrease was mainly due to the depreciation of existing properties (¥7,292 million ($64,997
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)
2017
¥30,246
17,845
¥12,401
2016
¥28,492
17,917
¥10,575
2017
$269,596
159,060
$110,536
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.”
94
Mitsui O.S.K. Lines
Annual Report 2017
95
14. SEGMENT AND RELATED INFORMATION
(A) SEGMENT INFORMATION:
For the year ended March 31, 2017:
Bulkships
1. Revenues:
Reportable segment
Container-
ships
Ferries &
Coastal
RoRo Ships
Associated
Businesses
Millions of yen
Sub Total
Others*1
Total
Adjustment*2
Consolidated
(1) Revenues from customers
¥ 744,288
¥620,714
¥42,036
¥ 90,025
¥1,497,063
¥ 7,311
¥1,504,374
¥
— ¥1,504,374
(2) Inter-segment revenues
168
1,817
108
27,518
29,611
5,916
35,527
(35,527)
—
Total revenues
¥ 744,456
¥622,531
¥42,144
¥117,543
¥1,526,674
¥ 13,227
¥1,539,901
¥ (35,527)
¥1,504,374
Segment income (loss)
¥ 39,051
¥ (32,865)
¥ 4,507
¥ 12,337
¥ 23,030
¥ 1,811
¥ 24,841
¥ 585
¥ 25,426
Segment assets
¥1,441,138
¥388,029
¥54,418
¥415,399
¥2,298,984
¥359,526
¥2,658,510
¥(440,981)
¥2,217,529
2. Others
Depreciation and amortization
¥ 62,246
¥ 12,131
¥ 1,905
¥ 9,396
¥ 85,678
¥ 320
¥ 85,998
¥ 1,193
¥ 87,191
22
4,172
15,910
5,792
94,528
0
895
1,728
—
14
124
(5)
12,635
360
2,449
164
44
1,437
227
2,139
186
5,125
19,199
6,374
111,751
0
2,118
1,082
(830)
1,049
186
7,243
20,281
5,544
112,800
—
(1,325)
(1,244)
186
5,918
19,037
—
—
5,544
112,800
Amortization of goodwill
Interest income
Interest expense
Equity in earnings (losses) of
affiliated companies, net
Investment in affiliates
Increase in vessels, property
and equipment and
intangible assets
For the year ended March 31, 2017:
Bulkships
1. Revenues:
Reportable segment
Container-
ships
Ferries &
Coastal
RoRo Ships
Associated
Businesses
Thousands of U.S. dollars (Note 1)
(1) Revenues from customers
$ 6,634,175
$5,532,703
$374,686
$ 802,433
$13,343,997
$ 65,166
$13,409,163
$
— $13,409,163
(2) Inter-segment revenues
1,497
16,196
962
245,281
263,936
52,732
316,668
(316,668)
—
Total revenues
$ 6,635,672
$5,548,899
$375,648
$1,047,714
$13,607,933
$ 117,898
$13,725,831
$ (316,668) $13,409,163
Segment income (loss)
$ 348,079
$ (292,940) $ 40,173
$ 109,965
$ 205,277
$ 16,142
$ 221,419
$
5,215
$ 226,634
Segment assets
$12,845,512
$3,458,677
$485,052
$3,702,639
$20,491,880
$3,204,617
$23,696,497
$(3,930,662) $19,765,835
2. Others
Depreciation and amortization $ 554,827
$ 108,129
$ 16,980
$ 83,751
$ 763,687
$ 2,852
$ 766,539
$
10,634
$ 777,173
196
37,187
141,813
0
7,977
15,402
—
125
1,462
392
1,658
45,681
1,105
12,809
171,129
0
18,879
9,645
1,658
64,560
180,774
—
(11,810)
(11,089)
1,658
52,750
169,685
Amortization of goodwill
Interest income
Interest expense
Equity in earnings (losses) of
affiliated companies, net
Investment in affiliates
842,571
112,621
51,627
(45)
3,209
21,829
2,023
19,066
56,814
996,087
(7,398)
9,350
49,416
1,005,437
—
—
49,416
1,005,437
Increase in vessels, property
and equipment and
intangible assets
777,101
252,322
180,319
44,006
1,253,748
1,605
1,255,353
8,521
1,263,874
For the year ended March 31, 2016:
Bulkships
1. Revenues:
Reportable segment
Container-
ships
Ferries &
Coastal
RoRo Ships
Associated
Businesses
Millions of yen
Sub Total
Others*1
Total
Adjustment*5
Consolidated
(1) Revenues from customers
¥ 845,356
¥719,109
¥43,155
¥ 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
¥ 845,607
¥721,135
¥43,343
¥126,979
¥1,737,064
¥ 13,309
¥1,750,373
¥ (38,150)
¥1,712,223
Segment income (loss)
¥ 54,899
¥ (29,831)
¥ 4,382
¥ 10,172
¥ 39,622
¥ 3,550
¥ 43,172
¥ (6,903)
¥ 36,269
Segment assets
¥1,531,278
¥397,081
¥39,402
¥416,454
¥2,384,215
¥162,725
¥2,546,940
¥(327,353)
¥2,219,587
2. Others
Depreciation and amortization
¥ 62,228
¥ 16,907
¥ 1,906
¥ 10,091
¥ 91,132
¥ 273
¥ 91,405
¥ 1,367
¥ 92,772
Amortization of goodwill, net
Interest income
Interest expense
Equity in earnings (losses) of
affiliated companies, net
Costs of business structural
reforms
Investment in affiliates
Increase in tangible /
intangible fixed assets
12
2,761
12,934
63
665
2,022
7,813
706
—
21
143
453
132
74
1,738
207
3,521
16,837
1
1,785
1,034
208
5,306
17,871
255
9,227
(49)
9,178
117,411
91,287
61,880
14,131
—
2,094
—
2,083
179,291
109,595
—
1,896
179,291
111,491
—
(1,227)
(3,295)
—
—
—
208
4,079
14,576
9,178
179,291
111,491
88,254
15,526
4,728
5,177
113,685
124
113,809
1,903
115,712
the ship chartering business, the financing business and the shipbuilding business.
2. (1) Adjustment in Segment income (loss) of ¥585 million ($5,215 thousand) include the following: –¥4,579 million (–$40,815 thousand) of corporate profit which is
not allocated to segments, ¥6,312 million ($56,262 thousand) of adjustment for management accounting and –¥1,148 million (–$10,232 thousand) of inter-
segment transaction elimination.
(2) Adjustment in Segment assets of –¥440,981 million (–$3,930,662 thousand) include the following: ¥14,715 million ($131,161 thousand) of assets which are not
allocated to segments and –¥455,696 million (–$4,061,823 thousand) of inter-segment transaction elimination.
(3) Adjustment in Depreciation and amortization of ¥1,193 million ($10,634 thousand) include the following: ¥1,193 million ($10,634 thousand) of depreciation of
(4) Adjustment in Interest income of –¥1,325 million (–$11,810 thousand) include the following: ¥2,522 million ($22,480 thousand) of interest income which is not
allocated to segments and –¥3,847 million (–$34,290 thousand) of inter-segment transaction elimination.
(5) Adjustment in Interest expenses of –¥1,244 million (–$11,089 thousand) include the following: ¥5,604 million ($49,951 thousand) of interest expenses which are
not allocated to segments, –¥2,999 million (–$26,731 thousand) of adjustment for management accounting and –¥3,849 million (–$34,309 thousand) of inter-
segment transaction elimination.
(6) Adjustment in Increase of tangible/intangible fixed assets of ¥956 million ($8,521 thousand) is increase of tangible/intangible fixed assets which are not allocated
to segments.
3. Management has decided not to allocate liabilities to segments. Therefore segment information regarding liabilities is not disclosed.
4. Segment income (loss) corresponds to Ordinary profit in the consolidated statements of operations.
5. (1) Adjustment in Segment income (loss) of ¥6,903 million include the following: –¥12,610 million of corporate profit which is not allocated to segments, ¥6,949
million of adjustment for management accounting and –¥1,242 million of inter-segment transaction elimination.
(2) Adjustment in Segment assets of –¥327,353 million include the following: ¥18,087 million of assets which are not allocated to segments and –¥345,440 million of
inter-segment transaction elimination
(3) Adjustment in Depreciation and amortization of ¥1,367 million include the following: ¥1,376 million of depreciation of assets which are not allocated to segments
and –¥9 million of inter-segment transaction elimination.
(4) Adjustment in Interest income of –¥1,227 million include the following: ¥1,796 million of interest income which is not allocated to segments and –¥3,023 million
of inter-segment transaction elimination.
(5) Adjustment in Interest expenses of –¥3,295 million include the following: ¥3,039 million of interest expenses which are not allocated to segments, –¥3,309 million
of adjustment for management accounting and –¥3,025 million of inter-segment transaction elimination.
(6) Adjustment in Increase of tangible/intangible fixed assets of ¥1,903 million is increase of tangible/intangible fixed assets which are not allocated to segments.
6. The Group has realigned its business segments from the fiscal year ended March 31, 2017 to reflect certain modifications in its organizational structure.
The former “Ferry & Domestic Transport” segment has been changed to the “Ferries & Coastal RoRo Ships” segment.
In connection with this alignment, figures of the “Bulkships” segment and the “Ferry & Domestic Transport” segment for the fiscal year ended March 31, 2016 have
been reclassified to conform to the presentation of the fiscal year ended March 31, 2017.
87,183
28,308
20,230
4,937
140,658
180
140,838
956
141,794
*1. ”Others” primarily consists of business segments that are not included in reportable segments, such as the ship operations business, the ship management business,
Sub Total
Others*1
Total
Adjustment*2
Consolidated
assets which are not allocated to segments.
96
Mitsui O.S.K. Lines
Annual Report 2017
97
(Segment income (loss))
Segment income (loss) is calculated by adjusting ordinary income (loss).
(B) RELATED INFORMATION:
(1) Information about geographic areas:
In our core marine transportation business, the areas which services are provided are not necessarily consistent with the location
of our customers.
Therefore, revenues by geographic areas are revenues by geographic areas of each company’s registration.
For the year ended March 31, 2017:
Revenues
Vessels, property and equipment
Japan
¥1,264,122
¥1,020,254
North America
¥27,571
¥43,966
Millions of yen
Europe
¥32,196
¥ 2,975
Asia
¥180,063
¥220,888
Others
¥ 422
¥35,582
Consolidated
¥1,504,374
¥1,323,665
For the year ended March 31, 2017:
Revenues
Vessels, property and equipment
Japan
$11,267,689
$ 9,093,983
North America
$245,753
$391,889
Thousands of U.S. dollars (Note 1)
Europe
$286,977
$ 26,518
Asia
$1,604,983
$1,968,874
Others
$ 3,761
$317,158
Consolidated
$13,409,163
$11,798,422
For the year ended March 31, 2016:
Revenues
Vessels, property and equipment
Japan
¥1,432,969
¥1,082,305
North America
¥28,185
¥41,748
Millions of yen
Europe
¥35,759
¥ 3,455
Asia
¥214,875
¥214,263
Others
¥ 435
¥34,661
Consolidated
¥1,712,223
¥1,376,432
(2) Information about impairment loss by reportable segment:
For the year ended March 31, 2017:
Bulkships
Millions of yen
Reportable segment
Container-
ships
Ferries &
Coastal
RoRo Ships
Associated
Businesses
Sub Total
Others
Adjustment
and
elimination
Consolidated
Impairment loss
¥1,267
¥21,007
¥—
¥—
¥22,274
¥—
¥—
¥22,274
For the year ended March 31, 2017:
Bulkships
Thousands of U.S. dollars (Note 1)
Reportable segment
Container-
ships
Ferries &
Coastal
RoRo Ships
Associated
Businesses
Sub Total
Others
Adjustment
and
elimination
Consolidated
Impairment loss
$11,293
$187,245
$—
$—
$198,538
$—
$—
$198,538
For the year ended March 31, 2016:
Bulkships
Millions of yen
Reportable segment
Container-
ships
Ferries &
Coastal
RoRo Ships
Associated
Businesses
Sub Total
Others
Adjustment
and
elimination
Consolidated
Impairment loss
¥33,859
¥56,449
¥—
¥—
¥90,308
¥—
¥—
¥90,308
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.
(3) Information about goodwill by reportable segment:
For the year ended March 31, 2017:
Bulkships
Millions of yen
Reportable segment
Container-
ships
Ferries &
Coastal
RoRo Ships
Associated
Businesses
Sub Total
Others
Adjustment
and
elimination
Consolidated
Goodwill at the end of current year
¥67
¥0
¥—
¥2,074
¥2,141
¥—
¥—
¥2,141
For the year ended March 31, 2017:
Goodwill at the end of current year
Bulkships
$597
Thousands of U.S. dollars (Note 1)
Reportable segment
Container-
ships
Ferries &
Coastal
RoRo Ships
Associated
Businesses
Sub Total
Others
Adjustment
and
elimination
Consolidated
$0
$—
$18,487
$19,084
$—
$—
$19,084
For the year ended March 31, 2016:
Bulkships
Millions of yen
Reportable segment
Container-
ships
Ferries &
Coastal
RoRo Ships
Associated
Businesses
Sub Total
Others
Adjustment
and
elimination
Consolidated
Goodwill at the end of current year
¥89
¥14
¥—
¥2,317
¥2,420
¥0
¥—
¥2,420
15. INCOME TAXES
The Company is subject to a number of taxes based on income, which, in the aggregate, indicate statutory rates in Japan of
approximately 28.8% for the year ended March 31, 2017 and 29.8% for the year ended March 31, 2016.
(A) Significant components of deferred tax assets and liabilities at March 31, 2017 and 2016 were as follows:
Deferred tax assets:
Operating loss carried forward
Write-down of securities and other investments
Reserve for bonuses expenses
Impairment loss
Excess bad debt expenses
Net defined benefit liabilities
Retirement allowances for directors
Unrealized gain on sale of fixed assets
Provision for loss on business liquidation
Provision for contract loss
Unrealized gains on hedging derivatives
Transfer of charters from subsidiaries and affiliates
Deemed dividends
Others
Total deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Reserve deductible for tax purposes when appropriated for
deferred gain on real properties
Reserve deductible for tax purposes when appropriated for
special depreciation
Unrealized holding gains on available-for-sale securities
Gain on securities contributed to employee retirement benefit trust
Revaluation reserve
Retained earnings of consolidated subsidiaries
Unrealized gains on hedging derivatives
Others
Total deferred tax liabilities
Net deferred tax liabilities
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
2016
2017
¥ 70,899
757
1,338
20,873
585
4,696
487
1,303
785
391
20,208
8,694
11,224
7,163
149,403
(141,743)
7,660
¥ 53,931
1,519
1,412
26,346
892
4,651
559
1,435
20,237
1,204
—
—
1,855
4,056
118,097
(110,911)
7,186
$ 631,955
6,747
11,926
186,050
5,214
41,858
4,341
11,614
6,997
3,485
180,123
77,494
100,045
63,847
1,331,696
(1,263,419)
68,277
(2,564)
(1,749)
(22,854)
(722)
(15,332)
(2,714)
(17,060)
(7,707)
(11,969)
(2,648)
(60,716)
¥ (53,056)
(604)
(11,806)
(2,714)
(17,179)
(8,496)
(39,531)
(1,501)
(83,580)
¥ (76,394)
(6,436)
(136,661)
(24,191)
(152,063)
(68,696)
(106,685)
(23,603)
(541,189)
$ (472,912)
98
Mitsui O.S.K. Lines
Annual Report 2017
99
(B) Reconciliation of the statutory tax rate to the effective tax rate for the year ended March 31,2017, was as follows:
(3) MOVEMENTS IN NET LIABILITY FOR RETIREMENT BENEFITS BASED ON THE SIMPLIFIED METHOD
Statutory tax rate
Non-deductible expenses
Tax exempt revenues
Effect on tonnage tax system
Changes in valuation allowance
Equity in earnings of unconsolidated subsidiaries and affiliated companies
Effect on difference of effective tax rate for consolidated subsidiaries
Others
Effective tax rate
2017
28.8 %
1.5
(9.0)
(11.5)
63.1
(6.8)
(10.0)
(1.6)
54.5 %
Balance at beginning of the year
Retirement benefit costs
Benefits paid
Contributions paid by the employer
Increase in retirement benefit obligations from change of
scope of consolidation
Balance at end of the year
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
¥10,159
1,751
(1,979)
(683)
12
¥ 9,260
2016
¥10,264
2,158
(1,510)
(753)
—
¥10,159
2017
$ 90,552
15,607
(17,640)
(6,088)
107
$ 82,538
*1 Changes in valuation allowance of effect on net loss carried forward for foreign subsidiaries are included in Effect on difference of effective tax rate for
(4) RECONCILIATION FROM RETIREMENT BENEFIT OBLIGATIONS AND PLAN ASSETS TO LIABILITY (ASSET) FOR RETIREMENT BENEFITS
consolidated subsidiaries.
*2 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.
INCLUDING PLAN APPLIED SIMPLIFIED METHOD
16. EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITS
(A) OUTLINE OF EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITS
The Group has funded and un-funded defined benefit pension plans and defined contribution pension plans.
The defined benefit 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 benefit trust.
The retirement lump-sum plans provide for a lump-sum payment, as employee retirement benefits, determined by reference to
the current rate of pay and the length of service.
Certain consolidated subsidiaries calculate liabilities for retirement benefit and retirement benefit expenses, for the defined
benefit 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 “simplified method”).
(B) DEFINED BENEFIT PLANS
(1) MOVEMENTS IN RETIREMENT BENEFIT OBLIGATIONS EXCEPT PLAN APPLIED SIMPLIFIED METHOD
Balance at beginning of the year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Balance at end of the year
(2) MOVEMENTS IN PLAN ASSETS EXCEPT PLAN APPLIED SIMPLIFIED METHOD
Balance at beginning of the year
Expected return on plan assets
Actuarial loss (gain)
Contributions paid by the employer
Benefits paid
Return of assets of retirement benefit trust
Balance at end of the year
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
¥46,769
1,768
407
(193)
(1,999)
¥46,752
2016
¥45,500
1,694
485
4,934
(5,844)
¥46,769
2017
$416,873
15,759
3,628
(1,720)
(17,818)
$416,722
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
¥56,777
1,136
2,774
28
(1,758)
—
¥58,957
2016
¥66,169
1,323
(1,550)
—
(5,584)
(3,581)
¥56,777
2017
$506,079
10,126
24,726
250
(15,671)
—
$525,510
Funded retirement benefit obligations
Plan assets
Unfunded retirement benefit obligations
Total net liability (asset) for retirement benefits at end of the year
Liability for retirement benefits
Asset for retirement benefits
Total net liability (asset) for retirement benefits at end of the year
(5) RETIREMENT BENEFIT COSTS
Service cost
Interest cost
Expected return on plan assets
Net actuarial loss amortization
Retirement benefit costs calculated by the simplified method
Other
Total retirement benefit costs for the fiscal year
(6) REMEASUREMENTS OF DEFINED BENEFIT PLANS
Actuarial loss (gain)
(7) ACCUMULATED REMEASUREMENTS OF DEFINED BENEFIT PLANS
Unrecognized actuarial differences
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
¥ 54,258
(68,911)
(14,653)
11,709
(2,944)
12,446
(15,390)
¥ (2,944)
2016
¥ 55,188
(66,745)
(11,557)
11,707
150
13,442
(13,292)
¥ 150
2017
$ 483,626
(614,235)
(130,609)
104,368
(26,241)
110,937
(137,178)
$ (26,241)
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
¥ 1,768
407
(1,136)
1,153
1,751
(23)
¥3,920
2016
¥ 1,694
485
(1,323)
(1,192)
2,158
221
¥ 2,043
2017
$ 15,759
3,628
(10,126)
10,277
15,607
(205)
$ 34,940
Millions of yen
2017
¥4,119
2016
¥(7,675)
Thousands of
U.S. dollars (Note 1)
2017
$36,715
Millions of yen
2017
¥4,070
Thousands of
U.S. dollars (Note 1)
2017
$36,278
2016
¥(49)
100
Mitsui O.S.K. Lines
Annual Report 2017
101
(8) PLAN ASSETS
1. Plan assets comprise:
Equity securities
Bonds
Jointly invested assets
Cash and cash equivalents
Other
Total
Retirement benefit trust
2017
31%
26
35
8
0
100%
27%
2016
34%
23
36
7
0
100%
27%
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, 2017 and 2016.
The rates of expected return on plan assets were mainly 2.0% for the years ended March 31, 2017 and 2016.
The expected rate of salary increase were mainly 0.51% ~5.7% for the years ended March 31, 2017 and 2016.
(C) DEFINED CONTRIBUTION PLANS
The estimated amounts of contributions to defined contribution plans were ¥650 million ($5,794 thousand) at March 31, 2017 and
¥816 million at March 31, 2016.
17. STOCK OPTIONS
(A) EXPENSED AMOUNT
Expensed amounts on stock options for the years ended March 31, 2017 and 2016 were as follows:
Selling, general and administrative expenses
Total
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
¥88
¥88
2016
¥146
¥146
2017
$784
$784
(B) TERMS AND CONDITIONS
The following table summarizes terms and conditions of stock options for the years when they were granted:
2006
2007
2008
2009
Number of grantees
Directors: 11
Executive officers: 17
Employees: 37
Presidents of the Company’s
domestic consolidated
subsidiaries: 37
Number of stock options Common stock 1,700,000
Grant date
Vesting conditions
Service period
Exercise period
August 11, 2006
No provisions
No provisions
From June 20, 2007 to
June 22, 2016
Directors: 11
Executive officers: 20
Employees: 33
Presidents of the Company’s
domestic consolidated
subsidiaries: 36
Common stock 1,710,000
August 10, 2007
No provisions
No provisions
From June 20, 2008 to
June 21, 2017
Directors: 11
Executive officers: 20
Employees: 38
Presidents of the Company’s
domestic consolidated
subsidiaries: 36
Common stock 1,760,000
August 8, 2008
No provisions
No provisions
From July 25, 2009 to
June 24, 2018
Directors: 11
Executive officers: 20
Employees: 34
Presidents of the Company’s
domestic consolidated
subsidiaries: 35
Common stock 1,650,000
August 14, 2009
No provisions
No provisions
From July 31, 2011 to
June 22, 2019
2010
2011
2012
2013
Number of grantees
Directors: 10
Executive officers: 21
Employees: 36
Presidents of the Company’s
domestic consolidated
subsidiaries: 33
Number of stock options Common stock 1,710,000
Grant date
Vesting conditions
Service period
Exercise period
August 16, 2010
No provisions
No provisions
From July 31, 2012 to
June 21, 2020
Directors: 10
Executive officers: 22
Employees: 35
Presidents of the Company’s
domestic consolidated
subsidiaries: 33
Common stock 1,730,000
August 9, 2011
No provisions
No provisions
From July 26, 2013 to
June 22, 2021
Directors: 9
Executive officers: 22
Employees: 33
Presidents of the Company’s
domestic consolidated
subsidiaries: 30
Common stock 1,640,000
August 13, 2012
No provisions
No provisions
From July 28, 2014 to
June 21, 2022
Directors: 9
Executive officers: 18
Employees: 38
Presidents of the Company’s
domestic consolidated
subsidiaries: 33
Common stock 1,600,000
August 16, 2013
No provisions
No provisions
From August 2, 2015 to
June 20, 2023
2014
2015
2016
Number of grantees
Directors: 9
Executive officers: 19
Employees: 33
Presidents of the Company’s
domestic consolidated
subsidiaries: 32
Number of stock options Common stock 1,480,000
Grant date
Vesting conditions
Service period
Exercise period
August 18, 2014
No provisions
No provisions
From August 2, 2016 to
June 23, 2024
Directors: 8
Executive officers: 18
Employees: 37
Presidents of the Company’s
domestic consolidated
subsidiaries: 32
Common stock 1,550,000
August 17, 2015
No provisions
No provisions
From August 1, 2017 to
June 20, 2025
Directors: 9
Executive officers: 18
Employees: 32
Presidents of the Company’s
domestic consolidated
subsidiaries: 37
Common stock 1,580,000
August 15, 2016
No provisions
No provisions
From August 1, 2018 to
June 19, 2026
(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
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Balance at March 31, 2016
Options granted during the year
Options expired during the year
Options vested during the year
Balance at March 31, 2017
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2016
—
— 1,480,000
1,550,000
—
—
—
—
— 1,480,000
— 1,580,000
—
—
—
—
—
— 1,550,000
1,580,000
102
Mitsui O.S.K. Lines
Annual Report 2017
103
Vested stock options
2006
2007
2008
2009
2010
2011
2012
2013
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
2014
—
Options vested during the year
Options exercised during the year
—
—
—
—
—
—
Options expired during the year
1,423,000
10,000
10,000
—
—
—
—
—
—
—
—
—
—
31,000
—
— 1,480,000
—
—
20,000
—
Balance at March 31, 2017
— 1,640,000
1,710,000
1,630,000
1,700,000
1,710,000
1,298,000
1,568,000
1,460,000
2015
2016
—
—
—
—
—
—
—
—
—
—
(2) Unit prices of stock options exercised during the year
Exercise price
Average market price of share
at exercise
Fair value per stock option
at grant date
2006
¥841
2007
2008
¥1,962
¥1,569
2009
¥639
2010
¥642
2011
¥468
2012
¥277
2013
¥447
2014
¥412
2015
¥427
2016
¥242
—
—
—
—
—
—
¥355
—
¥380
—
—
¥219
¥ 352
¥ 217
¥136
¥203
¥ 87
¥ 67
¥172
¥132
¥ 94
¥ 56
(D) KEY FIGURES FOR FAIR VALUE PER STOCK OPTION
The Company utilized the Black Scholes Model for calculating fair value per stock option. Key figures of the calculation were
as follows:
Stock price volatility
Expected remaining term of the option
Expected dividends
Risk-free interest rate
2016
39.53%
5 years and 11 months
¥5 per share
(0.26)%
18. COMPREHENSIVE INCOME
For the years ended March 31, 2017 and 2016, the amounts reclassified to net income (loss) that were recognized in other compre-
hensive income and tax effects for each component of other comprehensive income were as follows:
Unrealized holding gains on available-for-sale securities, net of tax:
Increase (Decrease) during the year
Reclassification adjustments
Sub-total, before tax
Tax effect
Unrealized gains on hedging derivatives, net of tax:
Increase (Decrease) during the year
Reclassification adjustments
Adjustments of acquisition cost
Sub-total, before tax
Tax effect
Foreign currency translation adjustments:
Increase (Decrease) during the year
Reclassification adjustments
Remeasurements of defined benefit plans:
Increase (Decrease) during the year
Reclassification adjustments
Sub-total, before tax
Tax effect
Millions of yen
Thousands of
U.S. dollars (Note 1)
2017
2016
2017
¥ 13,932
(1,414)
12,518
(3,750)
8,768
30,282
(19,502)
166
10,946
2,126
13,072
3,148
(685)
2,463
2,966
1,153
4,119
(1,175)
2,944
¥(22,226)
(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)
$ 124,182
(12,603)
111,579
(33,426)
78,153
269,917
(173,830)
1,480
97,567
18,950
116,517
28,060
(6,106)
21,954
26,438
10,277
36,715
(10,474)
26,241
Share of other comprehensive income (loss) of associates accounted
for using equity method:
Decrease during the year
Reclassification adjustments
Adjustments of acquisition cost
Total other comprehensive income (loss)
(1,521)
5,570
52
4,101
¥ 31,348
(8,186)
3,091
1,620
(3,475)
¥(65,919)
(13,557)
49,648
463
36,554
$ 279,419
104
Mitsui O.S.K. Lines
Annual Report 2017
105
19. RELATED PARTY TRANSACTIONS
For the year ended March 31, 2017
Millions of yen
Category
Name of
company
Address
Paid-in
capital
Business
description
Ratio of
the Group’s
voting
rights
Transactions during the year
ended March 31, 2017
Balance at
March 31, 2017
Relation with
related party
Description of
transaction
Transacted
amount
Account
Amount
Thousands of U.S. dollars
(Note 1)
Transactions
during the
year ended
March 31,
2017
Transacted
amount
Balance at
March 31,
2017
Amount
Affiliated
company
TARTARUGA
MV29 B.V.
Affiliated
company
T.E.N.
GHANA
MV25 B.V.
Affiliated
company
CARIOCA
MV27 B.V.
NETHERLANDS US$110,000 Bulkships
NETHERLANDS
€100,000 Bulkships
20.60% Interlocking directorate
Debt guarantee
Debt
guarantee
20.00% Interlocking directorate
Debt guarantee
Debt
guarantee
NETHERLANDS
€100,000 Bulkships
20.60% Interlocking directorate
Debt guarantee
Debt
guarantee
¥29,235
28,741
28,706
—
—
—
— $260,585
—
256,181
—
255,870
—
—
—
Note: Transaction terms and the policy are decided based on the form of guarantees and other conditions.
For the year ended March 31, 2016
Address
Paid-in
capital
Business
description
NETHERLANDS
€100,000
Bulkships
Category
Affiliated
company
Name of
company
T.E.N.
GHANA
MV25 B.V.
Affiliated
company
CARIOCA
MV27 B.V.
NETHERLANDS
€100,000
Bulkships
20.60% Interlocking directorate
Debt guarantee
Debt
guarantee
Millions of yen
Transactions during the year
ended March 31, 2016
Balance at
March 31, 2016
Relation with
related party
Description of
transaction
Transacted
amount
Account
Amount
Ratio of
the Group’s
voting
rights
20.00% Interlocking directorate
Debt guarantee
Debt
guarantee
¥26,123
25,456
—
—
—
—
Note: Transaction terms and the policy are decided based on the form of guarantees and other conditions.
20. SUBSEQUENT EVENT
(Changes in Number of Shares Constituting One Unit, Consolidation of Shares, and Partial Amendment to Articles of Incorporation)
At the Board of Directors meeting held on April 28, 2017, the Company resolved to propose a change in the number of shares
constituting one unit, consolidation of shares, and a partial amendment to its Articles of Incorporation at the Annual General
Meeting of Shareholders scheduled to be held on June 27, 2017.
1. Objectives of consolidation
Following the guidelines issued by Japanese Stock Exchanges in their “Action Plan for Consolidating Trading Units” with the aim of
unifying the trading units of common shares at 100 shares, the Company decided to change the number of shares constituting one
unit of shares, which will be the Company’s share trading unit, from 1,000 shares to 100 shares, effective October 1, 2017. In conjunc-
tion with the change, the Company will consolidate its shares (ten shares into one share) with the purpose of minimizing the impact
on the rights of shareholders following the change in the number of shares constituting one unit.
2. Particulars of consolidation
(1) Class of shares to be consolidated
Common shares
(2) Consolidation ratio
On October 1, 2017, every 10 shares held by shareholders listed or recorded on the final register of shareholders of September 30,
2017, will be consolidated into one share.
(3) Number of shares to be consolidated
Number of outstanding shares before consolidation (as of March 31, 2017)
Number of shares reduced through consolidation (Note)
Number of outstanding shares after consolidation (Note)
Shares
Common shares
Common shares
Common shares
1,206,286,115
1,085,657,504
120,628,611
Note: “Number of shares reduced through consolidation” and “Number of outstanding shares after consolidation” are theoretical values calculated based on the
“Number of outstanding shares before consolidation” and the consolidation ratio.
3. Treatment of cases of a fraction constituting less than one share
In case a fraction constituting less than one share arises as a result of share consolidation, the Company will liquidate all such
fractional shares in a lump based on the provisions in Articles 235 of the Companies Act, and the proceeds from the sale will be
distributed to shareholders who hold fractional shares, in accordance with the percentages of said fractions.
4. Impact on per share information
Per share information for this fiscal year, calculated as though the said consolidation of shares was conducted at the beginning of
this fiscal year, is presented as follows.
(1) Net assets per share
(2) Net income per share
¥4,782.25 ($42.63)
¥ 43.95 ($ 0.39)
(Change in Business Segment Classification)
Effective April 1, 2017 the Group restructured corporate organizations. Our chief aims are to optimize our fleet portfolio and to
pursue further efficiency in managerial resources. In addition, the Group has established an “One-MOL” cross-sectional sales
promotion platform to offer the best transportation service that meets our customers’ needs.
In the fiscal year ended March 31, 2017, the Group’s business domains were namely Bulkships, Containerships, Ferries & Coastal
RoRo Ships and Associated Businesses. Reflecting the aforementioned restructure, from the beginning of fiscal year ending March
31, 2018, the Group’s business domains will be namely Dry Bulk Business, Energy Transport Business, Product Transport Business
and Associated Businesses. Within the Product Transport Business, Containerships and Car Carriers, Ferries & Coastal RoRo Ships are
further identified as reportable segments.
Revenues and Segment income (loss) of the Group for the fiscal year ended March 31, 2017 under the new segment classifica-
tion are as follows:
For the year ended March 31, 2017
Millions of yen
Reportable Segments
Product Transport Business
Dry Bulk
Business
Energy
Transport
Business
Container-
ships
Car Carriers,
Ferries &
Coastal
RoRo Ships
Associated
Businesses
Sub Total
Others*1
Total
Adjust-
ments*2
Consoli-
dated
Revenues
Revenues from customers
¥267,864
¥267,809
¥620,714
¥250,651
¥ 90,025
¥1,497,063
¥ 7,311
¥1,504,374
¥ — ¥1,504,374
Inter-segment revenues
15
430
1,817
194
27,518
29,974
5,916
35,890
(35,890)
—
Total Revenues
¥267,879
¥268,239
¥622,531
¥250,845
¥117,543
¥1,527,037
¥13,227
¥1,540,264
¥(35,890)
¥1,504,374
Segment income (loss)
¥ 11,978
¥ 26,702
¥ (32,865)
¥ 4,878
¥ 12,337
¥ 23,030
¥ 1,811
¥ 24,841
¥
585
¥ 25,426
106
Mitsui O.S.K. Lines
Annual Report 2017
107
Independent Auditor’s Report
Thousands of U.S. dollars (Note 1)
Reportable Segments
Product Transport Business
Dry Bulk
Business
Energy
Transport
Business
Container-
ships
Car Carriers,
Ferries &
Coastal
RoRo Ships
Associated
Business
Sub Total
Others*1
Total
Adjust-
ments*2
Consoli-
dated
Revenues
Revenues from customers
$2,387,593
$2,387,102
$5,532,703
$2,234,166
$ 802,433 $13,343,997
$ 65,166 $13,409,163
$
— $13,409,163
Inter-segment revenues
133
3,833
16,196
1,729
245,281
267,172
52,732
319,904
(319,904)
—
Total Revenues
$2,387,726
$2,390,935
$5,548,899
$2,235,895
$1,047,714 $13,611,169
$117,898 $13,729,067
$(319,904) $13,409,163
Segment income (loss)
$ 106,765
$ 238,007
$ (292,940) $ 43,480
$ 109,965 $ 205,277
$ 16,142 $ 221,419
$
5,215 $ 226,634
*1 “Others” primarily consists of business segments that are not included in reportable segments, such as the ship operations business, the ship management business,
the ship chartering business, the financing business and the shipbuilding business.
*2 Adjustment in Segment income (loss) of ¥585 million ($5,215 thousand) include the following:
–¥4,579 million (–$40,815 thousand) of corporate profit which is not allocated to segments, ¥6,312 million ($56,262 thousand) of adjustment for management
accounting and –¥1,148 million yen (–$10,232 thousand) of inter–segment transaction elimination.
*3 Segment income (loss) corresponds to Ordinary profit in the consolidated statements of operations.
21. OTHERS
(1) Litigation
On January 10, 2014, the Company filed a lawsuit against Mitsubishi Heavy Industries, Ltd. (hereinafter “MHI”) at Tokyo District Court
seeking compensation for damages in association with a maritime accident caused by a vessel constructed by MHI. In response,
MHI filed a countersuit at Tokyo District Court seeking payment for reinforcement of the strength of the ship’s hull of the same type
of ship, and the legal dispute is continuing.
The Company recognizes the claims of the countersuit by MHI has no legitimate basis, and intends to assert the propriety of
the Company in addition to upholding the claims for damages under the lawsuit.
(2) 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
vehicles. In addition, a class-action lawsuit was filed 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 financial
results of the Group is uncertain as its financial impact is not estimable at this stage.
108
Mitsui O.S.K. Lines
Annual Report 2017
109
The MOL Group
Mitsui O.S.K. Lines, Ltd. March 31, 2017
■ Consolidated Subsidiaries
▲ Affiliated Companies Accounted for by the Equity Method
Dry Bulk Business
Energy Transport
Business
Product Transport
Business
■ Mitsui O.S.K. Kinkai, Ltd.
■ MOL Bridge Finance S.A.
■ MOL Cape (Singapore) Pte. Ltd.
■ Shipowner/Chartering companies (61 companies) in Panama, Marshall Islands, Liberia,
■ Other (1 company)
▲ Gearbulk Holding AG
▲ Shipowner company (1 company) in Panama
Hong Kong, Cayman Islands, and Singapore
Registered Office
MOL’s Voting
Rights (%)*
Paid-In Capital
(Thousands)
Japan
Panama
Singapore
100.00
100.00
100.00
¥660,000
US$8
US$62,752
Switzerland
49.00
US$228,100
■ El Sol Shipping Ltd. S.A.
■ Lakler S.A.
■ MCGC International Ltd.
■ Mitsui O.S.K. Bulk Shipping (Europe) Ltd.
■ MNN Holdings Inc.
■ MOG LNG Transport S.A.
■ MOL (Asia Oceania) Pte. Ltd.
■ MOL Coastal Shipping, Ltd.
■ MOL LNG Transport Co., Ltd.
■ MOL Chemical Tankers Japan Co., Ltd.
■ MOL Chemical Tankers Pte. Ltd.
■ MOL Netherlands Bulkship B.V.
■ Pacific LNG Transport Ltd.
■ Phoenix Tankers Pte. Ltd.
■ Samba Offshore S.A.
■ Shining Shipping S.A.
■ Unix Line Pte. Ltd.
■ Shipowner/Chartering companies (116 companies) in Panama, Marshall Islands, Liberia,
▲ Aramo Shipping (Singapore) Pte. Ltd.
▲ Asahi Tanker Co., Ltd.
▲ Avium Subsea AS
▲ Carioca MV27 B.V.
▲ Cernambi Norte MV26 B.V.
▲ Cernambi Sul MV24 B.V.
▲ LNG Fukurokuju Shipping Corp.
▲ LNG Jurojin Shipping Corp.
▲ T.E.N. Ghana MV25 B.V.
▲ Tartaruga MV29 B.V.
▲ Trans Pacific Shipping 2 Ltd.
▲ Trans Pacific Shipping 5 Ltd.
▲ Trans Pacific Shipping 8 Ltd.
▲ Viken MOL AS
▲ Viken Shuttle AS
▲ Shipowner/Chartering companies (47 companies) in Panama, Marshall Islands, Liberia,
Hong Kong, Singapore, Indonesia and Malta
Hong Kong, Cayman Islands, Singapore, Indonesia, Cyprus, Bahamas and Malta
■ Asia Utoc Pte. Ltd.
■ Bangkok Container Service Co., Ltd.
■ Bangpoo Intermodal Systems Co., Ltd.
■ Blue Highway Express Kyushu Co., Ltd
■ Blue Highway Service K.K.
■ Blue Sea Network Co., Ltd.
■ Chiba Utoc Corp.
■ Chugoku Shipping Agencies Ltd.
■ Euro Marine Carrier B.V.
■ Euro Marine Logistics N.V.
■ Ferry Sunflower Ltd.
■ Hong Kong Logistics Co., Ltd.
■ International Container Transport Co., Ltd.
■ International Transportation Inc.
■ Mitsui O.S.K. Bulk Shipping (USA), LLC
■ 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 Ferry Co., Ltd.
■ MOL Liner, Ltd.
■ MOL Logistics (Deutschland) GMBH
■ MOL Logistics (Europe) B.V.
■ MOL Logistics (H.K.) Ltd.
Panama
Uruguay
Bahamas
U.K.
Liberia
Panama
Singapore
Japan
Japan
Japan
Singapore
Netherlands
Bahamas
Singapore
Panama
Panama
Singapore
Singapore
Japan
Norway
Netherlands
Netherlands
Netherlands
Bahamas
Bahamas
Netherlands
Netherlands
Bahamas
Bahamas
Bahamas
Norway
Norway
Singapore
Thailand
Thailand
Japan
Japan
Japan
Japan
Japan
Netherlands
Belgium
Japan
Hong Kong
Japan
U.S.A.
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
Japan
Hong Kong
Germany
Netherlands
Hong Kong
100.00
100.00
80.10
100.00
75.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
50.00
25.96
25.00
20.60
20.60
20.60
30.00
30.00
20.00
20.60
20.00
50.00
50.00
50.00
50.00
100.00
100.00
74.62
100.00
100.00
100.00
100.00
100.00
75.50
50.00
99.00
100.00
51.00
51.00
100.00
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
100.00
US$10
US$91,401
US$1
US$8,402
US$22,100
¥200
S$2,350
¥650,000
¥40,000
¥100,000
S$138,018
€18
US$1
US$379,311
US$10
US$10
US$344
US$20,743
¥600,045
US$27,600
€100
€175,026
€162,160
¥1,000
¥1,000
€100
US$110
¥3,961,100
¥36,400
¥35,000
US$18
US$338
S$900
THB10,000
THB130,000
¥50,000
¥30,000
¥54,600
¥90,000
¥10,000
€91
€1,950
¥100,000
HK$58,600
¥100,000
US$0
—
A$1,000
¥100,000
NGN2,636
S$200
THB20,000
US$6
BRL3,603
US$2,200
€456
PLN5
£1,500
GHS92
S$5,000
HK$1,000
RMB8,000
THB10,000
XOF50,000
EGP750
¥1,577,400
HK$40,000
€537
€414
HK$14,100
■ 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.
■ Nissan Carrier Europe B.V.
■ Nissan Motor Car Carrier Co., Ltd.
■ Shanghai Huajia International Freight Forwarding Co., Ltd.
■ Shosen Koun Co., Ltd.
■ Thai Intermodal Systems Co., Ltd.
■ TraPac, LLC.
■ TraPac Jacksonville, LLC.
■ Utoc Corp.
■ Utoc Engineering Pte. Ltd.
■ Utoc Logistics Corp.
■ Utoc Ryutsu Service Corp.
■ Utoc Stevedoring Corp.
■ World Logistics Service (U.S.A.), Inc.
■ Shipowner/Chartering companies (50 companies) in Panama, Marshall Islands, Liberia,
■ Others (10 companies)
▲ Meimon Taiyo Ferry Co., Ltd.
▲ PKT Logistics Group Sdn. Bhd.
▲ 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)
Hong Kong, Cayman Islands, Singapore and Isle of Man
Associated Businesses ■ Daibiru Corp.
■ Daibiru Facility Management Ltd.
■ Daibiru Saigon Tower Co., Ltd.
■ Green Kaiji Kaisha, Ltd.
■ Green Shipping, Ltd.
■ Hokuso Kohatsu K.K.
■ Ikuta & Marine Co., Ltd.
■ Japan Express Co., Ltd.
■ Japan Hydrographic Charts & Publications Co., Ltd.
■ Jentower Ltd.
■ Kitanihon Tug-boat Co., Ltd.
■ Kobe Towing Co., Ltd.
■ Kosan Kanri Service Co., Ltd.
■ Kosan Kanri Service-West Co., Ltd.
■ 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.
■ Nishinihon Sogo Setsubi 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 (2 companies)
▲ Shinyo Kaiun Corp.
▲ South China Towing Co., Ltd.
▲ Tan Cang-Cai Mep Towage Services Co., Ltd.
Others
■ Euromol B.V.
■ Linkman Holdings Inc.
■ Mitsui Kinkai Kisen Co., Ltd.
■ Mitsui O.S.K. Holdings (Benelux) B.V.
■ MOL (Americas) Holdings, 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 (3 companies) in Panama
▲ Minaminippon Shipbuilding Co., Ltd.
* MOL’s voting rights include voting rights of MOL and its subsidiaries
Registered Office
MOL’s Voting
Rights (%)*
Paid-In Capital
(Thousands)
Japan
Netherlands
Singapore
Taiwan
Thailand
U.K.
U.S.A.
Netherlands
South Africa
Netherlands
Japan
China
Japan
Thailand
U.S.A.
U.S.A.
Japan
Singapore
Japan
Japan
Japan
U.S.A.
Japan
Malaysia
Netherlands
Japan
China
Vietnam
Thailand
Japan
Japan
Vietnam
Japan
Japan
Japan
Japan
Japan
Japan
British Virgin Islands
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
Japan
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
75.06
100.00
100.00
100.00
99.00
100.00
100.00
100.00
100.00
100.00
90.00
76.00
79.98
100.00
100.00
100.00
67.55
100.00
100.00
100.00
100.00
100.00
40.33
20.86
20.00
31.98
22.05
21.33
24.44
51.07
100.00
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
100.00
100.00
36.00
25.00
40.00
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
100.00
100.00
100.00
100.00
24.00
¥756,250
€3,049
S$700
NT$7,500
THB20,000
£400
US$9,814
€19
ZAR3,000
€195
¥640,000
US$1,720
¥300,000
THB77,500
—
—
¥2,155,300
S$2,000
¥50,000
¥10,000
¥50,000
US$200
¥880,000
MYR254,685
€14,000
¥100,000
US$1,240
VND732,966,020
THB100,000
¥12,227,847
¥17,000
VND124,203,000
¥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
¥10,000
¥20,000
¥10,000
¥14,950
VND349,000,000
¥6,810,000
¥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 2017
111
Worldwide Offices
Shareholder Information
JAPAN
Mitsui O.S.K. Lines, Ltd.
Head Office (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 Office (Tokyo):
Yokohama:
Nagoya:
Osaka:
Kyushu:
Tel: 81-3-3587-7684
Tel: 81-45-212-7710
Tel: 81-52-564-7000
Tel: 81-6-6446-6501
Tel: 81-92-262-0701
Fax: 81-3-3587-7730
Fax: 81-45-212-7735
Fax: 81-52-564-7047
Fax: 81-6-6446-6513
Fax: 81-92-262-0720
NORTH AMERICA
MOL (America) Inc.
Head Office (Chicago):
Atlanta:
Long Beach:
New Jersey:
San Francisco:
Seattle:
MOL (Canada) Inc.
Head Office (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 Office (New Jersey):
Houston:
Long Beach:
Tel: 1-201-395-5800
Tel: 1-832-615-6470
Tel: 1-562-528-7500
Fax: 1-201-395-5820
Fax: 1-832-615-6480
Fax: 1-562-528-7515
CENTRAL AND SOUTH AMERICA
MOL (Brasil) Ltda.
Head Office (Sao Paulo):
MOL (Chile) Ltda.
Head Office (Santiago):
MOL (Panama) Inc.
Head Office (Panama):
MOL (PERU) S.A.C.
Head Office (Lima):
Tel: 55-11-3145-3980
Fax: 55-11-3145-3946
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 Office (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
Tel: 55-11-3145-3980
Fax: 52-55-5089-2280
Fax: 55-11-3145-3946
EUROPE
MOL (Europe) B.V.
Head Office (Rotterdam):
Genoa:
Hamburg:
Le Havre:
Vienna:
Basel:
MOL (Europe) Ltd.
Head Office (Southampton):
MOL (Europe Africa) Ltd.
Head Office (London):
Hamburg:
AFRICA
MOL South Africa (Pty) Ltd.
Head Office (Cape Town):
Tel: 31-10-201-3200
Tel: 39-10-2901711
Tel: 49-40-356110
Tel: 33-2-32-74-24-00
Tel: 43-1-877-6971
Tel: 41-61-716-8001
Fax: 31-10-201-3158
Fax: 39-10-5960450
Fax: 49-40-352506
Fax: 33-2-32-74-24-39
Fax: 43-1-876-4725
Fax: 41-61-716-8070
Tel: 44-2380-714500
Fax: 44-2380-714519
Tel: 44-20-3764-8000
Tel: 49-40-3609-7410
Fax: 44-20-3764-8393
Fax: 49-40-8430-6105
Tel: 27-21-441-2200
Fax: 27-21-419-1040
Mitsui O.S.K. Lines (Nigeria) Ltd.
Head Office (Lagos):
Tel: 234-1-2806556
Fax: 234-1-2806559
MOL (Ghana) Ltd.
Head Office (Tema):
MOL Cote d’Ivoire
Head Office (Abidjan):
Tel: 233-22-212084
Fax: 233-22-210807
Tel: 225-21756920
MIDDLE EAST
MOL (UAE) L.L.C.
Head Office (Dubai):
Tel: 971-4-3573566
Fax: 971-4-3573066
MOL (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 Office (Sydney):
Tel: 61-2-9320-1600
Fax: 61-2-9320-1601
Mitsui O.S.K. Lines (New Zealand) Ltd.
Head Office (Auckland):
Tel: 64-9-300-5820
Fax: 64-9-309-1439
MOL (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 Office (Hong Kong):
MOL (Asia) Limited
Head Office (Hong Kong):
Tel: 852-2823-6800
Fax: 852-2865-0906
Tel: 852-2823-6800
Fax: 852-2865-0906
Mitsui O.S.K. Lines (India) Private Limited
Head Office (Mumbai):
Tel: 91-22-4054-6300
Fax: 91-22-4054-6301
Mitsui O.S.K. Lines Lanka (Private) Ltd.
Head Office (Colombo):
Tel: 94-11-2304721
Fax: 94-11-2304730
MOL (Singapore) Pte. Ltd.
Head Office (Singapore):
Tel: 65-6225-2811
Fax: 65-6225-6096
Mitsui O.S.K. Lines (Malaysia) Sdn. Bhd.
Head Office (Kuala Lumpur):
Tel: 60-3-5623-9666
Fax: 60-3-5623-9600
MOL Myanmar Limited
Head Office (Yangon):
Tel: 95-9-7318-9815
Fax: 95-9-5137-7174
P.T. Mitsui O.S.K. Lines Indonesia
Head Office (Jakarta):
Tel: 62-21-5288-0008
Fax: 62-21-5292-0920
Mitsui O.S.K. Lines (Thailand) Co., Ltd.
Head Office (Bangkok):
Tel: 66-2-234-6252
Fax: 66-2-237-9021
MOL Philippines, Inc.
Head Office (Manila):
Tel: 632-888-6531
Fax: 632-884-1766
Mitsui O.S.K. Lines (Vietnam) Ltd.
Head Office (Ho Chi Minh):
Tel: 84-83-8219219
Fax: 84-83-8219317
Mitsui O.S.K. Lines (Cambodia) Co., Ltd.
Head Office (Phnom Penh):
Tel: 855-23-223-036
Fax: 855-23-223-040
Mitsui O.S.K. Lines Pakistan (Pvt.) Ltd.
Head Office (Karachi):
Tel: 92-21-35205397
Fax: 92-21-35202559
MOL (China) Co., Ltd.
Head Office (Shanghai):
Beijing:
Tianjin:
Shenzhen:
MOL (Taiwan) Co., Ltd.
Head Office (Taipei):
MOL (HK) Agency Ltd.
Head Office (Hong Kong):
MOL (Korea) Co., Ltd.
Head Office (Seoul):
Fax: 86-21-2320-6331
Tel: 86-21-2320-6000
Fax: 86-10-8529-9126
Tel: 86-10-8529-9121
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
Tel: 852-2823-6800
Fax: 852-2529-9989
Tel: 82-2-559-3001
Fax: 82-2-561-9490
MOL (Asia Oceania) Pte. Ltd.
Head Office (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: 65-6323-1305
Fax: 66-2-634-0806
Fax: 60-3-5623-3107
Fax: 91-44-4208-1020
Capital
Head office
¥65,400,351,028
1-1, Toranomon 2-chome, Minato-ku,
Tokyo 105-8688, Japan
Number of MOL employees
Number of MOL Group employees
(The parent company and consolidated subsidiaries)
Total number of shares authorized
Number of shares issued
Number of shareholders
Shares listed in
Share transfer agent
(Contact information)
Communications materials
966
10,794
3,154,000,000
1,206,286,115
96,892
Tokyo*
Sumitomo Mitsui Trust Bank, Limited
Stock Transfer Agency Business Planning Department
8-4, Izumi 2-chome, Suginami-ku, Tokyo 168-0063, Japan
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)
* Delisting of common stock on the Nagoya Stock Exchange was made on May 18, 2017.
(As of March 31, 2017)
Stock Price Range (Tokyo Stock Exchange) and Volume of Stock Trade
(¥)
800
700
600
500
400
300
200
100
0
Fiscal 2014 High ¥450
Low ¥308
Fiscal 2015 High ¥437
Low ¥183
Fiscal 2016 High ¥389
Low ¥199
(Million shares)
14
/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
3
4
5
6
7
8
9
10
11
12
17
/1
2
3
4
5
6
800
700
600
500
400
300
200
100
0
112
Mitsui O.S.K. Lines
Annual Report 2017
113