Our Vision isOur VesselMOL Report 2018Year ended March 31, 2018 As a full-line marine transport company, the MOL Group contributes to providing better lives for people
around the world by engaging in the transport of goods indispensable for everyday life, ranging from
daily necessities such as food, clothing, household furniture and electronic appliances to energy resources
such as oil and natural gas.
1
Life andOurVesselMOL Report 2018 Long-Term Vision
To develop the MOL Group
into an excellent and resilient
organization that leads
the world shipping industry
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
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
3
VisionMitsui O.S.K. LinesMOL Report 2018 Outline
5 Glossary
6 MOL’s History: “Spirit of Challenge and Innovation”
8 Our Fleet
10 Market Position in the Industry
Vision
12 Business Portfolio and Roadmap to Profit Improvement
18 Message from the CEO
23 Feature: Our Vessel & Value Creation
Operation
34 At a Glance
38 Overview of Operations
50 Financial and Non-Financial Highlights
52 Key Indicators
54 Message from the CFO
Management Foundation
58
Board of Directors, Audit & Supervisory
Board Members and Executive Officers
60 Dialogue between Outside Officers
62 Corporate Governance
66 Safe Operation
69 Risk Management
71 Environment
73 Corporate Social Responsibility (CSR)
Data Section
76 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 communication with
stakeholders. The latest versions of all reports
can be found on our website.
http://www.mol.co.jp/en/ir/
• MOL Report
• Investor Guidebook
• Market Data
Forward-Looking Statements
This report contains forward-looking statements con-
cerning MOL’s future plans, strategies and performance.
These statements represent assumptions and beliefs
based on information currently* available and are not
historical facts. Furthermore, forward-looking statements
are subject to a number of risks and uncertainties that
include, but are not limited to, economic conditions,
worldwide competition in the shipping industry,
customer demand, foreign currency exchange rates,
price of bunker, tax laws and other regulations. MOL
therefore cautions readers that actual results may differ
materially from these predictions.
* As of June 30, 2018 unless otherwise specified
Glossary (In alphabetical order)
■ Ballast Water
Ocean water that is taken in by the vessel to maintain ideal
buoyancy and control the vessel when not fully loaded with
cargo. Usually, ballast water is taken on when cargo is
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 Manage-
ment 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.
■ Pool Arrangement
Ship operators and owners pool certain ships to conduct
joint operations.
■ 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 pas-
sengers and personal-use automobiles in addition to freight
vehicles, RoRo ships mainly transport freight vehicles.
■ Chemical Tankers
Tankers fitted with multiple tanks to transport many different
types of liquid chemical cargo at the same time. These tank-
ers have complex design specifications, as they are equipped
with independent pipelines, cargo pumps and temperature
regulating functions for each tank, in addition to dedicated
facilities for cleaning and other features.
■ Shuttle Tankers
Tankers that transport crude oil from offshore oil rigs, such as
FPSOs, to onshore refineries as an alternative means of pipe-
lines. 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 main-
taining a certain distance from the offshore platform.
■ Ethane Carriers
Ethane carriers are specialized for transporting liquefied
ethane, which has been cooled to −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)
■ FSU (Floating Storage Unit)
An FSU is a floating facility for storing LNG offshore. An FSRU
has the same structure as an FSU with an additional function
for regasification of LNG onboard, with which it can send out
vaporized natural gas to land through a pipeline. Now, FSRUs
and FSUs are being adopted for a growing number of proj-
ects to establish LNG receiving terminals all over the world
because of their advantages, including a shorter lead time
and lower costs compared to conventional onshore receiv-
ing terminals.
■ Highly Stable Profits
Profits that are stably generated by 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 monitors the ratio
of its market exposure with the aim of controlling the risk of
market fluctuation.
■ Small- and Medium-sized Bulkers
In this report, small- and medium-sized bulkers consist of
Panamax, Handymax and Small Handy dry bulkers that trans-
port 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 emit-
ted during the combustion of fossil fuels containing sulfur,
such as oil and coal. In the marine transport industry,
regulations requiring 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 ser-
vices to customers. For example, big data on weather and sea
conditions 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 management efficiency, including remotely monitoring
the operational status of engines and other machinery and
making maintenance arrangements in advance.
■ Yield Management
In the containership business, this refers to a management
technique 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 calcu-
lated by deducting direct costs from freight revenues) rather
than freight rates themselves. Direct costs include loading
and unloading costs, feeder costs, and the costs of returning
empty containers (calculated to reflect the aspect of surplus
and shortage of containers at each point).
4
5
Our Vision is Our VesselMitsui O.S.K. LinesMOL Report 2018
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 shipowners 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.
1964
Mitsui O.S.K. Lines (MOL) is
founded by a merger of OSK
Line and Mitsui Steamship.
1968
Full containership service
commenced.
AMERICA MARU (700TEU)
1965
Japan’s first specialized car carrier,
the OPPAMA MARU, is launched.
1942
Mitsui & Co., Ltd. spins off
its shipping department to
create Mitsui Steamship
Co., Ltd.
1961
World’s first automated ship,
the KINKASAN 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.
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
–162oC, 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 94 (including outstanding orders) as of March
31, 2018.
2018 March
World’s first ice-breaking LNG carrier project
Delivery of MOL’s first ice-breaking carrier,
VLADIMIR RUSANOV
2017
Delivery of the MOL FSRU Challenger,
the first FSRU owned and operated
by an Asian company
2012
The world’s first hybrid car
carrier, the EMERALD ACE,
is launched.
2010
The first participation
in FPSO
2016
World’s first large ethane
carrier ETHANE CRYSTAL
completed
1989
Navix Line is established by the merger
of Japan Line and Yamashita-Shinnihon
Steamship.
Mid 2000s~
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 shipping
market stumbled and has continued to struggle with ongoing
stagnation. To respond to this vastly different business
environment, MOL implemented the Business Structural Reforms
in the dry bulker business and decided on integrating the
containership businesses of three Japanese shipping companies.
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.)
2018 April
Operations began at Ocean
Network Express, a company
formed through the integration of
three Japanese shipping companies’
containership businesses
(related information on P. 11 and 14)
MOL, Nippon Yusen Kabushiki Kaisha and Kawasaki Kisen
Kaisha, Ltd. decided in 2016 to merge their containership
businesses to strengthen their global network and competi-
tiveness. Ocean Network Express, the integrated company
established in 2017, started operations in April 2018 and the
combined vessel fleet after integration is approximately
1.49 million TEUs—fifth largest in the world with a 7%
global share.
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.
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.
6
Underlined words are explained in the Glossary on page 5.
7
HistoryMitsui O.S.K. LinesMOL Report 2018 [Steaming Coal Carrier]
NAGARA MARU
[LNG Carrier]
LNG SATURN
[Methanol Carrier]
CAJUN SUN
[Chemical Tanker]
M/T NAEBA GALAXY
[Car Carrier]
BELUGA ACE
[VLCC]
KIRISHIMA
[FPSO]
Cidade de Caraguatatuba
MV27
Photo: MODEC, Inc.
[FSRU]
MOL FSRU Challenger
[Ferry]
SUNFLOWER SATSUMA
[Containership]
ONE COMMITMENT
[Cruise Ship]
NIPPON MARU
[Dry Bulker
Capesize Bulker]
VEGA DREAM
[Ice-Breaking LNG Carrier]
VLADIMIR RUSANOV
[Subsea Support Vessel]
Skandi Santos
[Shuttle Tanker]
Madre De Deus
[Tugboat]
ATSUMI MARU
8
Underlined words are explained in the Glossary on page 5.
9
Our FleetMitsui O.S.K. LinesMOL Report 2018 Market Position in the Industry
MOL operates a balanced oceangoing fleet. In terms of its total fleet size and presence in individual
market categories, MOL ranks among the world’s top class shipping companies.
Containerships
World Major Carriers’ Fleets (All Vessel Types)
(Number of Vessels)
0
200
400
600
800
1,000
1,200
63
857
China COSCO (China)
NYK (Japan)
MOL (Japan)
Oldendorff (Germany)
APM-Maersk (Denmark)
K Line (Japan)
MSC (Switzerland)
CMA-CGM (France)
China Merchants (China)
Fredriksen
Swiss Marine
Euronav+Gener8
0
20
40
60
80
100
120
(Million deadweight tonnage (DWT))
Number of vessels Deadweight tonnage (DWT)
Source: MOL internal estimation based on each companies’ published data, Clarkson and Alphaliner (March 2018)
Global Major Carriers’ Fleet Composition (by DWT)
20
40
60
80
100
49
25 11 3 12
(%)
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)
10
1,000
2,000
3,000
4,000
5,000
1,620
(Thousand TEU)
0
Maersk
MSC
China COSCO+OOCL
CMA-CGM
NEW J/V
NEW J/V
(Ocean Network Express)
(Ocean Network Express)
Hapag-Lloyd
(+UASC)
Evergreen
Yang Ming
Hyundai
Global fleet capacity Orderbook
Source: Alphaliner (As of April 2018)
Dry Bulkers
Tankers
(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
Oldendorff
NYK
China COSCO
K Line
MOL
Swiss Marine
Euronav+Gener8
China COSCO
China Merchants
MOL
Bahri
Teekay
30,419
Large bulkers Small- and medium-sized bulkers
Source: Companies’ published data and Clarkson (March 2018)
Source: Companies’ published data and Clarkson (March 2018)
15,839
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
94
MOL
NYK
K Line
EUKOR
GLOVIS
HOEGH
In operation On order
* Qatar Gas Transport Company Ltd.
Source: MOL (March 2018)
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 2018)
Note: Excluding spot-chartered vessels
111
11
Mitsui O.S.K. LinesMOL Report 2018 Current Business Portfolio
PORTFOLIO
Fleet Table (Number of vessels)
Dry Bulkers
(including Steaming Coal Carriers)
Tankers (including Chemical Tankers)
LNG Carriers (including Ethane Carriers)
Offshore Businesses*1
Car Carriers
Ferries & Coastal RoRo Ships
Cruise Ship
Others
Subtotal
Containerships*2
Total
As of March 31,
2018
As of March 31,
2017
337
173
83
7
119
14
1
32
766
91
857
337
169
80
5
120
14
1
31
757
91
848
Note: Figures include short-term chartered vessels and vessels owned by joint ventures.
*1 FPSO, FSRU and Subsea Support Vessel
*2 ONE operates from April 2018.
Highly specialized*
Chemical
Tankers
Ferries &
Coastal
RoRo Ships
LNG Carriers
Terminals and
Logistics
Businesses
Methanol
Tankers
Daibiru
Corporation
Offshore
Businesses
Tugboats
Variable
profits
Car Carriers
Trading
Business
Crude Oil
Tankers
Stable
profits
Product
Tankers
Large Bulkers
Small- and
Medium-Sized
Bulkers
Containerships
12
Mitsui O.S.K. Lines
13
Less specialized*
MOL Report 2018 Business Strategies (Containerships)
Operations started in April 2018 at Ocean Network Express
(ONE), an integrated containership business company
formed by three Japanese shipping companies
Strengthening Competitive Advantage
Operational
Efficiency
Economy
of Scale
Competi-
tiveness
(Profitability)
Best
Practices
Creation of more synergy and
enhancement of operational
efficiency by integration of each
company’s best practices
Larger
Business Size
Achievement of economy of scale
by integrating the three companies
Synergy of
$1,050 million/year
Profit stabilization by accomplishment of
synergy of $1,050 million/year
Appearance of Synergy Effects
Breakdown of the $1,050 million/year synergy effect:
Reduction of variable costs $430 million: Reduction in costs for railroads, trucks, feeders, terminals, containers, etc.
Reduction of overhead costs $370 million: IT integration and organizational rationalization, promotion of outsourcing, etc.
Reduction of operation costs $250 million: Reduction in fuel consumption, rationalization of routes, etc.
Appearance of Synergy Effects Timeline
(Millions of U.S. dollars)
1,200
1,000
800
600
400
200
0
About
80%
About
60%
100%
Reduction of
variable costs
Reduction of
overhead costs
Reduction of
operation costs
FY2018
FY2019
FY2020
As a result of the $1,050 million synergy effect that ONE generates yearly,
MOL will see improvement in profitability of approx. ¥34 billion* in line with
its 31% share of the company
* Based on an assumed exchange rate of ¥105/$1
(as of April 27, 2018)
Reinvention of MOL’s Business Portfolio
by Strategically Allocating Resources
PORTFOLIO
Roadmap to Profit Improvement (Ordinary Profit)
Highly Stable Profits + Other Variable Profits (Losses) = Ordinary Profit
(¥ billion)
100.0
80.0
60.0
40.0
20.0
0
–20.0
–40.0
Projected medium-term levels
¥80.0–100.0 billion
¥31.4 billion
¥40.0 billion
55.0
56.0
63.0
63.0
Transitional costs related to
containership business integration
■ Highly stable profits (existing)
■ Highly stable profits (contract renewal)
■ Other variable profits (losses)
● Ordinary profit (total)
FY2017
Results
FY2018
Forecasts
FY2019
Plan
FY2020
Plan
(as of April 27, 2018)
Highly specialized*
Fields for strategic resource allocation
Investment of management resources in businesses that
will generate highly stable profits and fields where
MOL can leverage its competitive edge
Chemical
Tankers
LNG Carriers
Ferries &
Coastal
RoRo Ships
Terminals and
Logistics
Businesses
Methanol
Tankers
Daibiru
Corporation
Offshore
Businesses
Tugboats
Variable
profits
Car Carriers
Trading
Business
Crude Oil
Tankers
Stable
profits
Containerships
（Ocean Network Express）
Product
Tankers
Large Bulkers
Economy of
scale through
integration
Small- and
Medium-Sized
Bulkers
● Highly stable profits
● Other variable profits (losses)
* 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
Less specialized*
Business Strategies (Other than Containerships)
▶ : Major Specific Achievements
Dry
Bulkers
Tankers
Ensure the renewal of long-term contracts with domestic and overseas steelmakers
Shift to a business model that steadily generates profits securing an additional margin
over the market
Increase contracts for biomass fuel transport, which are expected to generate mid-
and long-term revenue
▶ Signed deal for bauxite transport from Guinea
Strengthen chemical tankers and methanol tankers, while downsizing the product
tanker fleet
Consider entering the tank terminal business
▶ Entered the tank container business through capital and business alliance
with Nippon Concept Corporation
LNG
Carriers
Continue to accumulate highly stable profits through long-term contracts
Pursue vertically integrated businesses with LNG transportation as a core
▶ Signed long-term charter contracts for four LNG carriers (conventional type)
serving Yamal LNG project in Russia
Offshore
Businesses
Expand FPSOs, FSRUs and subsea support vessels
Consider entering emission-free businesses, beginning with offshore wind power-
related businesses
▶ Launched MOL FSRU Challenger in a new FSRU project in Turkey
▶ Participated in the SWAN project in India
▶ Signed long-term charter contract for LNG bunkering vessel
Car
Carriers
Procure eco-friendly vessels (incl. LNG-fueled vessels)
▶ Reduced core fleet to respond to changing trade patterns
Terminals &
Logistics
Expand regionally focused logistics through M&A, etc. (with a focus on Southeast Asia
and the Americas)
Rollout business under the unified brand MOL Worldwide Logistics in the NVOCC business
▶ Invested in the PKT Logistics Group, a leader in Malaysia’s total logistics field
Ferries &
Coastal RoRo
Ships
Strengthen the network of integrated sea and land transportation services combining
trucks and ferries
Create a casual cruise market by leveraging ICT
▶ Launched two new building ferries (increased truck-carrying capacity,
upgraded onboard facilities for passenger use)
Associated
Businesses
Expand business development in Asia
Gradually increase and diversify investments, primarily overseas, and transform them
into core businesses through domestic business development
14
Mitsui O.S.K. Lines
15
16
Underlined words are explained in the Glossary on page 5.
MOL Report 2018
17
Message from the CEO
Junichiro Ikeda
President & CEO
18
18
Mitsui O.S.K. Lines
I strongly believe that
the development of “stress-free services”
is key in strengthening trust and
being the first choice for customers.
Progress and Evaluation of Management Plan “Rolling Plan 2017”
Last year, the Company formulated a new management plan
which revises our past practice of adopting fixed-term strate-
gies every three years. Under this new approach, we first
devised a vision for the MOL Group to be pursued in the
coming ten years. Next, we clarified what measures are to be
taken to fulfill this vision. In today’s turbulent business envi-
ronment, it is becoming increasingly necessary to adjust to
new realities and be flexible in our endeavors. Plans need to
be revised, or at least adjusted every year, hence, the title of
last year’s plan, “Rolling Plan 2017.” The plan seeks to achieve
our ten-year vision by reinventing the business portfolio in
tandem with the enhancement of our financial strength. This
is to be achieved through the strategic allocation of resources
to carefully selected business fields which will serve to
generate highly stable profits and leverage the Company’s
strengths. Looking at the progress in terms of financial perfor-
mance in fiscal 2017, MOL posted a substantial extraordinary
loss accompanying the integration of the containership busi-
nesses, which pushed net profit into the red. This prevented
MOL from achieving its goals for a stronger financial structure.
However, we are pleased with the progress made towards the
reformation of our business portfolio.
LNG carriers and offshore businesses are positioned as the
core of the strategic business fields for resource allocation. In
the LNG carriers division, MOL acquired long-term charter
contracts for four conventional LNG carriers to be deployed in
the Yamal LNG project, following the securement of long-term
contracts for ice-breaking LNG carriers for use in the same
project. In the area of offshore businesses, the Company estab-
lished a foothold in the market for Floating Storage and Regas-
ification Units (FSRUs) by becoming the owner and operator of
a project in Turkey and deploying MOL FSRU Challenger. This is
the first time an Asian shipping company has ventured into the
FSRU business. In addition, MOL further strengthened the
business through the SWAN project in India, providing opera-
tions and maintenance know-how without entering into own-
ership. This has allowed us to generate steady revenues on a
fee basis with minimal risk. In the area of dry bulkers and tank-
ers, MOL has worked to solidify its mutual trust with existing
customers and has been successful in renewing and moving
forward with many contracts. By securing steady sources of
profits on the basis of long-term contracts, the Company was
able to establish highly stable profits for the future.
MOL has also made good progress in leveraging its existing
strengths in the business fields where it holds an edge over
competitors. For example, in the area of chemical tankers,
which requires extensive expertise and know-how, MOL is
enhancing its competitiveness by developing new large-scale
tankers. As for ferries and coastal RoRo ships, newly built fer-
ries are being introduced to improve fuel efficiency and
expand cargo space. An intensifying shortage of truck drivers
combined with rising environmental concerns is propelling a
modal shift from land transport to shipping, which MOL has
firmly leveraged. Meanwhile, the Company is taking steps to
cultivate tourism demand, by providing expanded and more
luxurious private spaces for passengers and more actively
marketing ferry travel. In the logistics business, the Company
is consolidating services under the unified brand of MOL
Logistics Worldwide, and providing various high-end services
to meet demand for the integrated transportation of individ-
ual items. MOL also invested in one of Malaysia’s leading
logistics companies. In addition to efforts to enter new
regional markets and provide tailor-made services to custom-
ers, the Company has established a capital and business alli-
ance with Nippon Concept Corp., to gain a foothold in the
tank container transport business.
Underlined words are explained in the Glossary on page 5.
19
Mitsui O.S.K. LinesMOL Report 2018 Message from the CEO
Toward “Rolling Plan 2018”
Continue Reinvention of MOL’s Business Portfolio
by Strategically Allocating Resources
There have been no major changes to the fundamental strat-
egy behind “Rolling Plan 2018.” MOL continues to focus its
resources in strategic business fields such as the LNG carriers,
offshore businesses, chemical tankers, methanol tankers and
logistics businesses. Through this, the Company strives to accu-
mulate further medium- and long-term contracts to ensure the
retainment of a stable cash flow in the future, as well as to
expand businesses where it holds a competitive edge.
Differentiating MOL from Competitors by
Deploying “Stress-Free Services”
As the Company steadily moves forward in its efforts to con-
centrate resources in the key strategic business fields, the
focus of the rolling plan, now in its second year, has shifted
slightly. It now adopts a more concrete roadmap to achieve
MOL’s goals for the next decade.
As CEO, a particular objective I wish to pursue is to provide
“stress-free services that are truly convenient for customers.” In
today’s marine transport industry, it would seem difficult for
any company to differentiate itself from others based on
concrete factors. MOL strongly believes developing “stress-free
services” is a vital way in which it can earn the trust of custom-
ers and become a truly reliable partner, which should lead to
the achievement of sustainable growth in the longer term.
Advances in digital innovation, among other factors, have led
to a diversification and intensification of customer needs.
Indeed, the market has progressed so rapidly that many cus-
tomers have latent needs that they themselves have difficulty
recognizing or specifying. MOL is looking for ways to cultivate
this latent demand by proposing comprehensive solutions,
and adopting an approach to sales that differs from conven-
tional methods.
To take the lead in these new initiatives, MOL newly estab-
lished the Corporate Marketing Division. This new division is
responsible for business intelligence—analyzing client com-
panies and entire industries to identify needs that have not
been met by conventional marketing activities and planning
new methods of approaching each market and each individ-
ual customer. The Company also created the Technology
Innovation Unit to merge the functions formerly handled by
the Technology Department (which addressed issues relating
to ships, machinery and other technical resources) and the IT
Department (which oversaw all issues relating to digitalization
and information technology). MOL works in an integrated
manner to provide customers with optimal solutions.
Refining Company Strengths to Support
Sustainable Growth
Naturally, it is not possible to provide truly “stress-free services”
just by changing the approach or the structure of our opera-
tions. MOL needs to constantly monitor and respond to
changing customer needs, while cultivating its responsiveness
and the ability to propose solutions. To this end, the Company
defined clearer priorities in five specific themes, identified last
year as Group-wide priorities for strengthening the MOL
Group, and continues to develop its strengths in these priori-
tized items.
In terms of the ICT strategy, in addition to offering solutions
that employ digital technology, the Company is developing a
next-generation type of ship management support system
that aims for the “visualization of marine operations.” With the
technology development and the environment, the Technol-
ogy Innovation Unit is making progress in three particular
areas. Firstly, it is moving to implement the further use of
LNG-fueled vessels in response to both tighter environmental
regulations and the need to combat global climate change.
Secondly, it is taking initiative in the development of the Wind
Challenger, a new type of vessel that will be partially powered
by sails. In doing so, we aim to improve fuel efficiency and
reduce environmental impact. Thirdly, to ease the workload
for crews onboard and improve safety, it is working on the
development of autonomous sailing technologies. Further-
more, in the environment and emissions-free businesses
which we consider the pillars for future generations, MOL is
actively entering new business segments such as LNG fuel
bunkering vessels and businesses related to offshore
wind-powered generators.
For the environment, in the future, marine transport busi-
nesses will be required to meet tighter environmental regula-
tions. Specifically, in 2020, new regulations are due to be
adopted covering SOx (sulfur oxide emissions) from ship
engines, which is expected to greatly increase the cost of
bunker fuel. It will be necessary to spread awareness and
ensure that customers understand the reasons for the
increase in the cost of our services, as this will be a burden
that everyone must bear in the interest of protecting our
environment. (For details regarding environmental regula-
tions,
P. 72.)
Regarding the marine technical skills, which are fundamen-
tal in ensuring the safety and consistency of its shipping
operations, the Company is working to further enhance
safety awareness in both its personnel and the organization
as a whole. At the same time, MOL constantly works to
improve its abilities as a group of marine transport profes-
sionals capable of proposing solutions that meet customer
needs, such as improving transport efficiency and reducing
environmental impact.
For the workstyle reforms, every employee in the Company
will need to improve their performance, work habits and
thought patterns. To this end, it is important to introduce
workstyle reforms that promote greater creativity and flexibil-
ity to build a vibrant organization where new ideas and
approaches are continuously generated. MOL will be revising
the structure of its personnel system to hone the skills of
middle managers so that their leadership and initiatives can
motivate employees in day-to-day operations. As chairman of
the Improvement of Work Efficiency Committee, I will commit
to exploring new working styles, more flexible office condi-
tions, and any other changes that can promote a more ener-
getic and productive corporate structure.
In addition to pursuing Group-wide priorities for the
strengthening of the MOL Group, MOL intends to study ways
to further improve safety and cost competitiveness—the two
criteria that customers consider most important when
selecting a transport company. One of the main topics newly
added to “Rolling Plan 2018” is the improvement of cost
competitiveness. MOL is trying to strengthen the competi-
tiveness of its fleet through cost-cutting measures and
enhanced utilization of vessels. The Company is also adopt-
ing RPA (Robotic Process Automation) to increase the effi-
ciency of administrative work. We shall keep no stone
unturned and seriously take on this project.
1. Vision for the MOL Group Ten Years from Now
■ The MOL Group will provide “stress-free services”
that are truly convenient for customers worldwide,
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
Technology
development
Environment
Workstyle
reforms
Provide services that fully harness the MOL
Group’s marine technical skills
Provide visualization of maritime operations (safe
and optimal vessel operation) and added value for
customers
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 emis-
sion-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
Ordinary profit
¥80.0–100.0 billion
¥150.0–200.0 billion
ROE
Gearing ratio
8–12%
2.0 or less
—
1.0
20
Underlined words are explained in the Glossary on page 5.
21
Mitsui O.S.K. LinesMOL Report 2018 Message from the CEO
Feature
Improving Cash Flow and Capital Efficiency
In recent years, free cash flow has remained continuously in
negative territory, elevating the gearing ratio to over 2.0. This
is an important management issue we wish to improve
upon. The Company aims to restore a positive free cash flow
as quickly as possible through the consolidation of its con-
tainership business to revive profitability and other measures
to expand businesses generating highly stable profits from
long-term contracts to improve cash flows from operating
activities. However, MOL continues to invest in projects
such as LNG carriers and offshore businesses, which are
expected to be the main source of future expanded profits.
Accordingly, cash flows from investing activities are likely to
be a net outflow of ¥350 billion in the three-year period
from fiscal 2018 through 2020. Considering shareholders’
equity, MOL has introduced new standards for future invest-
ment decisions, which place a heavy emphasis on capital
efficiency and cash flow. Therefore, the Company will be far
more selective in approving new investments in the future.
MOL will exercise greater control over its cash flows from
investing activities by also considering selling off assets,
particularly stocks held for cross- shareholding purposes.
To Our Shareholders and Investors
When I took over as CEO, the Company’s most important
management priority was to deal with the containership
business. Now that the three Japanese shipping companies
have integrated their containership businesses, we appear to
be on a clearer path to an earnings recovery. After an
18-month preparatory period, the integrated containership
firm, Ocean Network Express (ONE), commenced services as
originally planned in April 2018. The integration makes it the
fifth-largest containership business operator in the world.
Synergies from fusing the best practices of all three former
parent companies and economies of scale should allow it to
generate a steady profit, and ensure good prospects for
future growth. Even under the management control of ONE,
we expect our containership business to continue to be a
central contributor to MOL’s earnings in the future. ONE will
operate under the firm governance of a holding company,
and as one of the shareholders, MOL can offer support when-
ever necessary.
By spinning off the containership business, which
accounted for a very large share of our revenues, we must
now consider what the identity of the MOL Group entails. The
Company is unique in the marine transport industry, as a
full-line marine transport operator that holds the top compet-
itive position in many business sectors. The broad scope of the
Group’s operations allow it to offer comprehensive solutions
for customers with diverse cargo transportation needs. By
striving to introduce “stress-free services,” MOL is building on a
solid foundation of reliability and brand strength accumulated
over 130 years of operations. I wish to thank shareholders for
their support and understanding as we continue to work to
be our customer’s first choice for marine transport services.
Our Vessel &
Value Creation
Process of Increasing Corporate Value
Sustainable Growth and
Creating Social Value
Development of
“Stress-Free Services”
Strengthening
Relationships with
Customers
Safe
Operation
Human
Resources
The
Environment
Technology
Innovation
Non-Financial Capital to Realize Sustainable Growth
Implementing Four Initiatives to Achieve Sustainable Growth
MOL pursues the increase of its economic corporate value as well as the creation of social value, based on the
four initiatives of safe operation, human resources, the environment, and technology innovation, in order to
achieve stable growth through strengthening relationships with customers by providing the “stress-free services”
as described in our management plan, and to realize sustainable growth that considers a wide range of
stakeholders, such as employees and local communities, together with the global environment itself.
Contributing to Sustainable Development
Goals (SDGs)
The MOL Group, as one of the world’s largest full-line marine
transport groups, will contribute to realizing the Sustainable
Development Goals (SDGs) in the resolution adopted by the
UN General Assembly in September 2015, through the
aforementioned four initiatives.
22
Underlined words are explained in the Glossary on page 5.
23
Mitsui O.S.K. LinesMOL Report 2018 Our Vessel & Value Creation
VLCC
SHIZUKISAN
&
Safe Operation
SHIZUKISAN
· Undertaking various initiatives to forge ahead
to become the world leader in safe operation
· Innovation in safe operations by applying ICT
Capture long-term contracts to create
stable profits by earning customers’ trust
The SHIZUKISAN was built in 2009 and is a Very Large Crude Carrier (VLCC) capable of delivering over 300,000 tons of crude oil in a single
shipment (equivalent to about half of a single day’s consumption in Japan). Since its delivery, the vessel has been operated under a long-
term transport contract with a domestic customer, mainly contributing to the stable delivery of crude oil from the Middle East to Japan.
As this is one of the largest of the many types of vessels, it takes longer to change navigating speed or course. Furthermore, operation of
VLCCs requires an extremely high standard of safety as it carries vast quantities of crude oil, a hazardous substance, and must pass
through the Strait of Malacca, one of the world’s most congested seas.
Contributing to SDGs
Raise Individual Awareness of
Safe Operation and Foster
a Culture of Safety
SHIZUKISAN
Captain Goichi Umezaki
Safe operations are crucial for any type of vessel, but
VLCCs demand a higher level of tension because they
handle and transport huge quantities of crude oil, a
hazardous substance, meaning the risk of explosions,
fire or environmental destruction from oil spills is
constant.
MOL is engaged in various initiatives for safe opera-
tions from both hard and soft aspects. From a hard
aspect, under our original MOL Safety Standard Specifi-
cations, we carry out numerous initiatives from the
shipbuilding stage to respond to risks, such as installing
security cameras in the engine room, which enable
constant monitoring for fire from the bridge.
From a soft aspect, the annual MOL Safety Conference
involves various types of rank-based training programs
aimed at improving skills with seafarers on shore leave
taking part and participants exchanging opinions on
actual accidents to prevent their recurrence. Among
the activities, simulations reflecting operations on seas
of varying conditions in the BRM drill* have proven to
be an effective training method for VLCCs, of which
maneuverability is markedly restricted compared to
other vessel types.
The Safety Operation Supporting Center (SOSC)
sends in a timely manner extremely useful information,
such as data on weather and ocean conditions, piracy
and political instability, to aid captains in determining
ideal speeds and safer routes. In addition, when arriving
in a discharging port in Japan, a marine superintendent
and a technical supervisor are dispatched to confirm
the unloading operation is conducted safely and that
the entire ship is properly maintained. Detailed support
provided by each supervisor collaborating closely with
captains on the front lines goes a long way in building a
relationship of trust with oil companies.
Those various initiatives are crucial for the Company,
but, of course, the most important thing of all is for
each and every seafarer on board to have the neces-
sary expertise and to carry out their duties responsibly
to ensure safe operations. I maintain my motivation by
expressing gratitude to my crew for supporting safe
operations on a daily basis, and striving to foster a
culture of safety.
* 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.
Safety Operation Supporting Center (SOSC)
■ Established in 2007 with the motto “Never let the captain get isolated.”
■ Staffed at all times by two marine technical specialists including an experienced
MOL captain.
■ Monitoring and supporting approximately 860 vessels operated by MOL and affiliated
companies, 24 hours a day, 365 days a year.
■ Collecting information on weather and ocean conditions (including abnormal weather
and tsunamis) and security threats (including piracy and terrorism), and reporting in a
timely manner to the relevant personnel.
“Visualization of Marine Operations”
■ Provide visualization of the conditions of vessels and cargo at sea using ICT.
→ Offer value-added services to customers including sharing operation information
of vessels.
■ Analyze big data on weather and ocean conditions gathered from MOL-operated
vessels.
→ Utilize for safe operations and reducing fuel consumption based on optimal routing.
■ Make multidimensional analysis between actual operational stoppage accidents and
causal correlations of data from multiple sources.
→ Develop more effective measures to prevent accidents.
■ Remotely monitor the operational status of engines and other machinery on board.
→ Make necessary replacement of parts and maintenance arrangements well in advance.
Collecting data from MOL-operated vessels
Promotion of Autonomous Sailing
■ Aiming to prevent human error and respond to a shortage of seafarers in the future.
■ Set a goal of achieving autonomous sailing by 2025–2030.
■ In December 2017, MOL signed a deal with Rolls-Royce Marine on the joint research of
an advisory-type Intelligent Awareness System (IAS), which detects obstacles near
vessels with new sensors and provides ship operational support information to officers
onboard immediately.
→ Install the IAS on a ferry in service operated by Ferry Sunflower Limited in the Seto
Inland Sea.
■ In December 2017, MOL agreed with Furuno Electric Co., Ltd. and MOL Techno-Trade
to jointly develop a system that supports ship operation during voyages using aug-
mented reality (AR) technology.
Image of IAS in use
For details of the safe operation
PP. 66–68.
24
Underlined words are explained in the Glossary on page 5.
25
Mitsui O.S.K. LinesMOL Report 2018 Our Vessel & Value Creation
Car Carrier
VALIANT ACE
&
Human Resources
VALIANT ACE
· Training top-quality seafarers through
operation of training facilities
· Create environments where people want to work
Achieve safe and reliable transportation
through top-quality seafarers and
strengthen the MOL brand
Car carriers are vessels used exclusively for carrying motor vehicle cargo such as automobiles and construction machinery. Compared to
other vessels, car carriers are more susceptible to strong winds as they have something like an enormous multistory parking lot structured
inside the box-like hulls. Therefore, navigation of these vessels requires significant experience and knowledge, such as how to adjust
ballast water to control balance and plot courses to avoid bad weather. The VALIANT ACE is a car carrier built in 2012 and has a 6,400-
vehicle capacity. The vessel operates in a wide area including not only Asia, North America and Europe, but also South America, Africa and
Oceania, reflecting diversifying automobile trades.
Contributing to SDGs
Continuing to Be a Proud
Member of MOL
VALIANT ACE
First Officer (Philippine nationality) Louie John Q. Tuvillo
I was born and grew up in Antique in the Philippines. I
had my first experience onboard a passenger ship at
age 10 and can remember seeing the crew members
to this day. They were tall and proud, in pristine white
uniforms with shoulder boards. I saw how people
looked at them with admiration and respect. I told
myself that someday I would become one of them. I
had friends with brothers or fathers who were seaman,
and seeing their abundant lifestyles strengthened my
resolve. In addition to my childhood dream, I decided
to aim for a seafaring career as it would help me sup-
port my parents, siblings and my own future family.
After secondary school, I entered maritime college
where I was fortunately privileged to be a Magsaysay-MOL
scholar upon being selected after stiff competition.
Following graduation from maritime college, I
advanced to the Officer Candidate Course at MIS*, an
MOL training facility. We not only gained knowledge
and skill sets here, but also worked on physical condi-
tioning, which gave me a sense of ease about my
long-term onboard cadet training. During training,
senior Filipino seafarers made quite an impression by
mentoring newcomers with their knowledge and
experience. I got a glimpse of how MOL maintains and
improves its seafarers’ marine technical skills.
I decided to enter MOL because I had been chosen
for a scholarship. Once I started actually working for
MOL, I saw that there is no compromise regarding the
safety of lives, ships and cargo, as well as outstanding
crew members’ achievements and accomplishments
do not go disregarded and after seeing these things in
MOL, my motivation to continue as a member of the
MOL family became even greater.
My current aim is to become a captain, with the
trust of my peers to command a ship. My childhood
memory of the seafarers remains as powerful as ever,
and encourages me daily as I go about my work. I am
proud to be a seafarer for MOL, one of the world’s most
prestigious shipping companies, and by becoming a
seafarer with sufficient skills and expertise, I hope to
contribute to further improving MOL’s overall value and
competitiveness.
* Magsaysay Institute of Shipping
MIS was jointly established by MOL and Magsaysay Maritime Corporation in
1993. The institute provides various types of practical and theoretical
training to prepare students for careers at sea.
Nationality Ratio of Seafarers
(MOL-owned vessels as of March 2018)
Training Highly Competent Seafarers on a Global Scale
■ Since 2011, MOL has been providing education and training to Filipino cadets at an
MOL training facility in the Philippines.
■ In August 2018, MOL will open MOL Magsaysay Maritime Academy Inc. jointly with a
local partner to take over from the abovementioned facility. The maximum number of
students is 300 per year.
■ MOL conducts a wide variety of training from lectures to learn theories to practical
training using simulators at training centers in six countries including the Philippines.
■ At each training center, MOL employs an advanced onshore simulator that perfectly
recreates the bridge of a large vessel in operation. This simulator features concen-
trated real-life experiences of seafarers and enables an iterative approach under all
weather and ocean conditions.
A new maritime academy training facility
Training centers around the world
Simulator
Maintaining Motivation to Continue as an MOL Group Seafarer
■ MOL has held the MOL Presidential Awards to Officers and Engineers ceremony annually since 2008.
■ MOL has also held annual long-service award ceremonies for Filipino seafarers who belong to Magsaysay MOL Marine, Inc., an MOL
Group seafarer dispatch company, as well as hosted family day events for seafarers’ families every year.
Philippines 68%
Indonesia 2%
India 14%
Europe 6%
Japan 3%
Russia 5%
Others 2%
Recipients from the 2017 MOL Presidential Awards to Officers and Engineers
Family day scene
26
Underlined words are explained in the Glossary on page 5.
27
JAPANMONTENEGRORUSSIAPHILIPPINESINDONESIAINDIAMitsui O.S.K. LinesMOL Report 2018
Our Vessel & Value Creation
Floating Storage and Regasification Unit
MOL FSRU Challenger
&
The Environment
· World’s largest fleet of LNG carriers
· Solid relationships with partners worldwide
Expanding business domains to capture
growing demand for LNG, a fuel with
a lower environmental burden
Contributing to SDGs
Meeting Customer and
Environmental Needs
in the LNG Value Chain
Energy Business Strategy Division
General Manager, Strategy Division Yusuke Hongo
Natural gas is a major primary energy source alongside
petroleum and coal. It is produced primarily in the
Middle East, the U.S., Australia and certain other
regions, and exported to consumption regions such as
Asia and Europe through onshore pipelines and via
marine transport by LNG carriers after the gas is cooled
and liquefied. It is the cleanest fossil fuel as its CO2
emissions are lower than those of coal or oil. Demand
for natural gas is thus expected to grow significantly in
the years to come.
LNG requires advanced transport expertise because
it has to be transported at –162oC. MOL has been
involved in the marine transport of LNG since the
1980s, and currently has the world’s largest fleet of LNG
carriers, at 94 vessels (including outstanding orders) as
of March 31, 2018. Through involvement in various
projects over the years, we have been building up a
solid base of expertise in the transport of LNG, as well
as forming firm relationships with many local partners
worldwide.
Previously, LNG receiving terminals had to be built
onshore in order to receive LNG transported by LNG
carriers. However, since the world’s first FSRU entered
service in 2005, FSRUs have been rapidly adopted
globally as they can be set up in less time and with less
cost than conventional onshore receiving terminals
and also they provide a means of addressing demand
for smaller amounts of LNG imports. In fact, in the past
10 years, FSRUs have been adopted by around 60% of
the countries introducing LNG for the first time. With
the launch of MOL FSRU Challenger, MOL has taken a
major first step into the FSRU field.
Going forward, environmental regulations will be
tightened in order to curtail the amounts of SOx (sulfur
oxides) and CO2 in vessel emissions. In response, a
growing number of shipping companies are introduc-
ing LNG as an alternative bunker fuel to conventional
heavy oil. Against this backdrop, MOL is currently
building an LNG-fueled tugboat that is scheduled for
launch in 2019. We will further consider introducing
LNG- fueled vessels for use in other vessel types as well.
In addition, MOL has entered the LNG bunker fuel
supply business. Notably, in February 2018, MOL signed
a long-term charter contract with Total Marine Fuels
Global Solutions for a large LNG bunker vessel to
supply LNG fuel to mega containerships.
As environmental awareness rises around the world,
MOL will expand its business domains from the
conventional marine transport of LNG to its storage,
regasification, and the use and supply of LNG as bunker
fuel. By doing so, MOL aspires to fulfill both customer
and environmental needs.
MOL FSRU Challenger
An FSRU (Floating Storage and Regasification Unit) is a ship-based offshore LNG
receiving terminal. Its main roles are to store LNG received from LNG carriers in tanks
and to regasify and send it out to onshore pipelines according to demand. FSRUs
can be set up in less time and with less cost than onshore LNG receiving terminals.
For this reason, plans to launch FSRUs have been progressing in various regions
around the world, particularly in emerging countries. The MOL FSRU Challenger is
the first FSRU to be independently built, owned and operated by an Asian shipping
company. Following its delivery in October 2017, the vessel has been deployed to a
project in Turkey. The MOL FSRU Challenger has the world’s largest LNG storage
capacity of 263,000 m3, and the ability to reship LNG in its original state, in addition
to gas transfer capabilities, which enable the reexport of LNG to neighboring
regions or supply of LNG as fuel for other vessels.
Comparison of Emission Volumes When Combusted (Using coal as a base of 100)
CO2
SOx (Sulfur oxides)
NOx (Nitrogen oxides)
Coal
Oil
Natural gas
100
80
60
0
100
70
100
70
20‒40
LNG Carriers
Marine
Transport
LNG Carrier
Regasification System
FSRUs
FSRU
Jetty
Storage &
Regasification
To onshore pipelines
LNG flow
Regasified gas flow
■ MOL has been involved in the marine transport of LNG
since the 1980s.
■ Expanded up to current fleet of 94 vessels including out-
standing orders as of March 31, 2018.
■ The first of three ice-breaking LNG carriers was launched for
use in the Yamal LNG project in Russia. (March 2018)
■ MOL FSRU Challenger was delivered, and is the first FSRU
independently built, owned and operated by an Asian
shipping company. (October 2017)
■ MOL participated in an FSRU & FSU project developed by
Swan Energy Limited in India. (September 2017)
Expanding Business Domains
through the LNG Value Chain
■ MOL signed a long-term charter contract with French oil
major Total for a large LNG bunker vessel in February 2018.
■ The above large LNG bunker vessel will be delivered and
start bunkering operations in northern Europe in 2020.
LNG Bunker Vessels
LNG Fuel
Supply
■ MOL made a decision to build an LNG-fueled tugboat in
May 2017, and this will launch in Osaka Bay in April 2019.
■ MOL, Tohoku Electric Power Co., Inc. and Namura
Shipbuilding Co., Ltd. started joint development of an
LNG-fueled coal carrier, and earned an Approval in Principle
for design in December 2017.
■ MOL teamed up with Rio Tinto, BHP Billiton and other
partners including a shipbuilding company, on a joint
research project for an LNG-fueled capesize bulker in
January 2017. (Photo below)
LNG-Fueled Vessels
Use as
Fuel
For details of the environment
PP. 71–72.
28
Underlined words are explained in the Glossary on page 5.
29
Mitsui O.S.K. LinesMOL Report 2018 Our Vessel & Value Creation
Future Vessels
&
Technology Innovation
· Marine technical skills and sales capabilities
cultivated over many years in the shipping
industry
· Technological capabilities utilizing renewable
energy and ICT
Identify and resolve issues related to
social infrastructure and customers
Wind Challenger
MOL promotes the Wind Challenger Project, joint
industry-academia research that began in 2009.
This project aims to significantly reduce the
amount of fuel consumed by large vessels currently
dependent on oil fuels by maximizing the use of
wind power for propulsion by attaching massive
sail panels on vessels.
Contributing to SDGs
The Ultimate Goal
Is to Bring About
a Logistics Revolution
Senior Managing Executive Officer
Director General, Technology Innovation Unit Yoshikazu Kawagoe
The Technology Innovation Unit was established in
April 2018. The mission of the unit is to anticipate the
needs of customers and the new era and bring about
exciting logistics innovations. The three divisions,
namely, the Technical Division handling the physical
side of the vessels, the Smart Shipping Division han-
dling maritime ICT, and MOL Information Systems, Ltd.
taking responsibility for overall ICT will coordinate to
promote the development of technology services
while using ICT to strengthen MOL’s competitiveness.
In order to provide “stress-free services” under the
Company’s management plan, we aim to identify and
resolve customers’ issues by enhancing marine techni-
cal skills and sales skills which we have acquired and
technologies in relation to natural energy.
In 2016, MOL launched the “ISHIN NEXT—MOL
SMART SHIP PROJECT—,” aiming to increase corporate
value by developing two fields of technologies such as
safer vessel operation and reduction of environmental
impact. MOL will accelerate towards the realization of
these existing initiatives through further deepening
Technology Innovation Unit Organization Chart
creative collaboration across industries. In the safe
operation field, MOL is focusing intensely on promo-
tion of autonomous vessels and is working with multi-
ple partners to verify automatic technologies, such as
image recognition, giving way to other vessels at sea,
as well as berthing and unberthing. The Company is
aiming to achieve a practical demonstration around
2020. In the environment field, MOL is promoting the
Wind Challenger Project (see P. 31) for next-generation
sailing vessels, aiming to operate a first vessel in 2020,
following selection of a vessel to be equipped and
completion of a design during 2018.
The prime goal of the unit, as well as of MOL, is the
aforementioned “provision of stress-free services.” The
Company will actively aim to start a logistics revolution
to rival that of the home delivery services sector. This
means not only promoting technological develop-
ment, but service development collaborating closely
with sales divisions.
Technology
Innovation Unit
Smart Shipping Division
MOL Information Systems
(Quasi in-house organization)
Technical Division
Technology Research Center
30
Scan here to see a video on the Wind Challenger Project
Three Areas of Focus
Wind Challenger
■ The Wind Challenger Project research and practical demonstration
phase finished in September 2017 and has now entered the applica-
tion and commercialization phase conducted jointly with Oshima
Shipbuilding Co., Ltd.
■ Currently, with the aim of realizing a single sail, we are working on
detailed design and selecting the vessel to be equipped with it.
■ The aim is to select a vessel to be equipped with the sail in fiscal 2018,
and start operations in 2020.
Roadmap So Far
Conceptual image of the vessel equipped with a single sail while in
full sail at sea
Now
2009–September 2017
Research and practical
demonstration phase
October 2017 onward
Application and
commercialization phase
2020
Aim to start operations with
vessel equipped with a single sail
Sail demonstration unit
Autonomous vessels P. 25
LNG-fueled vessels P. 29
LNG fuel tank
31
CompletedMitsui O.S.K. LinesMOL Report 2018 Our Vessel & Value Creation
Non-Financial Indicators
Safe Operation
As MOL strives to achieve a global top-class level of operational safety, the Company has introduced
targets for operational safety which we refer to as the Four Zeroes. The objective is to maintain a
continuous record of safety, with zero serious marine incidents, zero oil pollution, zero fatal accidents
and zero cargo damage. Data on the number of days that the Company has maintained this
unblemished record is circulated among human resources, ensuring that every employee maintains
a keen awareness of safety issues in all of their daily work activities.
Number of days that MOL
has maintained its Four
Zeroes record for safety
(as of June 30, 2018)
Zero fatal accidents 230 days
Zero serious
marine incidents 1,839 days
Zero oil pollution 1,839 days
Zero cargo damage 1,839 days
For details of the safe operation ⇒ PP. 66–68.
Human Resources
MOL aims to cultivate a vibrant, energetic and diverse workforce, based on human resources from a multitude of countries,
genders, cultures and backgrounds, who share the values of the MOL Group as expressed in MOL CHART (see page 2).
Breakdown of Group Employees by Region (Consolidated)
FY2017
● Japan
● Southeast Asia
● East Asia
● Europe
● North America
● Others
53%
15%
12%
8%
8%
4%
Number of Employees / Ratio of Females /
2,000
Ratio of Females in Managerial Positions*
(People)
1,500
1,000
500
0
2013
2014
2015
2016
2017
(FY)
■ Number of Employees (left scale) ○ Ratio of Females (right scale)
○ Ratio of Females in Managerial Positions* (right scale)
* Unconsolidated basis excluding loaned employees, contract employees,
part-timers, etc., but including expatriate employees
40
(%)
30
20
10
0
Environment
Compared with other modes of transportation, shipping is the soundest method for transporting a large quantity of cargoes
between two points, generating less CO2 emissions and pollutants per cargo unit carried than any other form of transportation,
but the impact of the environment from the absolute amount emitted cannot be ignored. As an ecologically conscious company,
MOL is constantly seeking ways to reduce CO2 emissions even more, to further reduce the impact of our operations on the planet.
CO2 Emissions of MOL Fleet (Thousand tons)
25,000
120
MOL Group Emissions of CO2, SOx and NOx
(per unit load) (%)
20,000
15,000
10,000
5,000
0
2012
2013
2014
2015
2016
2017 (FY)
110
100
90
80
70
2012
2013
2014
2015
2016
2017
(FY)
○ CO2 emissions* ○ SOx emissions* ○ NOx emissions*
* Emissions per unit (ton-mile) compared to fiscal 2012
For details of the environment ⇒ PP. 71–72.
MOL’s Workstyle Reforms
MOL’s management plan has set various objectives for
reforming operations and workstyles across the entire
organization, under our “Vision for the MOL Group Ten
Years from Now” (see page 21).
New ideas
and constructive
deliberations
Creating a vibrant work
environment that facilitates
communication both
horizontally and vertically,
throughout the
organization
(Workstyle reforms logo)
Sustainable
corporate growth
“Creating innovation”
“Differentiation from
other companies”
“Leading the industry
in individual
competitiveness”
The president serves as chairman of the Improvement of Work Efficiency Committee
Enhancing efficiency
• Establishing an organizational
culture
• Accelerating the speed of
operating processes
• Rationalizing
administrative activities
Creating internal structures that promote
innovative ideas and enhance efficiency
Proceeding with workstyle
reforms for both the organization
and individuals
Enhancing employee satisfaction
• Clear separation of work
and private life
• Working “smartly”
• Creating momentum for
the future
Organization
Individuals
Four areas of focus for reforming workstyles
Introducing a new structure for the personnel system in fiscal 2018 based on the following principles:
• A structure that supports the process of early identification and cultivation of leaders who will
increase organizational accountability and initiative
• Hiring and training specialists, and diversifying the range of career paths to give employees greater
scope and opportunity for accomplishment
• Conduct HOT Dialogue to enhance communication between the CEO and each division as well as
general managers and staffs in divisions
• Provide company support for employee gatherings and activities across divisions
• Stimulate and organize discussions involving all human resources, via in-house social networks
• Introduce Smart OFF! Day on Wednesdays, where all human resources are recommended to leave
the office by 6 p.m.
• Launch the healthy breakfast campaign by serving breakfast in the Company cafeteria during the
summer to promote health and improve work performance
HOT Dialogue
• Introduced a remote work from home program (in August 2017)
• Space created by reducing paper documents was used to establish an employee lounge area
• Redesign the basic office layout based on Company-wide discussions about workstyles and offices
• Provide facilitator training to teach employees the skills needed to manage meetings
• Introduce large touchscreen displays (Surface Hub) to improve meeting productivity
• Implement the Paper OFF! Project to promote the use of electronic (paperless) documents
• Promote the use of Robotic Process Automation
Set up conference rooms that
can be used freely for non-
conference matters
Conduct meetings using
Surface Hub
32
Underlined words are explained in the Glossary on page 5.
33
Personnel structure reformsOrganizational culture reformsWorkplace reformsAdministrative reformsMitsui O.S.K. LinesMOL Report 2018 At a Glance
FY2017 Performance (Consolidated)
Revenues/Ordinary Profit by Segment
Shipping and other revenues
Equity ratio
¥1,652.3 billion
23.0%
Ordinary profit
Gearing ratio*1
¥31.4 billion
2.19
Total assets
Net gearing ratio*2
¥2,225.6 billion
1.82
Net assets
MOL’s fleet (number of vessels)
¥628.0 billion
857
*1 Interest-bearing debt / Shareholders’ equity
*2 (Interest-bearing debt – Cash and cash equivalents) / Shareholders’ equity
Revenues by Segment
Associated
Businesses
5%
Others
Less than
1%
Ferries & Coastal
RoRo Ships
3%
Dry Bulkers
(excluding Steaming
Coal Carriers)
17%
Associated
Businesses
and Others
6%
Product
Transport
Business
61%
Dry Bulk
Business
17%
Energy
Transport
Business
16%
Tankers
8%
LNG Carriers/
Offshore
Businesses
5%
Steaming
Coal Carriers
3%
Containerships
45%
Car Carriers
13%
Ordinary Profit by Segment (¥ billions)
FY2017
performance
Dry Bulk Business
Energy Transport Business
Product Transport Business
Containerships only
Associated Businesses
Others
Corporate/Eliminate
Total
15.4
13.6
(6.3)
(10.6)
12.6
2.6
(6.5)
31.4
Fleet Composition
Others
5%
Dry Bulkers
39%
Number
of ships
(857)
Containerships
12%
Dry Bulkers
49%
Deadweight
tons
(63 million)
Car Carriers
3%
LNG Carriers/
Offshore
Businesses
11%
Tankers
25%
Containerships
11%
Car Carriers
14%
LNG Carriers/
Offshore
Businesses
11%
Tankers
20%
34
35
Mitsui O.S.K. LinesMOL Report 2018 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.
Dry Bulk
Business
Dry Bulkers
(excluding
Steaming Coal
Carriers)
Tankers
Energy
Transport
Business
LNG Carriers/
Offshore
Businesses
Steaming Coal
Carriers
Business Activities
With one of the world’s largest fleets, MOL reliably trans-
ports 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.
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; methanol tankers that exclusively
carry methanol; and LPG tankers that carry liquefied
petroleum gas.
With the world’s largest LNG carrier fleet, MOL safely
transports liquefied natural gas (LNG), which is experienc-
ing growing global demand. In addition, we are active in
offshore businesses, including FPSOs and FSRUs, which are
poised for continued growth. MOL has also moved into
the renewable energy field by investing in a self-elevating
platform vessel operator that installs offshore wind power
generation facilities.
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 coun-
tries, 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.
Car Carriers
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.
Through a global network of sea routes provided by Ocean Network
Express, a company formed by the integration of the containership
businesses at three Japanese shipping companies, 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 trans-
port 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, a cruise ship (the NIPPON MARU), and trading.
Product
Transport
Business
Containerships
Ferries & Coastal
RoRo Ships
Associated
Businesses
36
[Iron Ore Carrier]
Shinzan Maru
[Tanker]
HAKUSAN
[LNG Carrier]
LNG FUKUROKUJU
[Steaming Coal Carrier]
ENERGY PROMETHEUS
[Car Carrier]
BELUGA ACE
[Containership]
ONE COMMITMENT
[Ferry]
SUNFLOWER FURANO
[Cruise Ship]
NIPPON MARU
Year in Review
Business Environment
Profitability improved from the previous fiscal year
backed by market conditions moving toward gradual
recovery with the support of steady cargo volumes, in
addition to the assured effects of the Business Structural
Reforms that fundamentally reviewed the business
model for small- and medium-sized bulkers as well as
reduced the number of Capesize bulkers operated on
spot contracts.
The tanker division focused on reducing market exposure,
mainly with product tankers, and on soundly executing
long-term contracts, centered on VLCCs and methanol
tankers, in conjunction with continuing to work to
improve operation efficiency and reduce costs. As a
result, we recorded a profit for fiscal 2017, despite a
year-on-year decrease due to a supply glut of new
vessels that made supply outstrip demand.
The LNG carriers/Offshore businesses division continued
to secure stable profits from long-term contracts while
steadily contributing to earnings through new projects
that started operations, though there was a slight
decrease in ordinary profit compared to the previous
fiscal year accompanying an extraordinary loss resulting
from the disposal of vessels owned by an equity-method
affiliated company.
Cargo volumes of completed cars to the U.S. and Europe
were firm, while imports by emerging countries and
resource-producing countries continued to be 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. As a result, ordinary
profit increased year on year, albeit from a low level.
In addition to increasing liftings by launching ultra-large
containerships on Asia-Europe routes, we continued
working to reduce costs, such as the cost of repositioning
empty containers, by bolstering yield management. As a
result, there was a significant reduction in ordinary loss
compared to the previous fiscal year in spite of having
recorded transitional costs associated with the launch of
the integrated company.
A sound business environment continued due to factors
including advances in the trend toward a modal shift in
transportation—i.e., a switch from long-distance land
transport by trucks to ferry transport—and a shortage of
truck drivers, but there was a decrease in ordinary profit
year on year due to delays in new vessel deliveries and
rising bunker fuel prices.
In the cruise ship business, ordinary profit decreased year
on year due to the factors including the cancellation of
cruises because of typhoons. Ordinary profit in the real
estate business increased, 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)
2,000
1,500
1,000
500
0
16/4
17/4
18/4
Source: MOL internal calculation based on TDS and others
*1 Baltic Dry Index
VLCC*2 Market (AG → Japan)
(US$/day)
80,000
60,000
40,000
20,000
0
16/4
17/4
18/4
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
16/4
Source: SSE
*3 China Containerized Freight Index
17/4
18/4
Underlined words are explained in the Glossary on page 5.
37
Mitsui O.S.K. LinesMOL Report 2018 Overview of Operations
Dry Bulk Business Unit
Hirofumi Kuwata
Executive Officer
Deputy Director General
Toshiaki Tanaka
Managing Executive Officer
Director General of Dry Bulk
Business Unit
Nobuo Shiotsu
Executive Officer
Deputy Director General
Dry Bulkers
Consolidated Revenues Breakdown (FY2017)
Portfolio
Highly Specialized
V
a
r
i
a
b
e
P
r
o
l
f
i
t
s
Short Sea
Ships
Wood Chip
Carriers
Capesize
Bulkers
l
S
t
a
b
e
P
r
o
f
i
t
s
Small- and Medium-
Sized Bulkers
Less Specialized
● Iron Ore & Coal Carrier 54%
26%
● General Bulk Carrier
12%
● Wood Chip Carrier
8%
● Short Sea Ship
Dry Bulker Fleet Table (Number of vessels)
Vessel type
Standard
DWT
At the end of
Mar. 2018
At the end of
Mar. 2017
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
88
26
54
28
39
61
90
24
57
31
39
55
Steel raw materials
(iron ore, coking coal)
Iron ore, coking coal,
steaming coal, grains,
etc.
Steaming coal, grains,
salt, cement, steel
products, etc.
Steel products,
cement, grains, ores,
etc.
Wood chips, soybean
meal, etc.
Steel products, plants,
etc.
296
296
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
Fiscal 2017 in Review
In fiscal 2017, the business environment was relatively good
as the dry bulker market changed course to a recovery track
from the record slump in the previous fiscal year. By vessel
type, Capesize bulkers and wood chip carriers, for which the
ratio of medium- and long-term contracts is high, kept con-
tributing to the posting of stable profits. Further, in general
bulk carriers, chiefly small- and medium-sized bulkers for
which the ratio of spot contracts is high, we reinvented via
the Business Structural Reforms and were able to record a
certain level of profit by effectively operating a lean, highly
competitive fleet with outstanding resilience to market fluc-
tuations. Thanks to highly stable profits from medium- and
long-term contracts, along with tailwinds from a recovery in
market conditions, the Dry Bulk Business Unit posted ordinary
profit of ¥15.4 billion.
Fiscal 2018 Initiatives
In fiscal 2018, we envision a relatively favorable business
climate on the whole as in fiscal 2017. Although the market
is expected to see some short-term fluctuations due to
seasonal factors and the international situation, the funda-
mentals are on a modest recovery trajectory, as the gap
between fleet supply and demand gradually subsides.
As for Capesize bulkers and wood chip carriers, we will
further foster our relationships with customers built on trust
over the years through our safe operations, meticulous ser-
vice and competitive freight rates, and continue to build up
medium- to long-term transport contracts. We also reinforce
the MOL brand by proactively addressing environmental
regulations, as well as responding to customers’ needs,
including their environmental response. To be specific, we
are working to offer LNG-fueled vessels with a low environ-
mental burden, and scrubbers for removing sulfur with an
eye to the new regulations limiting the amount of sulfur in
vessel fuel oil from 2020.
Also in general bulk carriers, there are growing opportuni-
ties to acquire medium- and long-term contracts. For
instance, biomass power generation, one method of renew-
able energy production, requires a stable supply of wood fuel
over the long term, which makes medium- to long-term
transport contracts a good fit. We aim to leverage the exper-
tise we have gained in Capesize bulkers and wood chip
carriers to win contracts in such domains.
As a comprehensive Dry Bulk Business Unit providing
environmentally conscious, safe and secure “stress-free
services” to customers, we will continue to work going for-
ward to build a robust brand so that customers are confident
and satisfied in choosing MOL for dry bulk.
Vessels Supply (Capesize) (Number of vessels)
300
200
100
0
–100
2012
2013
2014
2015
2016
2017
■ Deliveries (left scale) ■ Demolitions (left scale)
○ Net Increase (left scale) ○ YoY Change (right scale)
Source: MOL internal calculation based on IHS-Fairplay
15%
10%
5%
0%
–5%
MOL
FOCUS
Contract with Alufer Mining Limited for
Transporting Bauxite by Capesize Bulkers
In December 2017, MOL entered into a five-year contract with
Alufer Mining Limited (Alufer), for transporting bauxite by
Capesize bulkers.
Although MOL has a long track record of transporting bauxite by
small- and medium-sized bulkers, this project transporting bauxite
by Capesize bulkers counts as a new expansion of MOL dry bulk
business. The transport of mineral resources is expected to grow in
West Africa, and we will actively engage in transport in this busi-
ness area.
Left: CEO Bernard Pryor of Alufer Mining Limited
Right: Director General Toshiaki Tanaka of the Dry Bulk
Business Unit
38
Underlined words are explained in the Glossary on page 5.
39
Mitsui O.S.K. LinesMOL Report 2018
Overview of Operations
Energy Transport Business Unit
Masato Koike
Managing Executive Officer
Deputy Director General
(Tankers)
Tsuneo Watanabe
Executive Officer
Deputy Director General
(Tankers)
Takeshi Hashimoto
Senior Managing Executive Officer
Director General of Energy Transport
Business Unit
(Management and Offshore Businesses)
Kenta Matsuzaka
Managing Executive Officer
Deputy Director General
(LNG Carriers)
Hirofumi Kuwata
Executive Officer
Deputy Director General
(Steaming Coal Carriers)
Overall global demand for energy has been growing steadily, while the energy mix has become increasingly
diverse in markets ranging from developed nations to emerging countries. Against this backdrop, the
MOL Group provides the transport of crude oil and oil products, coal, LNG, ethane, methanol, and LPG.
In addition, the Group has taken its first steps into renewable energy-related business fields such as wind
power. Going forward, the entire MOL Group will continue working as one to serve its customers as their
best partner in energy transport.
Tankers
Portfolio
Highly Specialized
Methanol
Tankers
V
a
r
i
a
b
e
P
r
o
l
f
i
t
s
LPG Tankers
Chemical
Tankers
Product Tankers
Crude Oil
Tankers
l
S
t
a
b
e
P
r
o
f
i
t
s
Less Specialized
Fiscal 2017 in Review
In fiscal 2017, as part of our initial plan, we assumed that
market conditions would be sluggish due to an increase in
supply arising from new vessel deliveries, and the impact of
OPEC production cuts. We responded appropriately for each
vessel type in accordance with such an assumption. While the
spot market for crude oil tankers, product tankers, and LPG
tankers deteriorated further than we had anticipated, VLCCs
and methanol tankers deployed on medium- and long-term
contracts helped us to secure highly stable profits. As for
product tankers, of which a substantial portion are deployed
on spot contracts, we made steady strides toward scaling
down the fleet to minimize the negative impact on business
results. Meanwhile, chemical tankers secured solid profits,
while we steadily scaled up the fleet, including the addition of
new building vessels, in expectation of a large increase in
demand based mainly on progress with the construction of
new petrochemical plants in the Middle East. As a result of
those measures addressing the business situation of each
vessel type, the division as a whole managed to post a certain
level of profit, although declining substantially from fiscal 2016.
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
Fiscal 2018 Initiatives
In fiscal 2018, we expect the tanker market to continue
facing adverse conditions due to increased supply and con-
tinuing production cuts by OPEC. Meanwhile, demolitions
centered on VLCCs are proceeding at a faster pace than the
previous year. We expect that this will be positive for a turn-
around in market conditions.
In crude oil tankers, we will steadily address replacement
demand for the medium- and long-term contracts we have
accumulated based on long-term relationships with Japanese
and South Korean customers over the years. In addition, we
will focus on capturing demand from overseas customers in
India and other countries. Notably, India has begun to pur-
chase increasingly more crude oil mainly from Central and
South America and the Caribbean region, instead of the
Middle East. In view of the longer transport distances than
before, MOL’s crude oil tanker fleet has a competitive edge in
terms of cost effectiveness when we seek new business
opportunities in India. At the same time, India’s economic
development is also expected to drive growth in demand for
LPG. To capture this demand, MOL will proactively undertake
sales activities for LPG tankers. As for product tankers, consid-
ering its business nature where there are few opportunities
to secure medium- and long-term contracts, we will continue
working to scale down our fleet in response to the sluggish
market conditions. Meanwhile, we will strive to enhance
operating efficiency by making use of pool arrangements
with other companies to jointly retain a certain size of fleet,
as well as maintaining MOL’s presence in the market.
In methanol tankers, new projects that had been temporar-
ily suspended are now expected to be restarted as a result of
the rise in crude oil prices. We will work to win new contracts
in an effort to build up our existing base of highly stable profits.
In chemical tankers, one of our strategic business fields, we
are working to develop new routes from the Gulf of Mexico to
Europe. As a new initiative, we are also studying an entry into
the tank terminal business with an aim to integrate and stream-
line the cargo handling process, which is currently undertaken
in small lots at several different ports. We also expect to capture
synergies with the tank container business that we entered
through a capital alliance in the previous fiscal year.
Demand for energy is projected to continue growing
firmly in emerging countries, including India, as discussed
earlier. In response, MOL will execute intensive investments
in strategic fields, such as methanol tankers and chemical
tankers, to steadily accumulate profits. Leveraging the wide
range of vessel types in MOL’s tanker division, we will con-
duct sales activities with the aim of becoming the chosen
partner of our customers under the MOL brand.
Consolidated Revenues Breakdown (FY2017)
● Crude Oil Tanker
● Chemical Tanker
● Methanol Tanker
● Product Tanker
● LPG Tanker
28%
42%
13%
13%
4%
Tanker Fleet Table (Number of vessels)
Vessel type
At the end of
Mar. 2018
At the end of
Mar. 2017
Vessel type under
pool management
(at the end of Mar. 2018)
Crude oil tankers
Chemical tankers*1
Methanol tankers
Product tankers*2
LPG tankers
39
61
26
39
8
40
51
27
43
8
LR1 (70,000 DWT)
MR (50,000 DWT)
VLGC (Very Large Gas
Carrier, 80,000 m3)
Total
173
169
*1 Main cargoes: xylene, benzene and vegetable oil, etc.
*2 Main cargoes: gasoline, naphtha, kerosene, jet fuel and gas oil, etc.
MOL
FOCUS
Delivery of the KIRISHIMA, the Cutting-Edge, Eco-Friendly VLCC
In November 2017, MOL launched the newly built VLCC KIRISHIMA,
its first newly built vessel in this class in about five years. With the
largest capacity of 310,000 DWT, this vessel is a cutting-edge,
eco-friendly VLCC offering enhanced energy-efficient performance
through the use of modified bow and stern hull forms, electronically
controlled main engines, and high-efficiency propellers. It is also
equipped with a fuel tank for low-sulfur fuel oil to address stricter
sulfur oxide (SOx) emissions regulations. Going forward, MOL plans
to successively update its fleet by deploying new VLCCs from 2018
to 2019, with a view to addressing demand for oil transport around
the world.
VLCC KIRISHIMA
40
Underlined words are explained in the Glossary on page 5.
41
Mitsui O.S.K. LinesMOL Report 2018
Overview of Operations
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
LNG Carriers/Offshore Businesses
Fiscal 2017 in Review
In fiscal 2017, the LNG Carriers/Offshore Project division
continued to report stable profits as in fiscal 2016. In the past
few years, we have seen sluggish energy prices, along with
generally stagnant energy cargo movements. However, our
LNG carriers are basically operated under long-term con-
tracts and generate stable cash flow regardless of market
fluctuations. Moreover, we successively secured new LNG
transport contracts for various projects during the period
from fiscal 2014 to 2016. New LNG carriers for those projects
have been launched and are in the phase of contributing to
profits. Among those vessels is an ice-breaking LNG carrier
ordered in fiscal 2014 for use in the Yamal LNG project in
Russia (see the FOCUS section). In offshore businesses simi-
larly based on long-term contracts, we enlarged our base of
highly stable profits following the delivery of a new FSRU, the
first for a non-European shipping company, in addition to the
existing FPSO units. Our four FPSO units off the coast of Brazil,
along with one FPSO unit off the coast of Ghana are operat-
ing steadily. In addition to the new FSRU deployed in a
project in Turkey, we also laid the groundwork for future
profit growth. In India, we signed an agreement for the long-
term operation and maintenance of one FSRU and an
agreement for the provision and long-term operation and
maintenance of one FSU, both of which are scheduled to
start operation in early 2020.
Fiscal 2018 Initiatives
From fiscal 2018, we expect business performance to con-
tinue to grow steadily as the long-term contracts signed over
the past few years begin contributing to profits in earnest.
Looking at the business environment, global demand for LNG
as a cleaner source of energy than conventional fossil fuels is
expected to increase rapidly for the next 10 years or more.
Currently, roughly half of LNG transported by MOL is destined
for Japan and the remaining half for overseas. However,
demand for LNG is showing tremendous growth primarily in
China as well as India and Southeast Asia, and our plan is to
seize this opportunity by expanding our business overseas.
LNG is transported at –162oC, and its transportation
requires a wide range of advanced technological capabilities
from the construction of vessels to cargo handling during
navigation. In addition, the ordering and construction of LNG
carriers requires considerable financial strength as they cost
more than ¥20.0 billion per carrier. In these respects, the LNG
transport business has high barriers to entry. There are sev-
eral specialized LNG shipping companies in Europe that
compete with MOL. However, MOL, as a full-line marine
transport company, has a competitive edge over these spe-
cialized shipping companies in terms of the size and breadth
of its financing capabilities and human resources. To address
the growing demand for LNG transportation, we aim to drive
further growth by making a Group-wide effort to intensively
allocate resources to this business.
l
S
t
a
b
e
P
r
o
f
i
t
s
Portfolio
V
a
r
i
a
b
e
P
r
o
l
f
i
t
s
Highly Specialized
Offshore Businesses
LNG Carriers
Steaming Coal
Carriers
Less Specialized
New Projects Starting Operation in FY2018–2020
LNG Carriers
Osaka Gas
JERA
Tokyo Gas
Mitsui
ex. USA
ex. USA
ex. USA
ex. USA
To Japan
1 vessel
To Japan
2 vessels
To Japan
3 vessels
To Japan
3 vessels
SINOPEC (China)
ex. Australia
To China
1 vessel
Yamal (Russia)
ex. Russia
To China
3 vessels
Offshore Businesses
Petrobras
Swan Energy
Swan Energy
Brazil
India
India
FPSO
FSRU
FSU
1 unit
1 vessel
1 vessel
LNG: Seaborne Trade (Million tons)
500
400
300
200
100
0
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
2024*
2025*
* Forecast
The offshore businesses are also difficult to enter given the
strong emphasis put on the track record of companies, in addi-
tion to requiring advanced expertise and financing capabilities.
MOL has secured a competitive edge in this field as it has
already entered the FPSO and FSRU sectors. Notably, FSRUs have
rapidly penetrated the market, with more than 60% of the
countries that have begun importing LNG in the past decade
choosing to adopt FSRUs. With continued growth in demand
for LNG in South Asia, Southeast Asia, the Middle East and
certain other regions, FSRUs offer strong prospects for the future
because they can be installed quicker and less expensively than
building onshore LNG terminals. We believe that FSRUs will
contribute further to MOL’s base of highly stable profits. That
said, there is no guarantee that all of the FSRU projects will be
implemented effectively with no issues. In response, we will
cautiously execute investments by assessing risks of projects
based on the discernment that we have honed to date.
In offshore businesses, MOL embarked upon the self-
elevating platform vessel business for the installation of off-
shore wind power generation systems in fiscal 2017, as a part
of the environment and emission-free businesses. In recent
years, offshore wind power generation has been growing
primarily in Europe as a source of energy with a low environ-
mental impact. More recently, offshore wind power generation
systems have also started to be introduced in East Asia. MOL
is well positioned to apply the technologies and expertise it
has developed to fields such as the installation, operation and
maintenance of offshore wind power generation systems, as
well as finance leases for those systems. Therefore, we plan to
step up MOL’s level of engagement in these fields.
MOL
FOCUS
Launch of MOL’s Initial Vessel for the World’s
First Ice-Breaking LNG Carrier Project
At the end of March 2018, MOL launched the first of three ice-
breaking LNG carriers for use in the Yamal LNG project in Russia. This
LNG carrier, which was jointly ordered by MOL and China COSCO
Shipping Corporation Limited, has the ability to operate in ice-
covered waters by breaking up ice up to 2.1 meters thick under its
own power. In the summer, the LNG carrier will sail to East Asia from
the Yamal LNG base in Russia via the Northern Sea Route. This will
shorten transit time to East Asia to only 20 days, compared with 55
days via the conventional route through the Suez Canal. The cre-
ation of this new transport route is expected to enhance transport
efficiency and reduce CO2 emissions.
Scan here to see a video
Ice-breaking LNG carrier VLADIMIR RUSANOV
Steaming Coal Carriers
MOL’s steaming coal carriers are contributing to stable profits
as most of these vessels are operated under medium- to
long-term contracts with customers in Japan. In addition to
these profit contributions, the profitability of spot contracts
improved in fiscal 2017 owing to a recovery in dry bulker
market conditions. As a result, the division achieved a year-
on-year increase in profits. The main factors behind the
recovery in market conditions were firm cargo volume and
progress on the scrapping of aged vessels that could not
bear the additional costs of complying with stricter environ-
ment regulations, such as the ballast water treatment sys-
tems required by international regulations. Another factor
was that new shipbuilding orders for coal carriers have been
suppressed globally in the prolonged market slump.
Since the adoption of the Paris Agreement on climate
change, we have seen progress on efforts to move away from
fossil fuels and coal-fired thermal power generation and to
promote the shift to renewable energy, primarily in Europe.
However, the supply of renewable energy in Japan is pro-
jected to be inadequate over the medium term, and there
have been delays in restarting the operation of nuclear
power plants. Therefore, we believe that coal-fired power
generation will continue to play a significant role in the base
power mix. In fiscal 2018 and beyond, we will continue work-
ing to maintain and, where possible, expand our share of
steaming coal carriers operated under stable transportation
contracts. At the same time, demand for steaming coal is
likely to grow in emerging countries such as Southeast Asian
countries and India, where high-efficiency coal-fired power
plants are being introduced. Targeting this demand, the
steaming coal carrier division will enhance overseas sales
activities in collaboration with the tanker division and the
LNG carriers/offshore businesses division as the Energy Trans-
port Business Unit, with the aim of winning new contracts.
42
Underlined words are explained in the Glossary on page 5.
43
Mitsui O.S.K. LinesMOL Report 2018
Overview of Operations
Product Transport Business Unit
Michael P.Y. Goh
Executive Officer
Deputy Director General
(Logistics)
Naotoshi Omoto
Senior Managing Executive Officer
Director General of Product
Transport Business Unit
(Management and Car Carriers)
Atsushi Igaki
Executive Officer
Deputy Director General
(Ferries & Coastal RoRo Ships)
Akihiko Ono
Senior Managing Executive Officer
Deputy Director General
(Containerships)
Yutaka Hinooka
Executive Officer
Deputy Director General
(Terminals & Logistics)
Car Carriers
Portfolio
Highly Specialized
l
S
t
a
b
e
P
r
o
f
i
t
s
Car Carriers
Less Specialized
V
a
r
i
a
b
e
P
r
o
l
f
i
t
s
44
Fiscal 2017 in Review
In fiscal 2017, the division faced a tough business environ-
ment as in fiscal 2016. Cargo volumes from Japan and other
major loading ports in East Asia to North America, Europe,
and Oceania were strong, while those to Central and South
America and to Southeast Asia recovered somewhat from
sluggish levels in fiscal 2016. On the other hand, cargo vol-
umes remained lackluster from Asia and the Atlantic Ocean
region to oil-producing regions such as the Middle East and
Africa. The situation continued where changes in trade pat-
terns led to a decline in operation efficiency. Given this busi-
ness backdrop, the car carrier division worked to streamline
the core fleet, mainly through the retirement of aging vessels,
as in fiscal 2016. At the same time, we diligently strove to
improve operation efficiency by increasing cargo loading per
vessel, and succeeded in raising the overall number of cars
transported despite the reduction in the number of vessels
in operation.
As a result, our efforts to reduce the fleet size and improve
operation efficiency steadily paid off, countering cost
increases from a rise in fuel oil prices in the second half of the
fiscal year, such that profit levels in fiscal 2017 were higher
than in the previous fiscal year, albeit low.
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
Fiscal 2018 Initiatives
In fiscal 2018, we expect global auto sales to stay strong and
auto cargo volumes and trade patterns to be similar to fiscal
2017. On the other hand, there are concerns about a short-
age of transporting capacity from fiscal 2018 onward, due to
a decline in new vessel deliveries. In response, MOL will not
further shrink its fleet for the time being, while we plan to
keep actively endeavoring to raise profitability by improving
operation efficiency.
In fiscal 2018, we are taking deliveries of the remaining
three of four FLEXIE series next-generation car carriers (see
the FOCUS section), which should contribute to earnings by
carrying vehicles much more efficiently than conventional car
carriers. Though for the time being we plan to keep our core
fleet size of car carriers unchanged from fiscal 2017 at about
100 vessels, we will also study new LNG-fueled car carriers
capable of reducing CO2 emissions looking to the future.
The car carrier division previously operated overseas
networks and a portion of business systems jointly with the
containership business. However, the division rebuilt a net-
work of overseas sales and operating bases to maintain as
organizational revision progressed in light of the integration
of containership businesses by three Japanese shipping
companies. Also, regarding business systems, in summer
2018, we will start operating the new system we have been
developing. In addition to enhancing the efficiency of daily
operations, we expect the new system to encourage the use
of data in making decisions since it will enable easier access
of amassed information.
As our initiatives to boost earnings are steadily beginning
to produce results, the division will continue to work per-
sistently to bolster the business base and grow earnings
moving forward.
Main Routes
Car Export from Japan by Destination (Thousand units)
5,000
4,000
3,000
2,000
1,000
0
2012
2013
2014
2015
2016
2017
■N. America ■Europe ■Middle East ■Oceania ■Asia
■Latin America ■Africa
MOL
FOCUS
Delivery of BELUGA ACE, First Next-Generation
FLEXIE Series Car Carrier
The BELUGA ACE delivered in March 2018 is more advanced than
conventional car carriers with six rather than two liftable decks
allowing for height adjustment, enabling effective transport of a
wide array of vehicles, including large-sized construction equip-
ment. As such, it is expected to contribute to enhancing earnings
capacity. In addition, the BELUGA ACE uses a rounded bow shape
developed in collaboration with Akishima Laboratories (Mitsui
Zosen) Inc. and the MOL Group. This reduces wind resistance and
is expected to lower CO2 emissions by about 2% compared with
conventional car carriers.
Scan here for a video introduction
to the FLEXIE Series
Next-gen car carrier BELUGA ACE
45
Mitsui O.S.K. LinesMOL Report 2018
Overview of Operations
Portfolio
Highly Specialized
Terminals &
Logistics
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
Containerships
Less Specialized
Consolidated Revenues Breakdown (FY2017)
● North America Trade 43%
31%
● Europe Trade
10%
● North-South Trade
16%
● Intra-Asia Trade
Fiscal 2017 in Review
The containership business continued to post a loss in fiscal
2017. However, the result improved significantly compared
to fiscal 2016, when the business environment came under
pressure as freight rates sank to a historical low. In fiscal 2017,
the Asia-Europe route and Asia-North America route both
saw firm cargo movements. In this environment, MOL
enhanced its cost competitiveness by launching six new
ultra-large containerships. In parallel, we solidly captured
surging demand for containership services and steadily
accumulated revenues. Moreover, results were achieved
through continuing measures to reduce various costs, such
as enhancement of yield management to reduce the cost of
returning empty containers. In the second half of the year,
the supply of new containerships into the market negatively
affected the supply and demand situation. Nonetheless,
MOL’s initiatives to improve revenues and earnings proved
effective. In fiscal 2017, even though one-time costs were
recorded due to the establishment of Ocean Network
Express (ONE), an integrated containership business com-
pany, we still managed to drastically reduce losses in the
containership business from the previous fiscal year.
Containerships
Fiscal 2017 was also highly significant for MOL because
operations at the integrated containership business com-
pany formed by Japan’s three major shipping companies
were scheduled to begin in fiscal 2018. It was no easy feat to
maintain the same level of service quality in MOL’s own
containership business amid personnel constraints, while
advancing preparations for integrating the containership
business into ONE. Every staff member rose to the occasion
with a high level of motivation and selflessly fulfilled their
respective roles. As a result, we successfully completed both
of those priorities.
Fiscal 2018 Initiatives
ONE commenced services on April 1, 2018 as planned. In
conjunction with the integration, certain tasks related to
business withdrawal will remain at MOL. We expect to com-
plete almost all of those tasks within fiscal 2018. MOL is a
shareholder in ONE with an equity interest of 31%. As such,
MOL will assist management by sending directors to sit on
the ONE board. At the same time, a large number of manag-
ers and staff members from MOL will work together with
their new colleagues at ONE. They will strive to evolve the
meticulous services that have earned a strong reputation
from customers and improve revenues and earnings by
capturing integration synergies. In addition to the personnel
contribution, MOL has contributed significant assets to ONE
Plan to Improve Profitability in MOL’s Containership
Business
MOL’s containership
business ordinary
profit (loss)
＝
ONE: MOL’s ONE-related equity in earnings of
affiliates (31% of ONE’s net profit and loss)
MOL: Ordinary profit excluding the above
equity in earnings of affiliates (including
terminal & logistics businesses, etc.)
(¥ billions)
30
20
10
0
–10
–20
Ordinary profit (loss)
Total
¥–10.6 billion
Total
¥0.5 billion
Transitional costs
FY2017
Results
FY2018
Forecasts
FY2019
Plan
FY2020
Plan
■ONE ■MOL Ordinary profit (loss)
(April 27, 2018)
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
for use as business resources by chartering out vessels, con-
tainers, and other operating assets to the company. The
containership services that MOL has continuously provided
over many years will be reinvented as the ONE brand. How-
ever, there has been no change in the importance of the
containership business within MOL’s business portfolio. We
are confident that ONE, having the competitiveness to pre-
vail in the containership industry, will achieve steady growth
in the years to come.
Terminals & Logistics
Fiscal 2017 in Review
In fiscal 2017, the Terminals and Logistics business secured
firm profits in sequence from fiscal 2016. In the overseas
terminals business, automated container terminal operations
fared well both at Los Angeles and Rotterdam. At TraPac
terminal in Los Angeles, we achieved cost reductions by
enhancing operational efficiency along with the completion
of work pertaining to automation and an on-dock rail directly
connecting to the inland railway network. At our terminal in
Rotterdam, one of the most advanced terminals in the world,
capacity utilization was higher than in fiscal 2016 and main-
tained stable operations throughout the year.
In the logistics business, we are also making steady prog-
ress. We continued on a course of expanding the regional
logistics field through M&A and so forth, concluding a capital
and business tie-up with Nippon Concept Corporation (see
the FOCUS section) following our investment in a major
logistics company in Malaysia in fiscal 2016.
Fiscal 2018 Initiatives
As the overseas terminals business is scheduled to be trans-
ferred to Ocean Network Express (ONE), a new liner company
jointly formed by three major Japanese carriers, we will seek
a new growth strategy focusing on the logistics business
going forward.
In fiscal 2018, MOL will strengthen ties between the core
companies of its NVOCC* business, MOL Logistics (Japan) Co.,
Ltd. (MLG) and MOL Consolidation Service Ltd. (MCS) in Hong
Kong. We will integrate both companies’ NVOCC businesses
under a new company to be established in Hong Kong, and
develop the business under the unified brand “MOL World-
wide Logistics.”
At the new company, we look to reduce purchasing costs
by leveraging economies of scale in negotiating ocean
freight rates with shipping companies. At the same time, we
will consolidate marketing and other functions and aim to
generate synergies capitalizing on the customer bases of
MCS, which has strong support from customers engaging in
trade between Asia and the United States, and MLG, which
has a robust Japanese customer base. As MOL’s containership
business has been spun-off, we plan to expand the NVOCC
business further and make it an earnings pillar, also as a
means of maintaining MOL’s brand power, sales networks,
and relationships with customers forged over many years.
* NVOCC (Non-Vessel Operating Common Carrier)
MOL
FOCUS
Embarking on the Tank Container Business via
Capital and Business Alliance with Nippon
Concept Corporation
In February 2018, MOL entered into a capital and business alliance
agreement with Nippon Concept Corporation, an international
logistics company specializing in the transportation of various gases
and chemicals using tank containers. Developing a comprehensive
two-way strategic partnership will provide us with opportunities to
expand business in the highly specialized domain of transporting
liquid chemical products where there is potential for generating
stable profits. In addition, we aim to cultivate new customer needs
through synergies with the chemical tanker business, a field where
we are strategically allocating resources.
Photo: Nippon Concept Corporation
46
Underlined words are explained in the Glossary on page 5.
47
Mitsui O.S.K. LinesMOL Report 2018
Overview of Operations
Dry Bulk Business Unit
Energy Transport Business Unit
Product Transport Business Unit
Associated Businesses
Ferries & Coastal RoRo Ships
Portfolio
Highly Specialized
V
a
r
i
a
b
e
P
r
o
l
f
i
t
s
Ferries & Coastal
RoRo Ships
Less Specialized
l
S
t
a
b
e
P
r
o
f
i
t
s
Fiscal 2017 in Review
In fiscal 2017, passenger transportation and cargo transpor-
tation services both remained strong, as in fiscal 2016. In
passenger transportation services, an increase in repeat
customers pushed up the overall number of passengers. We
made steadfast efforts to increase our visibility in the market,
including the acquisition of the naming rights for a terminal
at Osaka Nanko Port and naming the terminal Sunflower
Terminal (Osaka), in addition to selling the concept of “casual
cruises” that allow people to enjoy a laid-back getaway in the
form of a sea voyage. We believe that these efforts are
MOL
FOCUS
producing strong results. In cargo transportation services,
there remains a strong modal shift from long-distance trans-
port by trucks to ocean transport by ferries driven by the
need to reduce environmental impact and a shortage of
truck drivers. As a result, cargo volume continued to trend at
high levels as in the previous fiscal year. In fiscal 2017, we
took delivery of two new ferries and launched them on the
Hokkaido route. However, the new SUNFLOWER SAPPORO,
one of the two new ferries, suffered engine trouble and
operations had to be suspended for about four months. In
addition, persistently high bunker fuel prices weighed heavily
on performance. As a result, although the division firmly
secured profits, the level of profit decreased year on year in
fiscal 2017.
Fiscal 2018 Initiatives
In fiscal 2018, demand for passenger and cargo transporta-
tion is projected to remain firm. Following on from the
launch of new ferries on the Hokkaido route in fiscal 2017, we
will launch two new ferries on the Kyushu route to increase
the truck-carrying capacity of our ferries. In doing so, we aim
to fulfill increased demand resulting from the modal shift. In
passenger transportation services, ferry occupancy rates
usually decline in certain seasons, compared with the peak
seasons when the ferries operate at mostly full occupancy.
Conversely, this means that the ferry business has more
potential for growth. To realize this potential and increase
Scan here for the introductory website
for “casual cruises”
Launch of the New SUNFLOWER SATSUMA
In May 2018, the new ferry SUNFLOWER SATSUMA was launched on the Osaka-South Kyushu route. The new
SUNFLOWER KIRISHIMA is planned for launch in September. We seek to make ferries more than just a mode of trans-
portation by providing passengers with a “sea voyage” experience. To do so, we have upgraded and expanded the
facilities onboard the ferries to allow passengers to fully enjoy a getaway far removed from their daily routines. We
have sharply increased the number of private cabins with showers,
vanity spaces and toilets. We have also installed a large and open
entrance lobby featuring a three-floor atrium, along with a spacious
restaurant and scenic public baths, as
well as suite rooms. Through the launch
of these ferries, we seek to provide
“casual cruises” that offer the excitement
and anticipation of a first-time experi-
ence to customers spanning a broad
range of age groups.
Launch of the new SUNFLOWER SATSUMA
Entrance lobby
demand, we have added a variety of innovative upgrades to
our new ferries so that passengers can fully enjoy our “casual
cruise” experience (see the FOCUS section). In terms of ser-
vices, we plan to enhance marketing by utilizing our data-
base of ferry passengers. We will strive to capture demand
from inbound tourists, as well as seniors centered on baby
boomers and female customers as we conduct proactive
marketing activities. In doing so, we aim to stimulate unmet
demand for passenger transportation services.
Previously, the Ferries & Coastal RoRo Ships business was
managed by each of the MOL Group ferry companies with a
strong focus on their respective regions. Going forward, we
will foster closer collaboration within the MOL Group by, for
example, sharing best practices across Group companies, as
we work to enhance the quality of the entire business. The
division is responsible for passenger and cargo transporta-
tion services between major urban areas and Hokkaido and
Kyushu. As such, the division’s businesses have been playing
an increasingly pivotal role in the development of regional
economies year by year. We will continue working as a group
to strengthen transportation capabilities and enhance trans-
portation quality, as we seek to contribute even further to
the economic vitality of Hokkaido and Kyushu as well as the
surrounding regions.
Associated Businesses
Portfolio
Highly Specialized
V
a
r
i
a
b
e
P
r
o
l
f
i
t
s
Tugboats
Trading
l
S
t
a
b
e
P
r
o
f
i
t
s
Daibiru
Corporation
Less Specialized
Fiscal 2017 in Review
This segment comprises MOL’s real estate, cruise ship, tug-
boat, trading and other businesses. In the office leasing
business, vacancy rates remained low in the Tokyo and
Osaka areas and rent levels gradually increased. Under these
conditions, Daibiru Corporation, the core company of this
business, posted a year-on-year increase in profits, achieving
high occupancy as a result of efforts to provide tenant ser-
vices, including promoting initiatives to enhance the quality
of building management. Meanwhile, in the cruise ship
business, profits decreased year on year, mainly due to the
impact of the cancellation of cruises because of typhoons
and the rise in bunker fuel prices. In the tugboat business,
we have taken steps to lay the groundwork for the future,
including our decision to build an LNG-fueled tugboat that
we plan to launch in Osaka Bay in April 2019. The trading
and other businesses also delivered solid results as a whole.
Overall, the associated businesses recorded an increase in
profits year on year.
Fiscal 2018 Initiatives
In fiscal 2018, we expect to continue managing each busi-
ness steadily, with results forecast to be mostly unchanged
from the previous fiscal year. In April 2018, Daibiru formu-
lated its new medium-term management plan, “Design 100
Project Phase-II.” Under this plan, Daibiru expects to achieve
steady growth by investing in prime urban assets and
enhancing the competitiveness of existing buildings by
investing in renovations, and continuously pushing ahead
with overseas businesses in markets such as Vietnam. In the
cruise ship business, we will strive to attract more guests and
improve profitability by further evolving the high-class ser-
vices that have proven popular on the NIPPON MARU. In the
tugboat and trading businesses, we will continue working to
enter fields peripheral to offshore businesses and new fields
where we can leverage MOL’s expertise, such as specialty
tugboats that assist in installing wind power generation
facilities and after-installation maintenance operations.
Moreover, the division will act as an engine to develop the
environment and emission-free businesses that MOL will
strengthen going forward into one of its future core busi-
nesses by leveraging and refining the MOL Group’s manage-
ment resources.
Corner Stone Building (Vietnam)
48
Underlined words are explained in the Glossary on page 5.
49
Mitsui O.S.K. LinesMOL Report 2018
Financial and Non-Financial Highlights
MOL ADVANCE
GEAR UP ! MOL
RISE 2013
STEER FOR 2020
ROLLING PLAN
2008/3
2009/3
2010/3
2011/3
2012/3
2013/3
2014/3
2015/3
2016/3
2017/3
2018/3
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:*1
Profit (loss) attributable to owners of parent (Yen)
Net assets (Yen)
Cash dividends applicable to the year (Yen)
Management indicators:
Gearing ratio (Times)
Net gearing ratio (Times)
Equity ratio (%)
ROA (%)*2
ROE (%)
Dividend payout ratio (%)
CO2 emissions of MOL fleet (Thousand tons)
Number of MOL Group employees (the parent
company and consolidated subsidiaries)
¥1,945,696
1,544,109
110,302
291,284
302,219
318,202
190,321
23,291
283,359
(260,068)
74,480
1,900,551
1,047,824
601,174
751,652
679,315
¥1,591.40
5,677.39
310
0.88
0.79
35.7
17.1
30.9
19.5
20,065
9,626
¥1,865,802
1,564,485
104,104
197,211
204,510
197,732
126,987
(71,038)
118,984
(190,022)
78,155
1,807,079
1,106,746
702,617
695,021
623,715
¥1,061.30
5,212.26
310
1.13
0.99
34.5
11.0
19.5
29.2
20,374
10,012
¥1,347,964
1,228,478
98,546
20,939
24,234
27,776
12,722
(40,055)
93,428
(133,483)
88,366
1,861,312
1,209,175
775,114
735,702
659,508
¥ 106.30
5,517.01
30
1.18
1.05
35.4
1.3
2.0
28.2
¥1,543,660
1,328,959
91,300
123,400
121,621
95,366
58,277
46,970
181,755
(134,785)
77,445
1,868,740
1,257,823
724,259
740,247
660,795
¥ 487.50
5,528.30
100
1.10
1.00
35.4
6.5
8.8
20.5
18,684
20,053
9,707
9,438
* Rounded down to the nearest ¥1 million
*1 The Company consolidated every 10 shares into 1 share effective October 1, 2017. Accordingly, figures have been calculated as if the consolidation of shares had been conducted at the
beginning of the fiscal year ended March 31, 2008.
*2 Ordinary profit (loss) / Average total assets at the beginning and the end of the fiscal year
¥1,435,220
1,368,794
¥1,509,194
1,432,014
90,885
(24,459)
(24,320)
(33,516)
(26,009)
(129,298)
5,014
(134,312)
85,624
1,946,161
1,293,802
869,619
717,909
637,422
92,946
(15,766)
(28,568)
(137,938)
(178,846)
(25,285)
78,955
(104,240)
94,685
2,164,611
1,303,967
1,046,865
619,492
535,422
¥ (217.60)
¥(1,495.70)
5,332.70
50
4,477.60
0
1.36
1.23
32.8
(1.3)
(4.0)
—
1.96
1.58
24.7
(1.4)
(30.5)
—
19,435
19,053
9,431
9,465
¥1,729,452
1,587,902
100,458
41,092
54,985
71,710
57,393
(25,615)
94,255
(119,870)
83,983
2,364,695
1,379,244
1,094,081
783,549
679,160
¥ 479.90
5,679.00
50
1.61
1.35
28.7
2.4
9.5
10.4
18,860
10,289
¥1,817,069
1,683,795
116,024
17,249
51,330
58,332
42,356
(66,656)
92,494
(159,150)
87,803
2,624,049
1,498,028
1,183,401
892,435
782,556
¥ 354.20
6,542.60
70
1.51
1.35
29.8
2.1
5.8
19.8
18,803
10,508
¥1,712,222
1,594,568
115,330
2,323
36,267
(154,385)
(170,447)
182,508
209,189
(26,681)
92,771
2,219,587
1,376,431
1,044,980
646,924
540,951
¥1,504,373
¥1,652,393
1,388,264
1,513,736
113,551
2,558
25,426
23,303
5,257
(56,318)
17,623
(73,941)
87,190
2,217,528
1,323,665
1,122,400
683,621
571,983
115,972
22,684
31,473
(28,709)
(47,380)
(2,471)
98,380
(100,851)
86,629
2,225,636
1,290,929
1,118,089
628,044
511,242
¥(1,425.00)
4,522.80
50
¥ 43.95
4,782.25
20
¥ (396.16)
4,274.81
20
1.93
1.64
24.4
1.5
(25.8)
—
18,676
10,500
1.96
1.64
25.8
1.1
0.9
45.5
18,204
10,794
2.19
1.82
23.0
1.4
(8.7)
—
17,774
10,828
50
51
Mitsui O.S.K. LinesMOL Report 2018
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
FY2017
Shipping and Other Revenues ¥1,652.3 billion
¥31.4 billion
Ordinary Profit (Loss)
FY2017
Total Assets
Net Assets
¥2,225.6 billion
¥628.0 billion
(¥ billions)
(¥ billions)
2,000
1,500
1,000
500
0
13/3
14/3
15/3
16/3
17/3
18/3
200
150
100
50
0
−50
3,000
2,400
1,800
1,200
600
0
1,000
800
600
400
200
0
13/3
14/3
15/3
16/3
17/3
18/3
■ Shipping and other revenues (left scale)
■ Ordinary profit (loss) (right scale)
■ Total assets (left scale)
■ Net assets (right scale)
Ordinary profit increased ¥6.0 billion, due to a
drastic decrease in losses in the containership
business, despite headwinds such as a deterioration
in the tanker market and a rise in bunker prices.
Total assets as of March 31, 2018 were mostly
unchanged from a year earlier, despite slight
increases in vessels and investment securities. Net
assets decreased ¥55.5 billion, primarily due to a
decline in retained earnings.
Net Income (Loss)* per Share/Cash Dividends
Applicable to the Year/Dividend Payout Ratio
Cash Flows
FY2017
Net Income (Loss)* per Share
Cash Dividends Applicable to the Year
Dividend Payout Ratio
¥(396.16)
¥20.00
—%
FY2017
Cash Flows from Operating
Activities
Cash Flows from Investing
Activities
¥98.3 billion
¥(100.8) billion
(Yen)
500
0
–500
–1,000
–1,500
13/3
14/3
15/3
16/3
17/3
18/3
(%)
50
0
(¥ billions)
250
200
150
100
50
0
–50
–100
–150
–200
–250
13/3
14/3
15/3
16/3
17/3
18/3
■ 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
FY2017
ROA
ROE
(%)
20
10
0
–10
–20
–30
–40
ROA
ROE
13/3
14/3
15/3
16/3
17/3
18/3
MOL posted a net loss* after a year-on-year deterioration of
¥52.6 billion from the previous fiscal year, reflecting the
recording of an extraordinary loss of ¥73.4 billion in
connection with the integration of the containership
businesses. MOL paid an interim dividend of ¥1 per share
(before the consolidation of shares) and a year-end dividend
of ¥10 per share (after the consolidation of shares).
* Profit (loss) attributable to owners of parent
52
Free cash flow was slightly negative as a result of
an increase of ¥26.9 billion in net cash used in
investing activities, despite an increase of ¥80.7
billion in net cash provided by operating activities.
ROA improved year on year, as ordinary profit
increased while total assets remained largely
unchanged from the previous fiscal year-end. ROE
decreased sharply due to the net loss* reflecting
the recording of an extraordinary loss in connection
with the integration of the containership businesses.
* Profit (loss) attributable to owners of parent
FY2017
Dry Bulk Business
Energy Transport Business
160
Product Transport Business
Associated Businesses/
Others/Adjustments
120
(¥ billions)
¥15.4 billion
¥13.6 billion
¥(6.3) billion
¥8.7 billion
FY2017
Interest-Bearing Debt
Net Interest-Bearing Debt*
Shareholders’ Equity**
(¥ billions)
¥1,118.0 billion
¥928.4 billion
¥511.2 billion
FY2017
Gearing Ratio
Net Gearing Ratio
Equity Ratio
80
40
0
–40
13/3
14/3
15/3
16/3
17/3
18/3
■ Dry Bulk Business
■ Energy Transport Business
■ Product Transport Business
■ Associated Businesses/Others/Adjustments
■ Bulkships
■ Containerships
■ Other segments, etc.
From fiscal 2017, we have changed our disclosure
segments. In the Energy Transport Business, ordinary
profit decreased year on year due to worsening
profitability in the tanker division. However, ordinary
profit in the Dry Bulk Business increased slightly due
to improving market conditions. In the Product
Transport Business, the ordinary loss was reduced
sharply owing to the positive effects of deploying
ultra-large containerships and other factors. Overall,
ordinary profit increased year on year.
1,200
1,000
800
600
400
200
0
13/3
14/3
15/3
■ Interest-bearing debt ■ Net interest-bearing debt
■ Shareholders’ equity
17/3
18/3
16/3
* 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 decreased ¥4.3 billion to
¥1,118.0 billion due to the redemption of bonds,
despite an increase in short-term bank loans.
Shareholders’ equity decreased ¥60.7 billion to
¥511.2 billion due to a decline in retained earnings
reflecting the recording of an extraordinary loss.
2.19
1.82
23.0%
(%)
50
40
30
20
10
0
2.50
2.00
1.50
1.00
0.50
0
13/3
14/3
15/3
16/3
17/3
18/3
Gearing ratio (left scale) Net gearing ratio (left scale)
Equity ratio (right scale)
The gearing ratio worsened 23 points and the
equity ratio decreased 2.8 points, reflecting the ¥4.3
billion decrease in interest-bearing debt, the ¥8.1
billion increase in total assets, and the ¥60.7 billion
decrease in shareholders’ equity.
Credit Ratings (As of June 2018)
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
Fleet Size (All Types of Vessels)*
1.4 %
(8.7)%
FY2017
Capital Expenditure
¥105.6 billion
FY2017
Number of Vessels
Deadweight
857 vessels
62,676 thousand tons
(¥ billions)
200
150
100
50
0
13/3
14/3
15/3
16/3
17/3
18/3
(Vessels)
1,000
(Thousand tons)
100,000
800
600
400
200
0
80,000
60,000
40,000
20,000
0
13/3
14/3
15/3
16/3
17/3
18/3
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.
■ Number of vessels (left scale)
■ Deadweight (right scale)
As a result of implementation of the Business
Structural Reforms in fiscal 2015, the fleet size
was scaled down, mainly of small- and medium-
sized bulkers.
* Including spot-chartered ships and those owned by
joint ventures
Note: The Company consolidated its common shares
on the basis of one (1) unit for every ten (10)
shares effective October 1, 2017. Accordingly,
each figure was calculated as if the consolidation
of shares had been conducted at the beginning
of the fiscal year ended March 31, 2013.
Underlined words are explained in the Glossary on page 5.
53
Mitsui O.S.K. LinesMOL Report 2018 Message from the CFO
Takashi Maruyama
Senior Managing
Executive Officer
Review of Fiscal 2017 and Recording of Loss
Related to Business Restructuring
In fiscal 2017, MOL achieved consolidated ordinary profit of
¥31.4 billion, up ¥6.0 billion year on year and ¥6.4 billion
higher than the initial forecast. The increase reflects steady
recording of highly stable profits from mid- and long-term
contracts, in addition to which, expenses associated with
the establishment of the integrated containership business
venture were lower than expected, and the dry bulker
market performed stronger than we had anticipated. On the
other hand, as we recorded an extraordinary loss (loss related
to business restructuring) of ¥73.4 billion associated with the
integration of the containership business, we recorded a loss
attributable to owners of parent of ¥47.3 billion.
Over 80% of the loss related to business restructuring was
incurred by chartering out containerships to the integrated
containership business venture Ocean Network Express
(ONE), which started service in April 2018. Specifically, we
recorded provisions in a lump sum for the losses reasonably
expected in the future from the negative difference between
charter rates to be paid by the Company for vessels procured
in the past (which under current market conditions unfortu-
nately means a comparatively high level) and the charter-out
rates to be received from ONE reflecting prevailing market
conditions. After several discussions with our independent
auditor, the management decided to purge the negative
legacy of the containership business, seizing this timing
when the integrated venture started its operations. At the
same time, the course toward improved business perfor-
mance from fiscal 2018 onwards is now much clearer, and we
have therefore paid a year-end dividend of ¥10 per share as
originally intended.
Roadmap to Improved Business Performance
By recording the extraordinary loss, we have finally resolved
the structural issues in the dry bulker and containership
businesses, two major segments that had caused the Com-
pany’s performance to worsen significantly since fiscal 2012,
and we believe this has increased the certainty of improved
profitability going forward. Namely, in dry bulkers, we com-
pleted our business model transformation by means of Busi-
ness Structural Reforms executed in fiscal 2015, and the
business has been reinvented with a structure that can stably
deliver profits without being too heavily influenced by
market fluctuations. In the containership business, we
purged unrealized losses and adopted a structure that
directly incorporates the profits ONE is expected to produce
going forward through integration synergies.
In addition, the initiative is also expected to greatly
improve “other variable profits (losses),” which had been a
hindrance to earnings in the recent years, by expanding and
strengthening the strategic priority business fields, such as
Roadmap to Improving Profit (Ordinary Profit)
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
(¥ billion)
100.0
80.0
60.0
40.0
20.0
0
–20.0
–40.0
¥31.4 billion
¥40.0 billion
Projected medium-term levels
¥80.0–100.0 billion
55.0
56.0
63.0
63.0
Transitional costs related to
containership business integration
FY2018
FY2017
Forecasts
Results
FY2019
Plan
FY2020
Plan
■Highly stable profits (existing) ■Highly stable profits (contract renewal)
■Other variable profits (losses)
Ordinary profit (total)
(as of April 27, 2018)
1.
2.
3.
Improving other variable profits (losses)
Improve/restore profitability in the containership business
Accumulating highly stable profits
Start operations of existing projects (LNG carriers/Offshore
businesses)/Acquire new mid- and long-term contracts (Dry
bulkers, Tankers, Offshore businesses)
Improving other variable profits
Expand and enhance businesses in which MOL has competitive
advantages (chemical tankers, ferries, etc.)
In the
medium
term
Improving other variable profits
Expect recovery of dry bulker and tanker markets to some extent
chemical tanker and ferry business where MOL has its com-
petitive edge. Furthermore, in fiscal 2019, we will fully deploy
LNG vessels and offshore units under long-term charter
contracts that have been acquired over the past few years.
The start of operations for these vessels and units had been
delayed a little from the original schedule, but now their
expected contribution to profits is another reason to feel
confident of improved business performance from fiscal
2018 onwards.
Financial Foundation and Cash Flows
Although the roadmap to improved business performance is
clearer going forward, as mentioned above, in fiscal 2017, the
Company ultimately recorded a loss, causing the equity ratio
to worsen to 23% and the gearing ratio to 2.19 times at the
fiscal year-end.
However, with the improvement in “other variable profits
(losses),” ordinary profit of ¥80–100 billion and ROE of 8–12%
envisaged for the medium term seem well within reach. If
these are achieved, then the accumulation of profits will
restore shareholders’ equity in due course. With regard to the
gearing ratio, a rapid improvement seems likely to take time,
with forecasts for negative free cash flow in fiscal 2018 also
due mainly to the cost of withdrawal from MOL’s own con-
tainership services. However, we will strive for improvement
by continuing to pursue a business model of controlling
Medium-Term Profit Levels and Key Financial Indicators
Projected
medium-term levels
Ordinary profit
¥80.0–100.0 billion
ROE
Gearing ratio
8–12%
2.0 or less
Gearing Ratio* / Equity Ratio
2.50
2.00
1.50
1.96
26%
2.19
2.15
23%
24%
1.00
FY2016
(Result)
Gearing ratio (left scale) Equity ratio (right scale)
* Interest-bearing debt / Shareholders’ equity
FY2017
(Result)
FY2018
(Forecast)
(%)
40
30
20
54
Underlined words are explained in the Glossary on page 5.
55
Mitsui O.S.K. LinesMOL Report 2018
CFO Message
cash outflows, for example by utilizing charter-in and
second-hand vessels, in addition to selling off assets, includ-
ing cross-shareholdings.
We initially projected free cash flow as significantly nega-
tive for fiscal 2017. However, strict selection of investments
and proceeds from sales of overseas real estate could mini-
mize the negative amount almost to zero.
Over the three years starting from fiscal 2018 to fiscal 2020,
we are expecting cash flows from investing activities totaling
net outflow of ¥350 billion (excluding investments in ONE).
We plan to capture new contracts in the offshore businesses
and LNG carriers stipulated for strategic resource allocation
under the management plan, scale up the fleet of chemical
tankers and methanol tankers and concentrate investments
on such areas as M&A in the logistics business. In particular,
we plan to strengthen investment in the offshore businesses,
which we expect to differentiate us from other shipping
companies and to provide a higher return, for example as the
first Asian shipping company to own and operate Floating
Storage and Regasification Units (FSRUs).
Although we are still in adverse conditions, to this end, we
will invest in rigorously selected projects whose future cash
flow creation is assured, and we aim for positive free cash
flow from fiscal 2019 onwards from improved operating
cash flows.
Fund Procurement
We don’t anticipate any issues with borrowings from financial
institutions. We have established good relationships with
financial institutions and our investments over the next three
years will be mainly in projects where we invest in accumula-
tion of highly stable profits through mid- to long-term
contracts with customers who have excellent credit ratings.
Moreover, we plan to invest in responding to environmental
regulations and in the environment and emission-free busi-
nesses, which are expected to become a core business in the
future. For this, we have the promising option of procuring
funds through Green Bonds, which are intended for funding
such investments.
Status of Credit Ratings
The Company has maintained a rating of “Stable” from
Japanese ratings agencies, with downward pressure relaxing
temporarily. The posting of a loss related to business restruc-
turing for fiscal 2017 has also been understood by the
agencies. We will continue as before to carefully explain to
ratings agencies about the Company’s path to recovering its
business performance. At the same time, we will also strive to
increase our rating by improving our profitability.
FY2018–2020 Investment Cash Flows Forecast (Three-Year Total)
Excluding invest in the containership joint venture
Fiscal 2017
Total
733億円
¥73.3 billion
3ヵ年
Three-Year
約3,500億円
¥350.0 billion
● LNG Carriers
● Offshore Businesses
● Chemical/Methanol Tankers
● Ferries/Associated Businesses/
Terminals/Logistics
● Environment/IT/Others
12%
21%
30%
26%
11%
● LNG Carriers
● Offshore Businesses
● Chemical/Methanol Tankers
● Ferries/Associated Businesses/
Terminals/Logistics
● Other Vessels
● Environment/IT
27%
29%
9%
11%
12%
12%
Environment/IT/Others includes Other Vessels only in fiscal 2017
Management
Foundation
58
Board of Directors, Audit & Supervisory
Board Members and Executive Officers
60 Dialogue between Outside Officers
62 Corporate Governance
66 Safe Operation
69 Risk Management
71 Environment
73 Corporate Social Responsibility
56
Underlined words are explained in the Glossary on page 5.
57
Mitsui O.S.K. LinesMOL Report 2018 Board of Directors, Audit & Supervisory Board Members
and Executive Officers
(At the end of June 2018)
Board of Directors
Audit & Supervisory Board Members
Koichi Muto
Representative Director
Born 1953
Junichiro Ikeda
Representative Director
Born 1956
Shizuo Takahashi
Representative Director
Born 1959
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 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. 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
Apr. 2018 Representative Director, Executive Vice President,
Executive Officer (current)
Takeshi Hashimoto
Director
Born 1957
Akihiko Ono
Director
Born 1959
Takashi Maruyama
Director
Born 1959
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 Corporate Planning Division
Jun. 2011 Executive Officer, General Manager of Corporate Planning Division
Jun. 2015 Managing Executive Officer
Apr. 2017 Senior Managing Executive Officer
Jun. 2018 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
Apr. 2018 Director, Senior Managing Executive Officer (current)
Independent Officers
Masayuki Matsushima
Outside Director
Hideto Fujii
Outside Director
Etsuko Katsu
Outside Director
Jun. 2011 Director of Mitsui O.S.K. Lines, Ltd. (current)
Jan. 2013 Senior Advisor, Taniguchi Partners International Accounting &
Jun. 2015 Adviser, Sumitomo Corporation (current)
Jun. 2016 Director of Mitsui O.S.K. Lines, Ltd. (current)
Tax Office (current)
Sept. 2014 Senior Advisor of Integral Corporation (current)
Jun. 2016 Outside Director of JGC Corporation (current)
Jul. 2017 Member of Management Council, Grant Thornton Taiyo LLC
(current)
Apr. 2003 Professor, School of Political Science and Economics,
Meiji University (current)
Mar. 2015 Director, Center for Entrance Examination Standardization
(current)
Jun. 2016 Director of Mitsui O.S.K. Lines, Ltd. (current)
Nov. 2016 Administrative Board Member, International Association of
Universities (current)
Apr. 2018 Chairman of Fund Management Advisory Committee,
The Japan Foundation (current)
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
Apr. 1984 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2009 General Manager of CSR and
Environment Office, Corporate Planning
Division
Jun. 2015 Audit & Supervisory Board Member of
Jun. 2013 General Manager of Investor Relations
Mitsui O.S.K. Lines, Ltd. (current)
Office
Jun. 2015 General Manager of Accounting Division
Jun. 2017 Audit & Supervisory Board Member of
Mitsui O.S.K. Lines, Ltd. (current)
Independent Officers
Hiroyuki Itami
Outside Audit & Supervisory
Board Member
Hideki Yamashita
Outside Audit & Supervisory
Board Member
Jun. 2011 Audit & Supervisory Board Member of
Mitsui O.S.K. Lines, Ltd. (current)
Apr. 1982 Attorney-at-Law (current)
Apr. 1985 Established YAMASHITA & TOYAMA LAW
Sept. 2017 President, International University of
AND PATENT OFFICE
Japan (current)
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)
Executive Officers
Koichi Muto
Chairman, Executive Officer
Junichiro Ikeda
President, Chief Executive Officer
Shizuo Takahashi
Executive Vice President, Executive Officer
(Assistant to President, Chief Compliance
Officer, Chief Information Officer,
Deputy Director General of Technology
Innovation Unit, Responsible for:
Corporate Audit Division, Secretaries &
General Affairs Division, Corporate
Marketing Division, MOL Information
Systems, Ltd.)
Takeshi Hashimoto
Senior Managing Executive Officer
(Director General of Energy Transport
Business Unit, Supervisor for: Steaming
Coal Carrier Division, LNG Carrier Division,
Responsible for: Energy Business
Strategy Division, Bunker Business
Division, Offshore Project Division)
Akihiko Ono
Senior Managing Executive Officer
(Deputy Director General of Safety
Operations Headquarters, Deputy
Director General of Product Transport
Business Unit, Responsible for:
Corporate Planning Division, Liner
Business Management Division)
Takashi Maruyama
Senior Managing Executive Officer
(Chief Financial Officer, Responsible for:
Corporate Communication Division (IR),
Finance Division, Accounting Division)
Naotoshi Omoto
Senior Managing Executive Officer
(Director General of Product Transport
Business Unit, Responsible for:
Europe, Africa and the Americas Area,
Car Carrier Division)
Yoshikazu Kawagoe
Senior Managing Executive Officer
(Chief Technical Officer, Director
General of Technology Innovation Unit,
Responsible for: Technical Division,
Smart Shipping Division, Secondarily
Responsible for MOL Information
Systems, Ltd.)
Koichi Yashima
Managing Executive Officer
(Responsible for: Human Resources
Division, New & Clean Energy Business
Division, Kansai Area)
Mitsujiro Akasaka
Managing Executive Officer
(Responsible for Asia, the Middle East
and Oceania Area, Chief Executive
Representative, Asia, Middle East,
Oceania, Managing Director of MOL
(Asia Oceania) Pte. Ltd.)
Toshiaki Tanaka
Managing Executive Officer
(Director General of Dry Bulk Business
Unit, Responsible for: Dry Bulk Business
Planning & Co-ordianation Division,
Dry Bulk Carrier Division (B), Dry Bulk
Carrier Supervising Division)
Masanori Kato
Managing Executive Officer
(Director General of Safety Operations
Headquarters, Responsible for: Human
Resources Division, Marine Safety
Division, Secondarily Responsible for
Smart Shipping Division)
Kenta Matsuzaka
Managing Executive Officer
(Deputy Director General of Energy
Transport Business Unit, Responsible
for: LNG Carrier Division, LNG Safety
Management Division)
Masato Koike
Managing Executive Officer
(Deputy Director General of Energy
Transport Business Unit, Responsible
for: Tanker Division (A), Tanker Division
(B), Tanker Safety Management Division,
Secondarily Responsible for Bunker
Business Division)
Masanori Kobayashi
Executive Officer
(Deputy Director General of Safety
Operations Headquarters, Responsible
for: Dry Bulk Carrier Supervising Division,
Tanker Safety Management Division,
LNG Safety Management Division,
Secondarily Responsible for: Marine
Safety Division, Smart Shipping Division)
Yutaka Hinooka
Executive Officer
(Deputy Director General of Product
Transport Business Unit, Responsible for
Port Projects & Logistics Business Division)
Kayo Ichikawa
Executive Officer
(Chief Communication Officer,
Responsible for: Work Efficiency
Improvement, Diversity Promotion,
Corporate Communication Division,
Secondarily Responsible for:
Corporate Planning Division,
Human Resources Division)
Toshinobu Shinoda
Executive Officer
(General Manager of Corporate
Planning Division)
Hirofumi Kuwata
Executive Officer
(Deputy Director General of Dry Bulk
Business Unit, Deputy Director General
of Energy Transport Business Unit,
Responsible for Steaming Coal Carrier
Division, Secondarily Responsible for
Dry Bulk Carrier Division (B))
Nobuo Shiotsu
Executive Officer
(Deputy Director General of Dry Bulk
Business Unit, Responsible for Dry Bulk
Carrier Division (A))
Tsuneo Watanabe
Executive Officer
(Deputy Director General of Energy
Transport Business Unit, Responsible for
Tanker Division (B) (Chemical Tanker
Business), Managing Director of MOL
Chemical Tankers Pte. Ltd.)
Atsushi Igaki
Executive Officer
(Deputy Director General of Product
Transport Business Unit, Responsible for
Ferry Business Division, President of
Ferry Sunflower Ltd.)
Hiroyuki Nakano
Executive Officer
(Secondarily Responsible for Offshore
Project Division)
Hirotoshi Ushioku
Executive Officer
(General Manager of Car Carrier Division)
Michael P.Y. Goh
Executive Officer
(Deputy Director General of Product
Transport Business Unit, Responsible
for Port Projects & Logistics Business
Division (NVOCC Business), Secondarily
Responsible for Asia, the Middle East
and Oceania Area, Chief Executive Officer
of MOL Consolidation Service Ltd.)
58
59
Mitsui O.S.K. LinesMOL Report 2018 Masayuki Matsushima
Outside Director
Hideki Yamashita
Outside Member of the Audit
& Super visory Board
Dialogue between
Outside Officers
Free exchange of opinions supports
effective corporate governance
Theme: Evaluation of MOL’s corporate governance,
Board of Directors activities and the Company’s own
“Deliberation on Corporate Strategy and Vision”
Matsushima When evaluating the role of corporate
governance, the most important issue is that it actually
performs a useful function rather than that it is simply a
formality. From this perspective, I have a high opinion of
MOL’s corporate culture, where Board members discuss
issues freely and openly. This contributes to a more effective
governance function.
Yamashita Yes, I agree that MOL’s Board meeting has a
culture that encourages people to openly speak their mind.
For example, when an Audit & Supervisory Board (ASB)
member comments about policies, the Board of Directors are
quite open to the input even when the comments are proac-
tive rather than a typically governance-focused protective
stance as a role generally required for an ASB. The Board also
evaluates the effectiveness of its meetings so that directors
and ASB members offer honest opinions on the issues being
discussed, and the meetings tend to be more productive.
Matsushima
I think the “Delib-
eration on Corpo-
rate Strategy and
Vision,” which is
held in conjunc-
tion with the
Board of Directors
meeting, is partic-
ularly useful. It
enables outside
directors and ASB
members to contribute their opinions before any important
company decisions are made. My only concern is that dis-
cussion usually tends to be limited to strategies only for
each specific division. I think the discussions could be even
more productive if we also deliberated broader issues such
as risk management and capital utilization policy over the
whole company.
Yamashita You’re right. Some discussions have been lim-
ited to vision for specific divisions. Perhaps if outside directors
and ASB members propose specific themes for discussion, it
might encourage the Board to address broader issues in a
timelier manner. On the other hand, we can see the benefits
of the “Deliberation on Corporate Strategy and Vision” in the
way that MOL addressed restructuring of its containership
business. Because the Company had analyzed various sce-
narios for improvement in the past, the entire Board, includ-
ing outside directors and ASB members shared common
awareness of the need for drastic action, which then led to
the significant decision to merge the containership businesses.
As you pointed out, corporate governance should not just be
a formality. Its true value lies in how effectively it can deal
with truly critical management issues.
“Rolling Plan” seeks to identify issues
for discussion and steps that need to
be taken based on a vision of what the
Company aims to become ten years
from now. The key is for management
to address concrete plans and actions,
rather than simply vague ideas about
corporate direction
Theme: Evaluation on “Rolling Plan”
Yamashita The underlying concept of “Rolling Plan” is to
envision what the Company should be ten years in the
future, compare that vision with MOL’s current situation, and
identify steps that must be taken to bridge the gap between
current reality and future goals. The only problem is that a
decade is a very long time, so the objectives that MOL sets
are bound to be somewhat idealistic. The important thing, in
my opinion, is to make sure the plans that management
adopts are specific, and grounded in reality.
Matsushima As one of the people who strongly advocated
the use of this Rolling Plan approach, I know that “Rolling
Plan 2018” is based on a great deal of analysis and discussion
of the business sectors that are likely to experience growth in
the future, and the ways that MOL can enhance its competi-
tiveness. When you adopt a long-term vision and aim at
distant objectives, it allows you to see a much broader range
of potential paths that could be taken to reach that objective,
and a larger number of alternatives to consider as possible
ways to achieve growth. Although the “Rolling Plan” model
for management planning was adopted just two years ago, I
think the impact is already visible.
listening. Top
management
needs to seize any
occasion to
emphasize the
importance of
compliance, as the
essential prerequi-
site to all company
operations. I
believe that MOL
recognizes this fact. However, as business becomes more
global, the issue of how to reinforce compliance becomes
progressively more difficult. As an outside member of the ASB,
I recognize my own vital role in promoting compliance on a
continuous basis.
Matsushima The Company’s involvement in violating the
Antimonopoly Act regarding the car carrier business occurred
after I was appointed as an outside director. MOL addressed the
issue in a comprehensive way, with everyone in the Company
from the CEO on down discussing key questions: “what specifi-
cally went wrong?” and “what must be done to set things right?”
I believe that this process elevated awareness of compliance
considerably, throughout the Company. Unfortunately, the
human being is a forgetful creature. It is vital that the Company
continue to discuss the issue, to maintain a constant awareness
of compliance issues. It isn’t enough to just write down the
rules in some manual and ask employees to memorize the text.
Compliance is something that people need to really take to
heart, not only learning a lot of rules, but understanding the
underlying purpose of those rules, and the reasons why they
need to be followed. MOL should strive to keep compliance
awareness fresh in the minds of everyone in the Company.
The key to better compliance is to make
sure that every single employee in the
Company is aware of its importance
Theme: Evaluation of the Company’s approach
to compliance
Yamashita The need for stronger compliance is a very
important issue that companies continuously must grapple
with. Scandals happen all the time, even with stronger com-
pliance. I believe that this has to do with employee awareness.
It isn’t enough to just give lip service to compliance, posting
rules and regulations like office wallpaper, or announcing
initiatives while everyone nods in assent without really
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
ASB members.
“Deliberation on Corporate Strategy and Vision”
Agenda FY2016
April
September
January
February
Agenda
Strategy for the car carrier division
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)
FY2017
May
July
September
October
Agenda
Strategy in capital markets
Strategy for Port Projects & Logistics Business Division
Strategy for New Business Creation and Group
Business Division
Review on governance organizational structure and
evaluation of Audit & Supervisory Committee
December
Discussion on personnel system reform
January
February
Outline proposal for the next management plan
“Rolling Plan 2018”
Outline proposal for the next management plan
“Rolling Plan 2018” (continued)
60
61
Mitsui O.S.K. LinesMOL Report 2018
Corporate Governance
Governance Summary
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)
Number of board meetings
held in fiscal 2017
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 2017
5
10
93%
Term of directors
Stock option system
Retirement benefit system
1 year
Yes
No
Anti-takeover measures
Compliance rules
External compliance advisory
service desk
No
Yes
Yes
HISTORY
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 gover-
nance 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 direc-
tors and two internal directors, and aim to enhance outside
directors’ supervision of directors responsible for business
execution. The committees conduct investigations from an
objective standpoint emphasizing the perspective of share-
holders, the Nomination Advisory Committee regarding the
selection of directors and executive officers and the Remunera-
tion 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 important
matters and projects straddling divisions that will be submitted 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
Japan. MOL has adjudged that all three individuals are
Corporate Governance Organization (as of June 26, 2018)
General Shareholders’ Meeting
Elect and appoint/dismiss
Business audit/
accounting audit
Elect and appoint/dismiss
Audit & Supervisory Board
Outside members: 2 Internal members: 2 Total: 4
Elect and
appoint/
dismiss
Accounting Auditors
Board of Directors
Outside directors: 3 Internal directors: 6 Total: 9
Audit & Supervisory Board Manager
Accounting audit
Elect and appoint/
supervise
Submit basic
management policies
and other issues
for discussion
Report
Report
Nomination Advisory Committee
Outside directors: 3 Internal directors: 2 Total: 5
Remuneration Advisory Committee
Outside directors: 3 Internal directors: 2 Total: 5
Executive Committee
Internal directors and executive officers: 11
Provide direction on
important business issues
Submit to Executive Committee
after preliminary deliberations
Committees under the Executive Committee
STEER Committee, Budget Committee,
Investment and Finance Committee,
Operational Safety Committee, Compliance Committee,
SOx 2020 Regulation Response Committee
Instruction
Audit plan/
audit report
Communicate and coordinate
with Audit & Supervisory
Board members and
the Accounting Auditors
Corporate Audit
Division
Submit for discussion and/or report
on important business and other issues
Executive Officers
Director/Executive officers: 6 Executive officers: 19 Total: 25
Divisions / Branches / Vessels / Group companies
Business audit/
accounting audit
62
63
Mitsui O.S.K. LinesMOL Report 2018 Corporate Governance
independent 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 management and the status of execution of business opera-
tions from the shareholders’ standpoint. At the same time, they
express valuable opinions about management as a whole. In
these ways, the outside directors play a major role in enhancing
the operation of the Board of Directors.
Reasons for Appointment of Outside Directors
Position
Name
Reason for appointment
Masayuki
Matsushima
Senior Advisor of Integral Corporation
Outside Director of JGC Corporation
Senior Advisor, Taniguchi Partners
International Accounting & Tax Office
Member of Management Council,
Grant Thornton Taiyo LLC
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.
Hideto Fujii
Adviser of Sumitomo Corporation
Etsuko Katsu
Professor, School of Political Science
and Economics, Meiji University
Chairman of Fund Management
Advisory Committee, The Japan
Foundation
Director, Center for Entrance
Examination Standardization
Administrative Board Member,
International Association of
Universities
(As of June 30, 2018)
MOL adjudged that he has a neutral position with
no conflicts of interest with the Company and that
he has extensive, wide-ranging experience in
and knowledge of the management from his
involvement in Japan’s finance and financial policy
as an administrative vice minister of finance. 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
management and business execution from an
independent perspective and contribute to the
maintenance and reinforcement of 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 Corporate Audit Division and independent public
accountants to assure effective corporate governance. They also
work on strengthening corporate governance and compliance
throughout the Group.
Reasons for Appointment of Outside Audit & Supervisory
Board Members
Position
Reason for appointment
Name
Hiroyuki Itami
President, International University
of Japan
MOL adjudged that he has a neutral position with
no conflicts of interest with the Company, and that
he has wide-ranging experience and knowledge for
checking the appropriateness of management
decisions and supervising the execution of business
operations from the shareholders’ perspective 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.
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, 2018)
Compensation for Directors, Audit & Supervisory Board
Members and Independent Public Accountants
The Board of Directors, including the outside directors, determines
compensation for the directors and Audit & Supervisory Board
members. Compensation paid to directors and Audit & Supervi-
sory Board members in fiscal 2017 is shown in the following table.
The Company has granted stock options to all directors,
executive 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
operations 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
7
3
5
¥330
$3,106
63
56
592
527
Compensation for the Accounting Auditors
Compensa-
tion for audit
operations
(¥ millions)
Compensa-
tion for
non-audit
operations
(¥ millions)
Total
(¥ millions)
(Thousands
of U.S.$)
Parent company
¥108
Consolidated
subsidiaries
Total
122
231
—
1
1
¥108
$1,017
123
232
1,158
2,184
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 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.
General managers of divisions are appointed as Compliance
Officers, take a thorough approach to compliance as the person
responsible, and are also required to report to the Compliance
Committee in the event of a compliance breach. The Corporate
Audit Division, a body that operates independently of the
Company’s divisions, provides a counseling service. The division
also undertakes investigations of breaches and reports the
results to the Compliance Committee. In addition to the existing
counseling service, we established an external compliance
advisory service desk, which we entrusted an outside attorney
to run. The desk provides anonymous counseling services.
2. Role of the Audit & Supervisory Board Members
The MOL Group has established rules for reporting to its Audit &
Supervisory Board members, creating a system in which directors,
executive 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 Corporate Audit Division 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.
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 2017,
the president participated in the Company’s presentations of
interim and full-year results and attended meetings with domes-
tic 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 Japa-
nese 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 informa-
tion 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 investors
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 rules enacted in April 2018.
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 2017 (April 2017–March 2018)
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
3 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
4 times
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, Nagoya
and Kanazawa, 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)
Integrated Report
Securities reports
Quarterly reports
Business reports for shareholders
Investor guidebooks
Market data
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
Yes
Yes
64
65
Mitsui O.S.K. LinesMOL Report 2018 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
Operational Safety Committee
Chairman: President & CEO
Vice-Chairman: Director General,
Safety Operations Headquarters
Executive
Committee
Safety Operations Headquarters
Marine Safety Division
Ship management coordinating divisions
Marine technical teams supporting vessel
operations for business divisions
In-house ship management companies
leading working-level ship management*
* MOL Ship Management Co., Ltd. and MOL LNG Transport Co., Ltd.
Emergency Response System
MOL continues to strengthen its systems so that it can provide
an accurate response in the unlikely event of an emergency.
■ Safety Operation Supporting Center (SOSC)
The SOSC is staffed at all times by two marine technical 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 October 2017,
we conducted an emergency response drill based on the prem-
ise of a fire breaking out in the engine room of a car carrier that
is leaking fuel and taking on seawater after striking into a reef.
We will continue to conduct drill 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
(Since fiscal 2015)
3. Operational stoppage time*2: 24 hours/ship or below
4. Operational stoppage accident rate*3: 1.0/ship or below
In fiscal 2017, we did not achieve 1 above as unfortunately
two fatal workplace accidents occurred on MOL Group-
operated vessels and we also did not achieve 3 as shown in
the below graph.
*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 workplace
illness or injury that prevents a worker from resuming even a reduced
workload on that day, regardless of whether the illness or injury requires
disembarkation.
Average for all industries (2017) was 1.66, shipping industry 1.14, and
transportation equipment manufacturing industry 0.43. (Source: 2017
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.
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.
*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
*3 Operational stoppage accident rate: Expresses the number of accidents that
accident.
result in ship operational stoppage per ship per year.
Lost Time Injury Frequency (LTIF)
1.8
1.5
1.2
0.9
0.6
0.3
0
2017 average for all industries: 1.66
MOL target: 0.7 or below for 2015 onward
0.44
0.30
0.53
0.50
0.51
2013
2014
2015
2016
2017
(FY)
Average Operational Stoppage Time and Operational
Stoppage Accident Rate
(Hours/ship)
(Accidents/ship)
40
30
20
10
0
25.56
0.99
31.08
22.53
0.91
0.94
Average operational stoppage time
target: 24 hours or below
28.45
25.04
0.52
0.51
Operational stoppage accident rate
target: 1.0 or below
2013
2014
2015
2016
2017
(FY)
2.0
1.5
1.0
0.5
0
○ Average operational stoppage time (left scale)
○ Operational stoppage accident rate (right scale)
66
67
Mitsui O.S.K. LinesMOL Report 2018
Safe Operation
Risk Management
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.
Opening a Self-Operated Maritime Academy in the
Philippines in August 2018
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, in
August 2018, MOL will open the Maritime Academy in the
Philippines. The academy facility, which has been already con-
structed, imitates its layout of the practice facilities as realistically
as possible. The academy will provide students with training that
makes them work-ready as soon as they complete their studies.
Through operation of the academy, we will 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 Car-
rier 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.**
** Society of International Gas Tanker and Terminal Operators Ltd.
■ Management program for seafarer education and training
acquired certification from DNV GL AS
MOL’s management program for
seafarer education and training was
recognized 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).
A bridge training facility at the academy
A main engine training facility at the academy
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 management
foundation and support the successful execution of the plan.
To fully exercise sustainable risk management, the Company
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 multitude
of factors that are subject to change, such as fluctuations in the
economies of individual countries, changes in trade structures,
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 interna-
tional 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 appropriately reduce
risks related to fluctuation, especially those arising from freight
rates, bunker prices, exchange rates, and interest rates. The Invest-
ment and Finance Committee also identifies, analyzes and evalu-
ates risks related to such material issues as investment in ships.
Variation of Procurement and Contract Terms
(as of March 2018)
0
20%
40%
60%
80%
100%
Dry Bulkers
(337 ships)
Tankers
(173)
LNG Carriers
(83)
Car Carriers
(119)
Containerships
(91)
46%
21%
33%
35%
48%
17%
100%
98%
2%
79%
21%
■ 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 2018)
Total number
of fleet
Market exposure
Capsize
Small- and medium-sized bulkers
VLCCs
Product tankers
LPG tankers
88
108
31
39
8
24%
6%
16%
74%
50%
Diversifying Operations to Reduce Risk
MOL operates a “full-line marine transport group.” As of the end
of March 2018, we operated around 860 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 source of highly stable
profits. By expanding these contracts from a long-term perspec-
tive, MOL will create an even steadier earnings structure. To
achieve this objective, one of the options we will look closely at
as a matter of priority is M&A deals in growing sectors which
enjoy a relatively stable cash flow.
Exchange Rate Fluctuations
Although MOL has concluded transport contracts on a yen-
denominated basis with some Japanese clients, most transactions
in the international marine transport business are concluded on
a U.S. dollar-denominated basis. Despite our best efforts to incur
expenses in U.S. dollars, U.S. dollar-denominated revenue cur-
rently exceeds U.S. dollar-denominated expenses, so when the
yen strengthens against the U.S. dollar this can have a negative
impact on Group earnings. In fiscal 2018, we project that each
¥1-per-dollar change in the yen-U.S. dollar exchange rate will
have an impact of approximately ¥0.8 billion on consolidated
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
fluctuations. As of March 31, 2018, interest-bearing debt totaled
¥1,118.0 billion, and around 30% of that loan principal is locked
in at a fixed interest rate. As a result, an increase of 1 percentage
68
Underlined words are explained in the Glossary on page 5.
69
Mitsui O.S.K. LinesMOL Report 2018 Risk Management
Environment
Vessel Operations
MOL operates a fleet of approximately 860 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 setting
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.
point in market interest rates on both yen-denominated and U.S.
dollar-denominated interest-bearing liabilities would impact
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. In fiscal 2018, MOL projects
buying 3.9 million tons of fuel on a standalone and consolidated
subsidiary basis, of which the Company is able to pass on about
80% of the risk to customers. In addition, an increase of US$1 per
metric ton in the average annual price of bunker would lower
earnings, including from equity-method affiliates, by approxi-
mately ¥0.18 billion (net of hedging) at the maximum.
A stricter regulatory rule to reduce SOx emissions generated
by ships will be introduced in 2020. This regulation would
require the use of low-sulfur fuel oil containing less than 0.5%
sulfur, the installation of SOx scrubbers on vessels to remove
sulfur, or the use of alternative fuels such as LNG, LPG, and
methanol, which could have an impact on fuel costs or capital
costs. In this case, the Company intends to put in effort to gain
the understanding of customers and reflect these additional
costs in freight rates and other fees.
Sensitivity of Earnings to Exchange Rate/Interest Rate/
Bunker Price Fluctuations
Exchange rate
(¥/US$)
A ¥1 appreciation reduces ordinary profit by
approximately ¥0.8 billion
Interest rate (%)
A 1 percentage point rise in both yen- and U.S. dollar-
denominated interest-bearing debt reduces ordinary
profit by approximately ¥4.0 billion
Bunker price
(US$/MT)
A US$1/MT increase reduces ordinary profit by
approximately ¥0.18 billion
Impact of Exchange Rate
Fluctuations (Model)
Impact=1+2
Impact of Bunker Price
Fluctuations (Model)
Revenues
Expenses
Profit
2
Exposure
I
m
p
a
c
t
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.
Initiatives on the Environment
In April 2017, we formulated MOL Group Environmental Vision 2030 to present our cutting-edge initiatives for environmental preservation.
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 commu-
nity 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.
Roadmap to Reduce Greenhouse Gas Emissions
(%)
Greenhouse Gas Emissions Targets
(per transport unit)
FY2030
FY2050
–25%
–50%
50
25
Radical innovation
Offset greenhouse gas emissions
by environment and emission-free
businesses
New technologies that are proven to be
economically feasible (LNG-fueled vessels,
main engine waste heat recovery, Power
Assist Sail*, etc.)
Applicable technologies/projects at the present time
(PBCF, low-friction hull paint, larger-size hulls, slow steaming)
0
2014
2030
2050
（年度）
* Power Assist Sail: Sailing rigs that provide supplementary propulsion force for the vessel by
using the lift force of crosswinds, similar to the wings of an airplane, and drag from tailwind
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; and our own internal viewpoints. Finally, we formulated the
following eight action plans.
1. Promote use and innovation of technologies for reducing
environmental impact and advanced support technolo-
gies 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 opti-
mize 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.
Environmental Investments
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 2015
0.3
Fiscal 2016
0.4
(Billions of yen)
Fiscal 2017
0.5
0.9
2.2
1.0
0.3
4.6
0.5
3.1
1.1
0.3
5.4
0.8
3.1
0.8
0.5
5.7
Organizational Structure for Environmental Initiatives
Organizational reforms implemented on April 1, 2018 created a
framework where the New & Clean Energy Business Division will
take the lead in promoting new and clean energy business
going forward. The division will conduct feasibility studies and
actively promote the environment and emission-free businesses
that should become a core business for MOL in the future. In
addition, the division will also set the Company’s environmental
targets and review the status of achievement of these targets in
order to steadily advance initiatives.
Moreover, ahead of stricter regulation on sulfur content in fuel
oil scheduled for 2020, the SOx 2020 Regulation Compliance
Committee established in November 2016 will collect informa-
tion and work in collaboration with sales divisions to promote
Company-wide initiatives taking into account customers’ needs.
70
Underlined words are explained in the Glossary on page 5.
71
Mitsui O.S.K. LinesMOL Report 2018
Environment
Corporate Social Responsibility (CSR)
Environmental Regulations
Schedule of Environmental Regulations by IMO, etc.
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 five years from September 2019
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 by the IMO
in 2004 and has been in effect since September 2017. Under the
convention, vessels, including existing vessels, are mandated to
install ballast water treatment systems, by September 2024.
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 114
owned vessels (as of April 2018).
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. Shipowners/operators have to
choose a method from the following menu:
Method
Advantages
Disadvantages/Issues
Complied 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
MOLʼs Initiatives
• MOL has been studying complied 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
Tackling global
warming
GHG emissions
EEDI*1
SEEMP*2
Phase 1
Mandatory
2016
2017
2018
2019
2020
Phase 2
2025
Phase 3
* Reference: Greenhouse gas reduction targets in international shipping were decided at the IMO’s 72nd session of the Marine Environment
Protection Committee held in April 2018. Using 2008 as a base, the targets were to improve fuel efficiency in all shipping operations by at least
40% by 2030, and strive to improve by 70% or more by 2050. The meeting also decided to cut greenhouse gas emissions from all shipping by at
least 50% by 2050, and ultimately endeavor to eliminate greenhouse gas emissions as soon as possible within this century.
Preventing air
pollution
NOx emissions*3
General Sea
Areas
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.)
*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 convention
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 May 2018, 6 countries
have ratified.)
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.
Based on this belief, MOL sees CSR being directly linked to
management principles and policies and it is clearly stipulated as
item which should be discussed directly in the Executive Com-
mittee. Moreover, the Corporate Planning Division will adminis-
trate overall CSR policy, propose targets and manage progress,
while the divisions named in the chart below will take charge of
the individual areas of Compliance, Safety Operations, the
Environment, and Human Resources Development/Social Con-
tribution Activities. This creates a framework capable of dealing
soundly with each field.
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 2.
Organizational Framework for CSR Initiatives
CSR Policies and Goals
Compliance
Corporate Planning
Division
Corporate Audit Division
Secretaries & General
Affairs Division
Executive
Committee
Safety Operations
Marine Safety Division
Environment
New & Clean Energy
Business Division
Human Resources
Development/Social
Contribution Activities
Human Resources
Division
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
compulsory 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
environmental responsibility; and
9. Encourage the development and diffusion of
environmentally 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 accordance
with the following basic policy:
1. We comply with applicable laws, regulations and social norms,
and pay due consideration to the protection of the
environment.
2. We procure goods and/or services, including the delivery or
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.
72
Underlined words are explained in the Glossary on page 5.
73
Mitsui O.S.K. LinesMOL Report 2018 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
management system. Certified companies: MOL Ship Management Co., Ltd., MOL Ship Management (Singapore) Pte. Ltd., MOL
Ship Management (Hong Kong) Company, Limited and Magsaysay MOL Ship Management, Inc.
External Recognition (Overall, CSR-Related)
■ CSR Rating by the FTSE4Good Developed Index Series
FTSE is a global index provider owned by the London Stock Exchange. Since 2003, FTSE Russell
has included MOL in one of its major indices, the FTSE4Good Developed Index, which is a
responsible investment index.
■ FTSE Blossom Japan
Since 2017, 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
Since 2017, 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 identifies companies in all industries with superior performance in
promoting 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 Work Style Reform Finance
MOL was rated for its initiatives adopted in the past (see page 33), and Sumitomo Mitsui Banking
Corporation approved MOL for an SMBC Work Style Reform Finance as a growth enterprise that
can be expected to encourage workstyle reform in the future (2018).
Data Section
76 Consolidated Financial Statements
76 Consolidated Balance Sheets
78
Consolidated Statements of Operations and
Consolidated Statements of Comprehensive Income
79 Consolidated Statements of Changes in Net Assets
80 Consolidated Statements of Cash Flows
81 Notes to Consolidated Financial Statements
109
Independent Auditor’s Report
110 The MOL Group
112 Worldwide Offices
113 Shareholder Information
74
75
Mitsui O.S.K. LinesMOL Report 2018
Consolidated Financial Statements
Consolidated Balance Sheets
Mitsui O.S.K. Lines, Ltd. March 31, 2018 and 2017
ASSETS
Current assets:
Cash and cash equivalents (Note 3)
Trade receivables (Note 3)
Inventories (Note 5)
Deferred and prepaid expenses
Deferred tax assets (Note 14)
Other current assets (Notes 3 and 6)
Allowance for doubtful accounts
Total current assets
Millions of yen
Thousands of
U.S. dollars (Note 1)
2018
2017
2018
¥ 189,591
125,851
38,679
61,918
1,334
63,063
(401)
480,036
¥ 186,844
130,420
36,358
60,888
1,273
66,121
(428)
481,477
$ 1,784,553
1,184,591
364,071
582,812
12,556
593,589
(3,774)
4,518,411
Vessels, property and equipment,
net of accumulated depreciation (Notes 7 and 12):
Vessels
Buildings and structures
Machinery, equipment and vehicles
Furniture and fixtures
Land
Vessels and other property under construction
Others
Net vessels, property and equipment
776,554
148,598
31,581
4,137
221,045
106,128
2,884
1,290,929
756,930
153,767
26,630
5,366
221,342
156,935
2,693
1,323,665
7,309,431
1,398,701
297,260
38,940
2,080,619
998,945
27,146
12,151,063
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 15)
Deferred tax assets (Note 14)
Other non-current assets (Note 6)
Allowance for doubtful accounts
Total investments, intangibles and other assets
Total assets
See accompanying notes.
76
Mitsui O.S.K. Lines
30,163
274,527
73,403
6,388
18,811
3,212
50,583
(2,421)
454,669
¥2,225,636
31,287
231,978
62,796
6,824
15,390
3,535
62,661
(2,089)
412,385
¥2,217,528
283,913
2,584,026
690,916
60,128
177,061
30,233
476,120
(22,788)
4,279,640
$20,949,134
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)
Commercial paper (Notes 3 and 7)
Accrued income taxes (Note 14)
Advances received
Deferred tax liabilities (Note 14)
Allowance for bonuses
Allowance for directors’ bonuses
Provision for loss on business liquidation
Provision for contract loss
Provision for loss related to business restructuring
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 14)
Net defined benefit liabilities (Note 15)
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 as of March 31, 2018:
Authorized —315,400,000 shares
Issued —120,628,611 shares
Capital surplus
Retained earnings
Treasury stock, at cost
Total owners’ equity
Accumulated other comprehensive income
Unrealized holding gains on available-for-sale securities, net of tax
Unrealized gains on hedging derivatives, net of tax
Foreign currency translation adjustments
Remeasurements of 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
Millions of yen
Thousands of
U.S. dollars (Note 1)
2018
2017
2018
¥ 131,405
31,872
180,539
5,000
6,395
34,409
590
4,567
186
—
15,879
7,068
60,372
478,287
175,748
706,944
15,977
55,225
12,909
1,487
20,647
50,933
620
78,810
1,119,304
1,597,591
¥ 125,118
20,000
133,155
—
6,642
32,258
1,188
4,402
153
2,753
1,239
—
56,544
383,456
210,595
738,163
18,371
56,678
12,445
1,459
18,566
226
620
93,325
1,150,450
1,533,907
$ 1,236,869
300,000
1,699,350
47,063
60,193
323,879
5,553
42,987
1,750
—
149,463
66,528
568,260
4,501,948
1,654,254
6,654,216
150,385
519,813
121,507
13,996
194,342
479,414
5,835
741,810
10,535,617
15,037,565
65,400
45,385
306,642
(6,807)
410,620
33,400
37,873
23,442
5,905
100,621
2,026
114,776
628,044
¥2,225,636
65,400
45,382
355,263
(6,820)
459,226
28,353
54,326
27,178
2,898
112,757
2,447
109,190
683,621
¥2,217,528
615,587
427,193
2,886,314
(64,071)
3,865,022
314,382
356,485
220,651
55,581
947,110
19,070
1,080,346
5,911,558
$20,949,134
MOL Report 2018
77
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, 2018 and 2017
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2018 and 2017
(CONSOLIDATED STATEMENTS OF OPERATIONS)
Shipping and other revenues (Note 13)
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
Equity in losses of affiliated companies
Others
Total non-operating expenses
Ordinary income
Other gains:
Gain on sales of vessels, property, equipment and others
Others
Total other gains
Other losses:
Loss on sales and disposals of vessels, property, equipment and others
Loss related to business restructuring (Note 10)
Impairment loss
Costs of business structural reforms
Others
Total other losses
Income (Loss) before income taxes
Income taxes (Note 14):
Current
Deferred
Net income (loss)
Income attributable to non-controlling interests
Income (loss) attributable to owners of parent
(CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME)
Net income (loss)
Other comprehensive income (Note 17):
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)(*1)
Net income (loss)
Diluted net income (Note 2)
Cash dividends applicable to the year
Millions of yen
2018
¥1,652,393
1,513,736
138,656
115,972
22,684
2017
¥1,504,373
1,388,264
116,109
113,551
2,558
Thousands of
U.S. dollars (Note 1)
2018
$15,553,397
14,248,268
1,305,120
1,091,603
213,516
7,976
6,661
—
16,834
3,930
35,402
20,413
3,428
2,771
26,613
31,473
16,979
4,587
21,566
1,310
73,476
—
—
6,962
81,748
(28,709)
5,918
6,021
5,543
24,179
3,875
45,538
19,037
—
3,633
22,670
25,426
6,125
29,080
35,206
1,259
—
22,273
6,490
7,304
37,328
23,303
10,729
2,002
(41,440)
5,939
¥ (47,380)
13,323
(625)
10,605
5,348
¥ 5,257
Millions of yen
2018
¥(41,440)
5,839
(22,402)
(773)
3,007
3,501
(10,828)
¥(52,268)
¥(59,516)
7,247
Yen
2018
¥(396.16)
—
20.00
2017
¥10,605
8,768
13,070
2,463
2,944
4,100
31,347
¥41,952
¥35,183
6,769
2017
¥43.95
40.61
20.00
75,075
62,697
—
158,452
36,991
333,226
192,140
32,266
26,082
250,498
296,244
159,817
43,175
202,993
12,330
691,603
—
—
65,530
769,465
(270,227)
100,988
18,844
(390,060)
55,901
$ (445,971)
Thousands of
U.S. dollars (Note 1)
2018
$(390,060)
54,960
(210,862)
(7,275)
28,303
32,953
(101,920)
$(491,980)
$(560,203)
68,213
U.S. dollars (Note 1)
2018
$(3.72)
—
0.18
See accompanying notes.
*1 The Company consolidated its common shares (ten shares into one shares), effective October 1, 2017.
Accordingly, net income, diluted net income and cash dividends applicable to the year per share have been recalculated on the assumption that the share
consolidation took place at the beginning of the year ended March 31, 2017.
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, 2016
¥65,400
¥45,388
¥354,179
¥(6,847)
¥20,950
¥ 35,033
¥26,885
¥ (39)
¥2,681
¥103,292
¥646,924
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
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(6)
—
—
(4,186)
5,257
36
—
(23)
—
—
4
—
—
—
(23)
45
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,186)
5,257
36
(23)
22
(6)
7,403
19,292
292
2,938
(228)
5,898
35,596
Balance at March 31 and April 1, 2017
¥65,400
¥45,382
¥355,263
¥(6,820)
¥28,353
¥ 54,326
¥27,178
¥2,898
¥2,447
¥109,190
¥683,621
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
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2
—
—
(1,196)
(47,380)
3
—
(47)
—
—
12
—
—
—
(98)
98
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(12)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1,196)
(47,380)
3
(98)
51
2
5,046
(16,453)
(3,735)
3,006
(408)
5,585
(6,959)
Balance at March 31, 2018
¥65,400
¥45,385
¥306,642
¥(6,807)
¥33,400
¥ 37,873
¥23,442
¥5,905
¥2,026
¥114,776
¥628,044
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, 2017
$615,587 $427,164
$3,343,966
$(64,194)
$266,876
$ 511,351 $255,817
$27,277
$23,032
$1,027,767
$6,434,685
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, 2018
See accompanying notes.
—
—
—
—
—
—
—
—
—
—
—
—
—
—
18
—
—
(11,257)
(445,971)
28
—
(442)
—
—
112
—
—
—
(922)
922
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(112)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(11,257)
(445,971)
28
(922)
480
18
—
47,496
(154,866)
(35,156)
28,294
(3,840)
52,569
(65,502)
$615,587 $427,193
$2,886,314
$(64,071)
$314,382
$ 356,485 $220,651
$55,581
$19,070
$1,080,346
$5,911,558
78
Mitsui O.S.K. Lines
MOL Report 2018
79
Consolidated Financial Statements
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2018 and 2017
Mitsui O.S.K. Lines, Ltd. Years ended March 31, 2018 and 2017
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
Loss related to business restructuring
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
and intangible assets, 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 (used in) 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 provided by (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 (decrease) 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)
2018
2017
2018
¥ (28,709)
¥ 23,303
$ (270,227)
86,629
—
—
73,476
3,428
1,021
785
539
(14,637)
20,413
(13,471)
(17,480)
4,690
(2,423)
6,218
(6,549)
113,934
18,662
(21,208)
(13,007)
98,380
(41,288)
2,029
(142,570)
89,446
(28)
(29,866)
22,092
(666)
(100,851)
60,125
5,000
96,812
(127,272)
—
(20,000)
(1,214)
(1,450)
(2,757)
9,243
(4,025)
2,746
186,844
87,190
22,273
6,490
—
(5,543)
(20,053)
1,996
(755)
(11,939)
19,037
(3,938)
(25,818)
(1,683)
(8,691)
(573)
(51,690)
29,602
15,351
(18,778)
(8,551)
17,623
(14,533)
27,738
(143,177)
71,350
(6,652)
(21,374)
9,832
2,876
(73,941)
9,907
—
239,075
(119,252)
10,000
(45,000)
(4,258)
(1,018)
(2,323)
87,129
(3,454)
27,357
159,449
815,408
—
—
691,603
32,266
9,610
7,388
5,073
(137,772)
192,140
(126,797)
(164,533)
44,145
(22,806)
58,527
(61,643)
1,072,420
175,658
(199,623)
(122,430)
926,016
(388,629)
19,098
(1,341,961)
841,923
(263)
(281,118)
207,944
(6,268)
(949,275)
565,935
47,063
911,257
(1,197,966)
—
(188,253)
(11,426)
(13,648)
(25,950)
87,001
(37,885)
25,847
1,758,697
—
¥ 189,591
37
¥ 186,844
—
$ 1,784,553
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
Instruments and Exchange Act. Some supplementary information included in the statutory Japanese language consolidated
financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan,
using the prevailing exchange rate at March 31, 2018, which was ¥106.24 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.
Yen figures less than a million yen are rounded down to the nearest million yen, except for per share data. U.S. dollar figures less
than a thousand dollars are rounded down to the nearest thousand dollars, except for per share data. And, therefore, the totals
shown in tables do not necessarily agree with the sums of the individual amounts.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and 369 subsidiaries for the year ended March 31,
2018 (368 subsidiaries for the year ended March 31, 2017). 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 80 affiliated companies for the year ended March 31, 2018 (76 affiliated companies
for the year ended March 31, 2017). 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.
80
Mitsui O.S.K. Lines
MOL Report 2018
81
(5) SECURITIES
Securities are classified into (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended to
be held to maturity (hereafter, “held-to-maturity debt securities”), (c) equity securities issued by subsidiaries and affiliated companies,
or (d) for all other securities that are not classified in any of the above categories (hereafter, “available-for-sale securities”).
Trading securities are stated at fair market value. Unrealized gains and losses from market value fluctuations are recognized as gains
or losses in the period of the change. Held-to-maturity debt securities are stated at amortized cost, net of the amount considered not
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
equipment 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.
(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 ¥1,462 million ($13,761 thousand) for the year
ended March 31, 2018.
(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 esti-
mated 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 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.
(14) PROVISION FOR LOSS RELATED TO BUSINESS RESTRUCTURING
Provision for loss related to business restructuring is recorded for estimated losses arising from business restructurings to be
carried out.
(15) DIRECTORS’ AND CORPORATE AUDITORS’ RETIREMENT BENEFITS
Some 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, 2018 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.
82
Mitsui O.S.K. Lines
MOL Report 2018
83
(22) STANDARDS AND GUIDANCE NOT YET ADOPTED
The following standards and guidance were issued but not yet adopted.
(Revenue Recognition)
“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 30, 2018)
“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30, March 30, 2018)
I. Overview
The above standard and guidance provide comprehensive principles for revenue recognition. As a basic policy in developing the
above standard, ASBJ adopted the basic principle of IFRS 15 from the viewpoint of comparability between financial statements,
which is one of the benefits of convergence with IFRS 15.
II. Effective date
The Company will apply this standard and guidance from the beginning of the fiscal year ending March 31, 2022.
III. Effects of the application of the standards
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new
standards on the consolidated financial statements.
(Tax Effect Accounting)
“Implementation Guidance on Tax Effect Accounting” (ASBJ Guidance No. 28, February 16, 2018 (hereinafter, “Guidance No. 28”))
“Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26 (revised 2018), February 16, 2018
(hereinafter, “Guidance No. 26”))
I. Overview
The above guidance was revised in regard to the treatments for taxable temporary differences for investments in subsidiaries
within the context of non-consolidated financial statements, and to clarify the treatments in determining recoverability of deferred
tax assets in a company which was categorized as ‘Type1’ according to the guidance.
II. Effective date
The Company will apply this standard and guidance from the beginning of the fiscal year ending March 31, 2019.
III. Effects of the application of the standards
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new
standards on the consolidated financial statements.
(23) RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the 2018 presentation.
(24) ADDITIONAL INFORMATION
(Establishment of Holding Company and Operating Company for New Integrated Container Shipping Business)
The Company, Kawasaki Kisen Kaisha, Ltd., and Nippon Yusen Kabushiki Kaisha established the below holding company and
operating company, based on the business integration contract and the shareholders agreement on October 31, 2016 to integrate
the container shipping businesses (including worldwide terminal operation businesses outside Japan) of all three companies.
These two companies started their services on April 1, 2018.
Overview of New Companies
I. Holding Company
Company name
Amount of Capital
Shareholders/Contribution Ratio
Location
Date of Establishment
Ocean Network Express Holdings, Ltd.
¥50 million ($470 thousand)
Kawasaki Kisen Kaisha, Ltd.
Nippon Yusen Kabushiki Kaisha
The Company
Tokyo, Japan
July 7, 2017
31%
38%
31%
II. Operating Company
Company name
Amount of Capital
Shareholders/Contribution Ratio
Location
Date of Establishment
3. FINANCIAL INSTRUMENTS
Ocean Network Express Pte. Ltd.
US$800 million
31%
Kawasaki Kisen Kaisha, Ltd.
38%
Nippon Yusen Kabushiki Kaisha
The Company (including indirect investment) 31%
Singapore
July 7, 2017
(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 commit-
ment 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
regulations. Besides, trade receivables denominated in foreign currencies are exposed to the foreign currency exchange rate risk.
We avoid the risk mainly by, in principle, utilizing forward exchange contracts which cover the net position (The difference
between trade receivables and trade payables dominated in foreign currencies).
Investment securities are mainly stocks of companies with which we have business relationships. These investment securities
are exposed to the price fluctuation risk. We identify the market value of listed stocks on a quarterly basis.
Trade payables are due within a year.
Short-term bank loans and commercial papers are primarily used for raising short-term operating funds, while long-term bank
loans and bonds are mainly for capital investments. Although several items with variable interest rates are exposed to the interest
rate risk, a certain portion of such variable interest rates is 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.
84
Mitsui O.S.K. Lines
MOL Report 2018
85
(2) Fair values of financial instruments
Book values and fair values of the financial instruments on the consolidated balance sheet at March 31, 2018 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
Investments in unconsolidated subsidiaries and affiliated companies
Long-term loans receivable (*1)
Total
Liabilities
Trade payables
Short-term bank loans
Commercial paper
Bonds (*2)
Long-term bank loans (*3)
Total
Derivative financial instruments (*4)
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
Investments in unconsolidated subsidiaries and affiliated companies
Long-term loans receivable (*1)
Total
Liabilities
Trade payables
Short-term bank loans
Commercial paper
Bonds (*2)
Long-term bank loans (*3)
Total
Derivative financial instruments (*4)
Millions of yen
Book value
Fair value
Difference
¥ 189,591
3,705
125,851
16,735
106,775
2,915
74,661
¥ 520,236
¥ 131,405
98,589
5,000
207,620
788,895
¥1,231,509
¥ 8,615
¥ 189,591
3,705
125,851
16,735
106,775
3,099
76,789
¥ 522,549
¥ 131,405
98,589
5,000
209,668
801,041
¥1,245,705
¥ 8,484
¥ —
—
—
—
—
184
2,128
¥ 2,313
¥ —
—
—
2,048
12,146
¥14,195
(131)
¥
Thousands of U.S. dollars (Note 1)
Book value
Fair value
Difference
$ 1,784,553
34,873
1,184,591
157,520
$ 1,784,553
34,873
1,184,591
157,520
1,005,035
27,437
702,757
$ 4,896,799
1,005,035
29,169
722,788
$ 4,918,571
$ 1,236,869
927,983
47,063
1,954,254
7,425,592
$11,591,763
$ 81,089
$ 1,236,869
927,983
47,063
1,973,531
7,539,919
$11,725,385
$ 79,856
$
—
—
—
—
—
1,731
20,030
$ 21,771
$
—
—
—
19,277
114,326
$133,612
$ (1,233)
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
3,101
130,420
17,262
98,675
70,799
¥ 507,103
¥ 125,118
39,163
230,595
832,154
¥1,227,031
¥ 18,745
¥ 186,844
3,101
130,420
17,262
98,675
74,695
¥ 510,999
¥ 125,118
39,163
231,949
849,862
¥1,246,094
¥ 18,592
¥ —
—
—
—
—
3,896
¥ 3,896
¥ —
—
1,354
17,708
¥19,063
(153)
¥
*1 The book value of long-term loans receivable includes current portion amounting to ¥8,002 million.
*2 The book value of bonds includes current portion amounting to ¥20,000 million.
*3 The book value of long-term bank loans includes current portion amounting to ¥93,991 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 as at the end of the years and the fair value of bonds is
evaluated 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 interest 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.
*1 The book value of long-term loans receivable includes current portion amounting to ¥1,257 million ($11,831 thousand).
*2 The book value of bonds includes current portion amounting to ¥31,872 million ($300,000 thousand).
*3 The book value of long-term bank loans includes current portion amounting to ¥81,950 million ($771,366 thousand).
*4 Amounts of derivative financial instruments are net of asset and liability. Negative amount stated with (
) means that the net amount is liability.
Bonds
The fair value of corporate bonds is evaluated on their market price.
86
Mitsui O.S.K. Lines
MOL Report 2018
87
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
2018
¥ 7,782
157,043
9
¥164,836
2017
¥ 7,662
125,628
11
¥133,302
2018
$ 73,249
1,478,190
84
$1,551,543
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.
At March 31, 2018, 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
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
¥189,591
3,705
125,851
16,735
—
—
1,257
¥337,141
Within a year
$1,784,553
34,873
1,184,591
157,520
—
—
11,831
$3,173,390
Millions of yen
After one year
through five years
¥ —
—
—
—
After five years
through ten years
¥ —
—
—
—
10
200
2,787
¥2,997
—
—
11,048
¥11,048
Thousands of U.S. dollars (Note 1)
After one year
through five years
$ —
—
—
—
$
After five years
through ten years
—
—
—
—
94
1,882
26,233
$28,209
—
—
103,990
$103,990
After ten years
¥ —
—
—
—
—
—
59,568
¥59,568
After ten years
$ —
—
—
—
—
—
560,692
$560,692
At March 31, 2017, 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
¥186,844
3,101
130,420
17,262
—
—
8,002
¥345,631
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
After ten years
¥ —
—
—
—
—
—
53,158
¥53,158
4. SECURITIES
A. The following tables summarize acquisition costs, book values and fair values of securities with available fair values at March 31,
2018 and 2017.
Available-for-sale securities:
Securities with book values exceeding acquisition costs at March 31, 2018
Type
Equity securities
Bonds
Governmental/municipal bonds
Corporate bonds
Total
Type
Equity securities
Bonds
Governmental/municipal bonds
Corporate bonds
Total
Securities with book values exceeding acquisition costs at March 31, 2017
Type
Equity securities
Bonds
Governmental/municipal bonds
Corporate bonds
Total
Millions of yen
Acquisition cost
¥43,384
Book value
Difference
¥96,449
¥53,065
10
200
¥43,594
10
208
¥96,668
0
8
¥53,073
Thousands of U.S. dollars (Note 1)
Acquisition cost
$408,358
Book value
$907,840
Difference
$499,482
94
1,882
$410,335
94
1,957
$909,902
0
75
$499,557
Millions of yen
Acquisition cost
¥43,974
Book value
Difference
¥89,266
¥45,291
10
200
¥44,184
10
211
¥89,488
0
11
¥45,303
88
Mitsui O.S.K. Lines
MOL Report 2018
89
Securities with book values not exceeding acquisition costs at March 31, 2018
6. DERIVATIVE TRANSACTIONS
Type
Equity securities
Total
Type
Equity securities
Total
Securities with book values not exceeding acquisition costs at March 31, 2017
Type
Equity securities
Total
Acquisition cost
¥11,353
¥11,353
Millions of yen
Book value
¥10,107
¥10,107
Difference
¥(1,245)
¥(1,245)
Thousands of U.S. dollars (Note 1)
Acquisition cost
$106,861
$106,861
Book value
$95,133
$95,133
Difference
$(11,718)
$(11,718)
Acquisition cost
¥11,065
¥11,065
Millions of yen
Book value
¥9,186
¥9,186
Difference
¥(1,878)
¥(1,878)
B. Total sales of available-for-sale securities sold in the years ended March 31, 2018 and 2017 and the related gains and losses were
as follows:
Proceeds from sales
Gross realized gains
Gross realized losses
Millions of yen
2018
¥1,145
687
3
Thousands of
U.S. dollars (Note 1)
2018
$10,777
6,466
28
2017
¥3,346
2,249
406
C. Impairment losses of securities
For the year ended March 31, 2018, the Company reduced the book value on the securities and booked the reductions as
impairment losses of ¥255 million ($2,400 thousand).
For the year ended March 31, 2017, the Company reduced the book value on the securities and booked the reductions as
impairment losses of ¥12 million.
With regard to the impairment losses, the Company principally reduces the book value on the securities to the amount which is
considered the recoverability, etc. in the event the fair market value declines more than 50% in comparison with the acquisition cost.
5. INVENTORIES
Inventories as at March 31, 2018 and 2017 consisted of the following:
Fuel and supplies
Others
Total
Millions of yen
2018
¥37,483
1,196
¥38,679
2017
¥34,684
1,674
¥36,358
Thousands of
U.S. dollars (Note 1)
2018
$352,814
11,257
$364,071
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,
2018 and 2017, 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
(3) Others
a. Fuel oil swaps
Receive floating, pay fixed
Contracts outstanding
Fair values
b. Freight futures
Contracts outstanding
Fair values
Millions of yen
2018
2017
Thousands of
U.S. dollars (Note 1)
2018
¥749
3
¥ 32
(0)
¥ 23
0
¥1,563
5
¥ 41
0
¥ 24
(0)
$7,050
28
$ 301
0
$ 216
0
Millions of yen
2018
2017
Thousands of
U.S. dollars (Note 1)
2018
¥19,721
(993)
¥14,202
(881)
¥22,825
(1,684)
¥15,590
(615)
$185,626
(9,346)
$133,678
(8,292)
Millions of yen
2018
2017
Thousands of
U.S. dollars (Note 1)
2018
¥ —
—
¥205
28
¥ 375
(167)
¥ 239
(7)
$ —
—
$1,929
263
Note: Fair values are measured based on forward exchange rates prevailing at the end of the year and information provided by financial institutions, etc.
90
Mitsui O.S.K. Lines
MOL Report 2018
91
II. Hedge accounting applied
The following tables summarize the outstanding contract amounts and fair values of financial derivatives of the Group at March 31,
2018 and 2017, 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
f. Freight futures to hedge the risk for the freight
Contracts outstanding
Fair values
(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
Millions of yen
2018
2017
Thousands of
U.S. dollars (Note 1)
2018
¥ 48,752
148
¥ 67,676
136
$ 458,885
1,393
¥ 32,175
(398)
¥ 62,955
(989)
$ 302,852
(3,746)
¥ 3,126
(441)
¥ 5,078
(906)
$ 29,423
(4,150)
¥183,823
25,498
¥164,416
40,852
$1,730,261
240,003
¥247,064
(15,025)
¥282,032
(18,207)
$2,325,527
(141,425)
¥ 20,567
77
¥ 23,892
(47)
$ 193,589
724
¥ 2,935
593
¥ 37
7
¥ 5,917
378
¥ —
—
$ 27,626
5,581
$ 348
65
Millions of yen
2018
2017
Thousands of
U.S. dollars (Note 1)
2018
¥20,450
—
¥20,617
—
$192,488
—
Millions of yen
2018
2017
Thousands of
U.S. dollars (Note 1)
2018
¥1,943
—
¥6,285
—
$18,288
—
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. Interest rate swaps which special treatment are applied to are recorded as the combined amount of such interest rate swaps and their hedge items. Therefore,
their fair values are included in fair values of such hedge items.
3. 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, 2018 and 2017 consisted of the following:
Short-term bank loans
Commercial paper
Total
Millions of yen
2018
¥ 98,589
5,000
¥103,589
2017
¥39,163
—
¥39,163
Thousands of
U.S. dollars (Note 1)
2018
$927,984
47,063
$975,047
Average interest rates on short-term bank loans at March 31, 2018 and 2017 were 1.49% and 0.88%, respectively.
Average interest rates on commercial paper at March 31, 2018 were –0.02%.
(2) LONG-TERM DEBT
Long-term debt at March 31, 2018 and 2017 consisted of the following:
Bonds:
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
1.50% and 1.22% at March 31, 2018 and 2017, respectively
Long-term bank loans due after one year:
Long-term bank loans due through 2076 at average interest rate of
2.00% and 1.73% at March 31, 2018 and 2017, 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.$53.10 per share
U.S.$47.80 per share
Millions of yen
2018
2017
Thousands of
U.S. dollars (Note 1)
2018
¥
—
31,872
18,500
10,000
21,248
15,000
17,800
5,000
8,700
10,000
15,000
29,500
15,000
10,000
¥ 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
$
—
300,000
174,134
94,126
200,000
141,189
167,545
47,063
81,890
94,126
141,189
277,673
141,189
94,126
81,950
93,991
771,367
706,944
996,514
113,822
¥882,692
738,163
1,062,749
113,991
¥ 948,758
6,654,217
9,379,838
1,071,367
$8,308,471
92
Mitsui O.S.K. Lines
MOL Report 2018
93
At March 31, 2018, the aggregate annual maturity of long-term debt was as follows:
9. NET ASSETS
Year ending March 31
2019
2020
2021
2022
2023
2024 and thereafter
Total
Millions of yen
¥113,822
120,299
113,124
111,673
78,228
459,365
¥996,514
Thousands of
U.S. dollars (Note 1)
$1,071,366
1,132,332
1,064,796
1,051,138
736,332
4,323,842
$9,379,838
(3) ASSETS PLEDGED AND SECURED DEBT
At March 31, 2018 and 2017, the following assets were pledged as collateral for short-term debt and long-term debt.
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
2018
¥240,140
16,042
55,779
¥311,962
2017
¥216,193
—
83,029
¥299,222
Millions of yen
2018
¥ 14,288
185,856
¥200,144
2017
¥ 12,175
160,119
¥172,294
Thousands of
U.S. dollars (Note 1)
2018
$2,260,353
150,997
525,028
$2,936,389
Thousands of
U.S. dollars (Note 1)
2018
$ 134,487
1,749,397
$1,883,885
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.
(A) SHARES ISSUED AND OUTSTANDING
Changes in number of shares issued and outstanding during the years ended March 31, 2018 and 2017 were as follows:
Balance at April 1, 2016
Increase during the year
Decrease during the year
Balance at March 31 and April 1, 2017
Increase during the year
Decrease during the year(*)
Balance at March 31, 2018
* The Company consolidated its common shares (ten shares into one shares), effective October 1, 2017.
(B) SHARE SUBSCRIPTION RIGHTS
Share subscription rights at March 31, 2018 and 2017 consisted of the following:
Shares of
common stock
(Thousands)
1,206,286
—
—
1,206,286
—
(1,085,657)
120,628
Shares of
treasury stock
(Thousands)
10,222
84
(75)
10,231
72
(9,269)
1,034
Millions of yen
2018
¥2,026
¥2,026
2017
¥2,447
¥2,447
Thousands of
U.S. dollars (Note 1)
2018
$19,070
$19,070
Millions of yen
¥1,196
¥1,196
Thousands of U.S.
dollars (Note 1)
$11,257
$11,257
8. COMMITMENTS AND CONTINGENT LIABILITIES
(A) COMMITMENT
At March 31, 2018 and 2017, certain subsidiaries had loan commitment agreements. The nonexercised portion of loan commit-
ments was as follows:
Stock options
Total
Total loan limits
Loan executions
The nonexercised portion of loan commitments
Millions of yen
Thousands of
U.S. dollars (Note 1)
2018
¥15,404
15,404
¥ —
2017
¥16,267
16,267
¥ —
2018
$144,992
144,992
—
$
(B) CONTINGENT LIABILITIES
At March 31, 2018 and 2017, 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 ¥132,844 million ($1,250,414
thousand) and ¥159,430 million, respectively.
U.S. dollars-denominated liabilities were included in the above amount, which were $1,112,045 thousand and $1,260,875
thousand respectively.
(C) DIVIDENDS
(1) Dividends paid for the year ended March 31, 2018 were as follows:
Approved at the board of directors held on October 31, 2017
Total
(2) Dividends included in the retained earnings at March 31, 2018 and to be paid in subsequent periods were as follows:
Approved at the shareholders’ meeting held on June 26, 2018
Total
Millions of yen
¥1,195
¥1,195
Thousands of U.S.
dollars (Note 1)
$11,248
$11,248
94
Mitsui O.S.K. Lines
MOL Report 2018
95
10. BREAKDOWN OF LOSS RELATED TO BUSINESS RESTRUCTURING
For the year ended March 31, 2018, in relation to the integration of the container shipping businesses, the Company recognized
loss related to business restructuring, which was consisted of ¥4,412 million ($41,528 thousand) for temporary cost relating to the
liquidation of the Company’s agencies, ¥64,280 million ($605,045 thousand) for losses related to charter contracts, and ¥4,783
million ($45,020 thousand) for other losses.
11. LEASES
AS LESSEE:
FUTURE LEASE PAYMENTS UNDER OPERATING LEASES FOR ONLY NON-CANCELABLE CONTRACTS AT MARCH 31, 2018 AND 2017:
Amount due within one year
Amount due after one year
Total
Millions of yen
2018
¥ 34,784
255,730
¥290,515
2017
¥ 45,021
284,385
¥329,407
Thousands of
U.S. dollars (Note 1)
2018
$ 327,409
2,407,097
$2,734,516
AS LESSOR:
FUTURE LEASE INCOME UNDER OPERATING LEASES FOR ONLY NON-CANCELABLE CONTRACTS AT MARCH 31, 2018 AND 2017:
Amount due within one year
Amount due after one year
Total
12. RENTAL PROPERTIES
Millions of yen
2018
¥16,008
34,630
¥50,639
2017
¥17,716
34,958
¥52,674
Thousands of
U.S. dollars (Note 1)
2018
$150,677
325,960
$476,647
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
2018
2017
Thousands of
U.S. dollars (Note 1)
2018
¥304,566
(4,963)
299,603
471,023
¥311,092
(6,525)
304,566
458,710
$2,866,773
(46,714)
2,820,058
4,433,574
Notes: 1. Book value is the acquisition cost, net of accumulated depreciation.
2. Of changes during the year ended March 31, 2017, the primary decrease was mainly due to the depreciation of existing properties (¥7,292 million).
3. Of changes during the year ended March 31, 2018, the primary increase was mainly due to the additional acquisition of land for provisionally named
“Akihabara project” (¥546 million ($5,139 thousand)), while the primary decrease was mainly due to the depreciation of existing properties (¥6,834 million
($64,326 thousand)).
4. Fair value is mainly based on the amount appraised by outside independent real estate appraisers.
In addition, information for rental revenue and expense from rental properties was as follows:
Rental revenue
Rental expense
Difference
Millions of yen
2018
¥30,869
17,815
¥13,054
2017
¥30,245
17,844
¥12,400
Thousands of
U.S. dollars (Note 1)
2018
$290,559
167,686
$122,872
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.”
13. SEGMENT AND RELATED INFORMATION
(A) SEGMENT INFORMATION:
Millions of yen
Reportable segment
Product Transport Business
Dry Bulk
Business
Energy
Transport
Business
Container
Ships
Car Carries,
Ferries and
Coastal
RoRo Ships
Associated
businesses
Sub Total
Others
Total
Adjustment
and
elimination
Consolidated
For the year ended March 31, 2018:
1. Revenues:
(1) Revenues from customers
¥272,956
¥262,245
¥749,714
¥261,171
¥ 90,095
¥1,636,184
¥ 16,208
¥1,652,393
¥
— ¥1,652,393
(2) Inter-segment revenues
3
8,712
1,909
234
28,366
39,226
6,305
45,531
(45,531)
—
Total revenues
¥272,960
¥270,957
¥751,624
¥261,406
¥118,462
¥1,675,410
¥ 22,514
¥1,697,925
¥ (45,531) ¥1,652,393
Segment income (loss)
¥ 15,414
¥ 13,633
¥ (10,691)
¥ 4,363
¥ 12,657
¥ 35,378
¥ 2,601
¥ 37,980
¥ (6,506) ¥ 31,473
Segment assets
¥341,638
¥866,429
¥384,612
¥263,983
¥422,008
¥2,278,672
¥347,336
¥2,626,008
¥(400,372) ¥2,225,636
2. Others
Depreciation and
amortization
Amortization of goodwill
Interest income
Interest expense
Equity in earnings
(losses) of affiliated
companies, net
Loss related to business
restructuring
¥ 11,749
¥ 37,105
¥ 11,525
¥ 15,758
¥ 9,143
¥ 85,282
¥ 361
¥ 85,644
¥ 985
¥ 86,629
—
1,152
2,863
22
4,565
13,190
0
1,126
1,581
—
116
159
44
1,221
1,331
182
7,005
20,189
—
2,928
1,951
182
9,933
22,141
—
(1,957)
(1,727)
182
7,976
20,413
—
—
—
(3,428)
73,476
141,448
(4,507)
8,240
(6,808)
377
277
(2,421)
(1,007)
(3,428)
Investment in affiliates
15,784
84,547
—
—
73,476
35,751
—
2,776
—
2,218
73,476
141,078
—
369
73,476
141,448
Increase in vessels,
property and
equipment and
intangible assets
5,912
87,430
21,735
26,773
5,967
147,819
763
148,582
612
149,195
Thousands of U.S. dollars (Note 1)
Reportable segment
Product Transport Business
Dry Bulk
Business
Energy
Transport
Business
Container
Ships
Car Carries,
Ferries and
Coastal
RoRo Ships
Associated
businesses
Sub Total
Others
Total
Adjustment
and
elimination
Consolidated
For the year ended March 31, 2018:
1. Revenues:
(1) Revenues from customers $2,569,239 $2,468,420 $7,056,795 $2,458,311 $ 848,032 $15,400,828 $ 152,560 $15,553,397
$
— $15,553,397
(2) Inter-segment revenues
28
82,003
17,968
2,202
266,999
369,220
59,346
428,567
(428,567)
—
Total revenues
$2,569,277 $2,550,423 $7,074,774 $2,460,523 $1,115,041 $15,770,048 $ 211,916 $15,981,974
$ (428,567) $15,553,397
Segment income (loss)
$ 145,086 $ 128,322 $ (100,630) $ 41,067 $ 119,135 $ 333,000 $ 24,482 $ 357,492
$ (61,238) $ 296,244
Segment assets
$3,215,719 $8,155,393 $3,620,218 $2,484,779 $3,972,213 $21,448,343 $3,269,352 $24,717,695
$(3,768,561) $20,949,134
2. Others
Depreciation and
amortization
Amortization of goodwill
Interest income
Interest expense
Equity in earnings
(losses) of affiliated
companies, net
Loss related to business
restructuring
$ 110,589 $ 349,256 $ 108,480 $ 148,324 $ 86,059 $ 802,729 $ 3,397 $ 806,137
$ 9,271 $ 815,408
—
10,843
26,948
207
42,968
124,152
0
10,598
14,881
—
1,091
11,492
1,496
414
1,713
65,935
12,528
190,032
—
27,560
18,364
1,713
93,495
208,405
—
(18,420)
(16,255)
1,713
75,075
192,140
(42,422)
77,560
(64,081)
3,548
2,607
(22,788)
(9,478)
(32,266)
—
— 691,603
—
—
691,603
—
691,603
—
—
(32,266)
691,603
Investment in affiliates
148,569
795,811
336,511
26,129
20,877
1,327,917
3,473
1,331,400
— 1,331,400
Increase in vessels,
property and
equipment and
intangible assets
55,647
822,948
204,583
252,004
56,165
1,391,368
7,181
1,398,550
5,760
1,404,320
96
Mitsui O.S.K. Lines
MOL Report 2018
97
Millions of yen
Reportable segment
Product Transport Business
Dry Bulk
Business
Energy
Transport
Business
Container
Ships
Car Carries,
Ferries and
Coastal
RoRo Ships
Associated
businesses
Sub Total
Others
Total
Adjustment
and
elimination
Consolidated
For the year ended March 31, 2017:
1. Revenues:
(1) Revenues from customers
¥267,864
¥257,834
¥620,714
¥250,648
¥ 90,025
¥1,487,087
¥ 17,286
¥1,504,373
¥
— ¥1,504,373
(2) Inter-segment revenues
14
8,378
1,816
181
27,518
37,909
6,658
44,568
(44,568)
—
Total revenues
¥267,879
¥266,212
¥622,531
¥250,830
¥117,543
¥1,524,997
¥ 23,944
¥1,548,941
¥ (44,568)
¥1,504,373
Segment income (loss)
¥ 11,977
¥ 26,499
¥ (32,864)
¥ 4,839
¥ 12,337
¥ 22,789
¥ 2,051
¥ 24,840
¥
585
¥ 25,426
Segment assets
¥371,411
¥845,984
¥388,029
¥265,906
¥415,399
¥2,286,731
¥371,328
¥2,658,060
¥(440,531)
¥2,217,528
¥ 12,944
¥ 36,958
¥ 12,130
¥ 14,134
¥ 9,395
¥ 85,564
¥ 433
¥ 85,997
¥ 1,192
¥ 87,190
—
846
3,163
21
3,295
11,589
0
895
1,728
(4,550)
19,053
10,341
75,474
(4)
12,635
—
36
1,279
360
2,448
164
43
1,436
226
2,139
185
5,117
19,197
0
2,119
1,076
186
7,236
20,274
—
(1,318)
(1,237)
186
5,918
19,037
6,373
111,750
(829)
1,049
5,543
112,799
—
—
5,543
112,799
2. Others
Depreciation and
amortization
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
(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, 2018:
Revenues
Vessels, property and equipment
Japan
¥1,442,585
¥ 984,611
North America
¥31,806
¥45,382
Millions of yen
Europe
¥39,369
¥ 2,955
Asia
¥136,530
¥219,260
Others
¥ 2,101
¥38,720
Consolidated
¥1,652,393
¥1,290,929
For the year ended March 31, 2018:
Revenues
Vessels, property and equipment
Japan
$13,578,548
$ 9,267,799
North America
$299,378
$427,164
Thousands of U.S. dollars (Note 1)
Europe
$370,566
$ 27,814
Asia
$1,285,109
$2,063,817
Others
$ 19,775
$364,457
Consolidated
$15,553,397
$12,151,063
For the year ended March 31, 2017:
Revenues
Vessels, property and equipment
Japan
¥1,264,121
¥1,020,253
North America
¥27,570
¥43,966
Millions of yen
Europe
¥32,195
¥ 2,975
Asia
¥180,063
¥220,888
Others
¥ 422
¥35,581
Consolidated
¥1,504,373
¥1,323,665
13,709
63,617
28,307
30,011
4,937
140,584
253
140,838
955
141,793
(2) Information about impairment loss by reportable segment:
*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. (1) Adjustment in Segment income (loss) of –¥6,506 million ($61,238 thousand) include the following: –¥11,610 million (–$109,280 thousand) of corporate profit
which is not allocated to segments, ¥5,998 million ($56,457 thousand) of adjustment for management accounting and –¥895 million (–$8,424 thousand) of
inter-segment transaction elimination.
(2) Adjustment in Segment assets of –¥400,372 million (–$3,768,561 thousand) include the following: ¥12,378 million ($116,509 thousand) of assets which are not
allocated to segments and –¥412,750 million (–$3,885,071 thousand) of inter-segment transaction elimination.
(3) Adjustment in Depreciation and amortization of ¥985 million ($9,271 thousand) include the following: ¥985 million ($9,271 thousand) of depreciation of assets
which are not allocated to segments.
(4) Adjustment in Interest income of –¥1,957 million (-$18,420 thousand) include the following: ¥3,263 million ($30,713 thousand) of interest income which is not
allocated to segments and –¥5,221 million (–$49,143 thousand) of inter-segment transaction elimination.
(5) Adjustment in Interest expenses of –¥1,727 million (–$16,255 thousand) include the following: ¥7,270 million ($68,429 thousand) of interest expenses which are
not allocated to segments, –¥3,773 million (–$35,513 thousand) of adjustment for management accounting and –¥5,223 million (–$49,162 thousand) of inter-
segment transaction elimination.
(6) Adjustment in Increase of tangible / intangible fixed assets of ¥612 million ($5,760 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 income in the consolidated statements of operations.
*5. (1) Adjustment in Segment income (loss) of ¥585 million include the following: –¥4,578 million of corporate profit which is not allocated to segments, ¥6,312 million
of adjustment for management accounting and –¥1,148 million of inter-segment transaction elimination.
(2) Adjustment in Segment assets of –¥440,531 million include the following: ¥14,715 million of assets which are not allocated to segments and –¥455,246 million of
inter-segment transaction elimination.
(3) Adjustment in Depreciation and amortization of ¥1,192 million include the following: ¥1,192 million of depreciation of assets which are not allocated to segments.
(4) Adjustment in Interest income of –¥1,318 million include the following: ¥2,522 million of interest income which is not allocated to segments and –¥3,840 million
of inter-segment transaction elimination.
(5) Adjustment in Interest expenses of –¥1,237 million include the following: ¥5,604 million of interest expenses which are not allocated to segments, –¥2,999 million
of adjustment for management accounting and –¥3,842 million of inter-segment transaction elimination.
(6) Adjustment in Increase of tangible/intangible fixed assets of ¥955 million is increase of tangible/intangible fixed assets which are not allocated to segments.
*6. As a result of the reorganization implemented on April 1, 2017, we changed the business domains from “Bulkships,” “Containerships,” “Ferries and Coastal RoRo Ships”
and “Associated Businesses” to “Dry Bulk Business,” “Energy Transport Business,” “Product Transport Business” and “Associated Businesses.” The following figures for the
fiscal year ended March 31,2017 are restated by performing reclassification to conform to the business domains in the fiscal year ended March 31, 2018.
Millions of yen
Reportable segment
Product Transport Business
For the year ended March 31, 2017:
Impairment loss
Dry Bulk
Business
¥896
Energy
Transport
Business
¥370
Container
Ships
¥21,007
Car Carries,
Ferries and
Coastal
RoRo Ships
¥—
Associated
Businesses
Sub total
¥— ¥22,273
Others
¥—
Adjustment
and
elimination
Consolidated
¥— ¥22,273
Note: There was no material impairment loss for the year ended March 31, 2018.
(3) Information about goodwill by reportable segment:
Millions of yen
Reportable segment
Product Transport Business
For the year ended March 31, 2018:
Goodwill at the end
of current year
Dry Bulk
Business
Energy
Transport
Business
Container
Ships
Car Carries,
Ferries and
Coastal
RoRo Ships
Associated
Businesses
Sub total
Others
Adjustment
and
elimination
Consolidated
¥—
¥44
¥—
¥— ¥1,845
¥1,890
¥—
¥— ¥1,890
Thousands of U.S. dollars (Note 1)
Reportable segment
Product Transport Business
For the year ended March 31, 2018:
Goodwill at the end
of current year
Dry Bulk
Business
Energy
Transport
Business
Container
Ships
Car Carries,
Ferries and
Coastal
RoRo Ships
Associated
Businesses
Sub total
Others
Adjustment
and
elimination
Consolidated
$—
$414
$—
$— $17,366
$17,789
$—
$— $17,789
98
Mitsui O.S.K. Lines
MOL Report 2018
99
Millions of yen
Reportable segment
Product Transport Business
Dry Bulk
Business
Energy
Transport
Business
Container
Ships
Car Carries,
Ferries and
Coastal
RoRo Ships
Associated
Businesses
Sub total
Others
Adjustment
and
elimination
Consolidated
¥—
¥66
¥0
¥—
¥2,073
¥2,140
¥—
¥—
¥2,140
For the year ended March 31, 2017:
Goodwill at the end
of current year
14. 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 years ended March 31, 2017 and 2018.
(A) Significant components of deferred tax assets and liabilities at March 31, 2018 and 2017 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
Provision for loss related to business restructuring
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)
2018
2017
2018
¥ 76,701
1,038
1,414
16,423
784
4,327
497
1,397
—
19,461
1,827
17,115
5,542
11,223
8,876
166,632
(158,808)
7,823
¥ 70,898
757
1,338
20,873
585
4,696
486
1,302
784
390
—
20,207
8,694
11,223
7,162
149,402
(141,743)
7,659
$ 721,959
9,770
13,309
154,583
7,379
40,728
4,678
13,149
—
183,179
17,196
161,097
52,164
105,638
83,546
1,568,448
(1,494,804)
73,635
(2,523)
(2,564)
(23,748)
(837)
(17,828)
(2,713)
(16,991)
(6,910)
(8,493)
(2,793)
(59,092)
¥ (51,268)
(722)
(15,332)
(2,713)
(17,059)
(7,706)
(11,968)
(2,648)
(60,716)
¥ (53,056)
(7,878)
(167,808)
(25,536)
(159,930)
(65,041)
(79,941)
(26,289)
(556,212)
$ (482,567)
(B) Reconciliation of the statutory tax rate to the effective tax rate for the year ended March 31,2017, was as follows:
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%
*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
consolidated subsidiaries.
*2 Reconciliation of the statutory tax rate to the effective tax rate for the year ended March 31,2018, is not stated as the Company recorded loss before income taxes.
15. 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
Millions of yen
Thousands of
U.S. dollars (Note 1)
2018
¥46,752
1,776
409
(520)
(2,057)
¥46,361
2017
¥46,769
1,768
407
(193)
(1,998)
¥46,752
2018
$440,060
16,716
3,849
(4,894)
(19,361)
$436,379
100
Mitsui O.S.K. Lines
MOL Report 2018
101
(2) MOVEMENTS IN PLAN ASSETS EXCEPT PLAN APPLIED SIMPLIFIED METHOD
(6) REMEASUREMENTS OF DEFINED BENEFIT PLANS
Balance at beginning of the year
Expected return on plan assets
Actuarial loss (gain)
Contributions paid by the employer
Benefits paid
Balance at end of the year
Millions of yen
Thousands of
U.S. dollars (Note 1)
2018
¥58,956
1,179
2,265
1,294
(1,757)
¥61,939
2017
¥56,777
1,135
2,773
28
(1,757)
¥58,956
2018
$554,932
11,097
21,319
12,179
(16,538)
$583,010
(3) MOVEMENTS IN NET LIABILITY FOR RETIREMENT BENEFITS BASED ON THE SIMPLIFIED METHOD
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)
2018
¥9,259
1,574
(482)
(676)
—
¥9,676
2017
¥10,158
1,750
(1,979)
(682)
12
¥ 9,259
2018
$87,151
14,815
(4,536)
(6,362)
—
$91,076
(4) RECONCILIATION FROM RETIREMENT BENEFIT OBLIGATIONS AND PLAN ASSETS TO LIABILITY (ASSET) FOR RETIREMENT BENEFITS
INCLUDING PLAN APPLIED SIMPLIFIED METHOD
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
Millions of yen
Thousands of
U.S. dollars (Note 1)
2018
¥ 54,642
(72,310)
(17,668)
11,766
(5,902)
12,909
(18,811)
¥ (5,902)
2017
¥ 54,257
(68,910)
(14,652)
11,707
(2,944)
12,445
(15,390)
¥ (2,944)
2018
$ 514,326
(680,628)
(166,302)
110,749
(55,553)
121,507
(177,061)
$ (55,553)
Millions of yen
Thousands of
U.S. dollars (Note 1)
2018
¥ 1,776
409
(1,179)
1,420
1,574
(79)
¥ 3,922
2017
¥ 1,768
407
(1,135)
1,153
1,750
(23)
¥ 3,919
2018
$ 16,716
3,849
(11,097)
13,365
14,815
(743)
$ 36,916
Actuarial loss (gain)
(7) ACCUMULATED REMEASUREMENTS OF DEFINED BENEFIT PLANS
Unrecognized actuarial differences
(8) PLAN ASSETS
1. Plan assets comprise:
Equity securities
Bonds
Jointly invested assets
Cash and cash equivalents
Other
Total
Retirement benefit trust
Millions of yen
2018
¥4,206
2017
¥4,118
Thousands of
U.S. dollars (Note 1)
2018
$39,589
Millions of yen
2018
¥8,276
2017
¥4,070
Thousands of
U.S. dollars (Note 1)
2018
$77,899
2018
33%
22
38
7
0
100%
29%
2017
31%
26
35
8
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, 2018 and 2017.
The rates of expected return on plan assets were mainly 2.0% for the years ended March 31, 2018 and 2017.
The expected rate of salary increase were mainly 0.5%–5.7% for the years ended March 31, 2018 and 2017.
(C) DEFINED CONTRIBUTION PLANS
The amounts of contributions to defined contribution plans were ¥689 million ($6,489 thousand) at March 31, 2018 and ¥649
million at March 31, 2017.
102
Mitsui O.S.K. Lines
MOL Report 2018
103
16. STOCK OPTIONS
(A) EXPENSED AMOUNT
Expensed amounts on stock options for the years ended March 31, 2018 and 2017 were as follows:
Selling, general and administrative expenses
Total
Millions of yen
Thousands of
U.S. dollars (Note 1)
2018
¥171
¥171
2017
¥88
¥88
2018
$1,609
$1,609
(B) TERMS AND CONDITIONS
The following table summarizes terms and conditions of stock options for the years when they were granted:
2007
2008
2009
2010
Number of grantees
Directors: 11
Executive officers: 20
Employees: 33
Presidents of the Company’s
domestic consolidated
subsidiaries: 36
Number of stock options Common stock 171,000
Grant date
Vesting conditions
Service period
Exercise period
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 176,000
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 165,000
August 14, 2009
No provisions
No provisions
From July 31, 2011 to
June 22, 2019
Directors: 10
Executive officers: 21
Employees: 36
Presidents of the Company’s
domestic consolidated
subsidiaries: 33
Common stock 171,000
August 16, 2010
No provisions
No provisions
From July 31, 2012 to
June 21, 2020
2011
2012
2013
2014
Number of grantees
Directors: 10
Executive officers: 22
Employees: 35
Presidents of the Company’s
domestic consolidated
subsidiaries: 33
Number of stock options Common stock 173,000
Grant date
Vesting conditions
Service period
Exercise period
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 164,000
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 160,000
August 16, 2013
No provisions
No provisions
From August 2, 2015 to
June 20, 2023
Directors: 9
Executive officers: 19
Employees: 33
Presidents of the Company’s
domestic consolidated
subsidiaries: 32
Common stock 148,000
August 18, 2014
No provisions
No provisions
From August 2, 2016 to
June 23, 2024
2015
2016
2017
Number of grantees
Directors: 8
Executive officers: 18
Employees: 37
Presidents of the Company’s
domestic consolidated
subsidiaries: 32
Number of stock options Common stock 155,000
Grant date
Vesting conditions
Service period
Exercise period
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 158,000
August 15, 2016
No provisions
No provisions
From August 1, 2018 to
June 19, 2026
Directors: 9
Executive officers: 18
Employees: 33
Presidents of the Company’s
domestic consolidated
subsidiaries: 35
Common stock 15,700
August 15, 2017
No provisions
No provisions
From August 1, 2019 to
June 25, 2027
Note: The Company consolidated its common shares (ten shares into one shares), effective October 1, 2017. The figures have been converted to the number after
the consolidation.
(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
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Balance at March 31, 2017
Options granted during the year
Options expired during the year
Options vested during the year
Balance at March 31, 2018
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2017
—
— 155,000
158,000
—
—
—
—
— 155,000
— 157,000
—
—
—
—
—
— 158,000
157,000
Vested stock options
2007
2008
2009
2010
2011
2012
2013
2014
Balance at March 31, 2017
164,000
171,000
163,000
170,000
171,000
129,800
156,800
146,000
2015
—
Options vested during the year
Options exercised during the year
—
—
Options expired during the year
164,000
—
—
—
—
—
—
—
—
—
—
—
—
—
13,000
—
—
—
—
— 155,000
2,000
2,000
800
—
Balance at March 31, 2018
— 171,000
163,000
170,000
171,000
116,800
156,800
142,000
154,200
2016
2017
—
—
—
—
—
—
—
—
—
—
(2) Unit prices of stock options exercised during the year
Exercise price
¥19,620
¥15,690
¥6,390
¥6,420
¥4,680
¥2,770
¥4,470
¥4,120
¥4,270
¥2,420
¥3,780
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Average market price of share
at exercise
Fair value per stock option
at grant date
—
—
—
—
—
¥3,642
—
¥3,100
¥3,100
—
—
¥ 3,520
¥ 2,170
¥1,360
¥2,030
¥ 870
¥ 670
¥1,720
¥1,320
¥ 940
¥ 560
¥1,090
Note: The Company consolidated its common shares (ten shares into one shares), effective October 1, 2017. The figures have been converted to the number after
the consolidation.
(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
2017
40.39%
5 years and 11 months
¥2 per share
(0.05)%
104
Mitsui O.S.K. Lines
MOL Report 2018
105
17. COMPREHENSIVE INCOME
For the years ended March 31, 2018 and 2017, the amounts reclassified to net income (loss) that were recognized in other
comprehensive income and tax effects for each component of other comprehensive income were as follows:
18. RELATED PARTY TRANSACTIONS
For the year ended March 31, 2018
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)
2018
2017
2018
¥ 9,035
(690)
8,344
(2,505)
5,839
(5,972)
(19,954)
(201)
(26,128)
3,725
(22,402)
(767)
(5)
(773)
2,785
1,420
4,206
(1,199)
3,007
¥ 13,932
(1,413)
12,518
(3,750)
8,768
30,282
(19,502)
166
10,945
2,124
13,070
3,148
(684)
2,463
2,965
1,153
4,118
(1,174)
2,944
$ 85,043
(6,494)
78,539
(23,578)
54,960
(56,212)
(187,820)
(1,891)
(245,933)
35,062
(210,862)
(7,219)
(47)
(7,275)
26,214
13,365
39,589
(11,285)
28,303
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)
(1,997)
5,499
—
3,501
¥(10,828)
(1,521)
5,569
52
4,100
¥ 31,347
(18,797)
51,760
—
32,953
$(101,920)
Millions of yen
Thousands of U.S. dollars
(Note 1)
Transactions
during the
year ended
March 31,
2018
Transacted
amount
Balance at
March 31,
2018
Amount
Category
Name of
company
Address
Paid-in
capital
Business
description
Ratio of
the Group’s
voting
rights
Transactions during the year
ended March 31, 2018
Balance at
March 31, 2018
Relation with
related party
Description of
transaction(*1)
Transacted
amount
Account
Amount
Affiliated
company
TARTARUGA
MV29 B.V.
Affiliated
company
Ocean
Network
Express
Pte. Ltd
NETHERLANDS
US$110,000 Energy
Transport
Business
20.60% Interlocking
directorate
Debt guarantee
Debt
guarantee
SINGAPORE
US$800,000,000 Container-
—(*2)
ships
Interlocking
directorate
Underwriting
of capital
increase
*1 Transaction conditions and policies to decide transaction conditions, etc.
(1) Transaction terms and the policy are decided based on the form of guarantees and other conditions.
(2) Underwriting of capital increase was carried out at US$10,000 per share.
¥35,170
27,456
—
—
— $331,042
—
258,433
—
—
*2 The Company owns 31% of the voting rights of Ocean Network Express Holdings, Ltd. and the said company is a holding company that owns 100% of the common
shares of Ocean Network Express Pte. Ltd.
For the year ended March 31, 2017
Category
Name of
company
Affiliated
company
TARTARUGA
MV29 B.V.
Address
Paid-in
capital
NETHERLANDS
US$110,000
Affiliated
company
T.E.N.
GHANA
MV25 B.V.
Affiliated
company
CARIOCA
MV27 B.V.
NETHERLANDS
€100,000
NETHERLANDS
€100,000
Business
description
Energy
Transport
Business
Energy
Transport
Business
Energy
Transport
Business
Millions of yen
Transactions during the year
ended March 31, 2017
Balance at
March 31, 2017
Relation with
related party
Description of
transaction (Note)
Transacted
amount
Account
Amount
Ratio of
the Group’s
voting
rights
20.60% Interlocking
directorate
Debt guarantee
20.00% Interlocking
directorate
Debt guarantee
20.60% Interlocking
directorate
Debt guarantee
Debt
guarantee
Debt
guarantee
Debt
guarantee
¥29,235
28,741
28,706
—
—
—
—
—
—
Note: Transaction terms and the policy are decided based on the form of guarantees and other conditions.
Note about significant related parties
A significant affiliated company to be disclosed for the year ended March 31, 2018 was Ocean Network Express Pte. Ltd. and the
summary of its financial statements was as follows:
Total current assets
Total non-current assets
Total current liabilities
Total non-current liabilities
Total net assets
Shipping and other revenues
Income (Loss) before income taxes
Net income (loss)
Millions of yen
2018
¥ 53,642
25,924
12,668
5,231
61,666
26
(23,325)
(23,325)
Thousands of
U.S. dollars (Note 1)
2018
$ 504,913
244,013
2017(*1)
—
—
—
—
—
—
—
—
119,239
49,237
580,440
244
(219,550)
(219,550)
*1 Ocean Network Express Pte. Ltd. was a newly established company. Therefore the Company recognized Ocean Network Express Pte. Ltd. as a significant affiliated
company from the year ended March 31, 2018.
106
Mitsui O.S.K. Lines
MOL Report 2018
107
Independent Auditor’s Report
19. SUBSEQUENT EVENT
(Additional investments in an equity-method affiliate of the Company)
As initially planned, the Company made an additional investment in its equity-method affiliate, Ocean Network Express Pte. Ltd. on
April 2, 2018.
1. Overview of the equity-method affiliate of the Company
(1) Company name:
Ocean Network Express Pte. Ltd.
(2) Amount of Capital:
(before additional investments) US$800 million
(after additional investments) US$3,000 million
(3) Shareholders/Contribution Ratio:
Kawasaki Kisen Kaisha, Ltd. 31%
Nippon Yusen Kabushiki Kaisha 38%
The Company 31%
(including indirect investment)
There has been no change in contribution ratios between before and after
the additional contribution of capital.
(4) Location:
(5) Date of Establishment:
Singapore
July 7, 2017
2. Details of additional investments
(1) Amount of additional investments
US$2,200 million
(2) Amount of Capital after additional investments
US$3,000 million
(3) Execution date of additional investments
April 2, 2018
20. 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
Since 2012, the Group has been the subject of investigations by the antitrust authorities in the U.S. and other countries, on the
suspicion of violations of each country’s competition laws with respect to ocean transport services of completed build-up vehicles.
In addition, a class-action lawsuit was filed in the U.S. and other countries against the Group, for damage claims, 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
MOL Report 2018
109
The MOL Group
Mitsui O.S.K. Lines, Ltd. March 31, 2018
■ 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 (66 companies) in Panama, Marshall Islands,
■ Other (1 company)
▲ Gearbulk Holding AG
▲ Shipowner company (1 company) in Panama
Liberia, 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
Liberia, Hong Kong, Singapore, Indonesia and Malta
■ Coconutland Maritime Inc.
■ El Sol Shipping Ltd. S.A.
■ Lakler S.A.
■ MCGC International Ltd.
■ MNN Holdings Inc.
■ MOG LNG Transport S.A.
■ MOL Chemical Tankers Japan Co., Ltd.
■ MOL Chemical Tankers Pte. Ltd.
■ MOL Coastal Shipping, Ltd.
■ MOL LNG Transport Co., 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 (115 companies) in Panama, Marshall Islands,
▲ 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.
▲ Sepia MV30 B.V.
▲ 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 (48 companies) in Panama, Marshall Islands, Liberia,
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.
■ 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. Lines (Australia) Pty. Ltd.
■ Mitsui O.S.K. Lines (Japan) Ltd.
■ Mitsui O.S.K. Lines (Nigeria) 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 Ferry Co., Ltd.
■ MOL Liner, Ltd.
■ MOL Logistics (Deutschland) GMBH
■ MOL Logistics (Europe) B.V.
■ MOL Logistics (H.K.) Ltd.
■ MOL Logistics (Japan) Co., Ltd.
■ MOL Logistics (Netherlands) B.V.
■ MOL Logistics (Singapore) Pte. Ltd.
Panama
Panama
Uruguay
Bahamas
Liberia
Panama
Japan
Singapore
Japan
Japan
Netherlands
Bahamas
Singapore
Panama
Panama
Singapore
Singapore
Japan
Norway
Netherlands
Netherlands
Netherlands
Bahamas
Bahamas
Netherlands
Netherlands
Netherlands
Bahamas
Bahamas
Bahamas
Norway
Norway
Singapore
Thailand
Thailand
Japan
Japan
Japan
Japan
Netherlands
Belgium
Japan
Hong Kong
Japan
U.S.A.
Australia
Japan
Nigeria
Thailand
U.S.A.
Brazil
China
Netherlands
Poland
U.K.
Ghana
Singapore
Hong Kong
China
Thailand
Ivory Coast
Japan
Hong Kong
Germany
Netherlands
Hong Kong
Japan
Netherlands
Singapore
100.00
100.00
100.00
80.10
75.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
50.00
26.73
25.00
20.60
20.60
20.60
30.00
30.00
20.60
20.00
20.60
20.00
50.00
50.00
50.00
—
100.00
100.00
74.62
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
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
100.00
100.00
100.00
100.00
100.00
75.06
100.00
100.00
US$5
US$10
US$101,401
US$1
US$22,100
¥200
¥100,000
S$138,018
¥650,000
¥40,000
€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
US$100
€149,650
US$110
¥3,961,100
¥92,400
¥35,000
US$18
US$338
S$900
THB10,000
THB130,000
¥50,000
¥30,000
¥54,600
¥10,000
€91
€1,950
¥100,000
HK$58,600
¥100,000
US$0
A$1,000
¥100,000
NGN2,636
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
¥1,577,400
HK$40,000
€537
€414
HK$14,100
¥756,250
€3,049
S$700
■ 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 Jacksonville, LLC.
■ TraPac, LLC.
■ Utoc Corp.
■ Utoc Engineering Pte. Ltd.
■ Utoc Logistics Corp.
■ Utoc Ryutsu Service Corp.
■ Utoc Stevedoring Corp.
■ Utoc Transnet Corp.
■ World Logistics Service (U.S.A.), Inc.
■ Shipowner/Chartering companies (52 companies) in Panama, Marshall Islands, Liberia,
■ Others (11 companies)
▲ Meimon Taiyo Ferry Co., Ltd.
▲ Nippon Concept Corp.
▲ Ocean Network Express Holdings, Ltd.
▲ Ocean Network Express Pte. Ltd.
▲ PKT Logistics Group Sdn. Bhd.
▲ Rotterdam World Gateway B.V.
▲ Shanghai Kakyakusen Kaisha, 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 CSB Co., Ltd.
■ 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.
■ White Lotus Properties Ltd.
■ Chartering company (1 company) in Panama
■ Other (1 company)
▲ Shinyo Kaiun Corp.
▲ South China Towing Co., Ltd.
▲ Tan Cang-Cai Mep Towage Services Co., Ltd.
Others
■ Euromol B.V.
■ Linkman Holdings Inc.
■ Mitsui O.S.K. Bulk Shipping (USA), LLC
■ Mitsui O.S.K. Holdings (Benelux) B.V.
■ MOL (Americas) Holdings, Inc.
■ MOL (Asia Oceania) Pte. Ltd.
■ MOL (Europe Africa) Ltd.
■ MOL Accounting Co., Ltd.
■ MOL Adjustment, Ltd.
■ MOL Engineering Co., Ltd.
■ 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 Treasury Management Pte. Ltd.
■ Shipowner/Chartering companies (2 companies) in Panama
▲ Other (1 company)
* MOL’s voting rights include voting rights of MOL and its subsidiaries
Registered Office
MOL’s Voting
Rights (%)*
Paid-In Capital
(Thousands)
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
Japan
U.S.A.
Japan
Japan
Japan
Singapore
Malaysia
Netherlands
Japan
Vietnam
Thailand
Japan
Vietnam
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
British Virgin Islands
Japan
Hong Kong
Vietnam
Netherlands
Liberia
U.S.A.
Netherlands
U.S.A.
Singapore
U.K.
Japan
Japan
Japan
Japan
Panama
Japan
Japan
Japan
Japan
Singapore
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
100.00
40.33
15.00
31.00
—
20.86
20.00
31.98
21.33
24.44
51.07
99.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
95.25
100.00
62.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
87.26
100.00
100.00
70.00
99.39
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
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
¥90,000
US$200
¥880,000
¥600,440
¥50,000
US$800,000
MYR276,354
€14,018
¥100,000
VND732,966,020
THB100,000
¥12,227,847
VND349,000,000
¥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
¥6,810,000
¥100,000
HK$12,400
US$4,500
€8,444
US$3
—
€17,245
US$200
S$2,350
US$8,402
¥30,000
¥10,000
¥20,000
¥100,000
US$3,889
¥100,000
¥100,000
¥50,000
¥50,000
US$2,000
110
Mitsui O.S.K. Lines
MOL Report 2018
111
Worldwide Offices
Shareholder Information
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)
Communication materials
975
10,828
315,400,000
120,628,611
86,927
Tokyo
Sumitomo Mitsui Trust Bank, Limited
Stock Transfer Agency Business Planning Department
8-4, Izumi 2-chome, Suginami-ku, Tokyo 168-0063, Japan
MOL Report (English/Japanese)
Investor Guidebook (English/Japanese)
Market Data (English/Japanese)
News Releases (English/Japanese)
Website (English/Japanese)
(As of March 31, 2018)
JAPAN
Mitsui O.S.K. Lines, Ltd.
Head Office (Tokyo):
Nagoya Branch:
Kansai Branch:
Hiroshima Branch:
Kyushu Branch:
NORTH AMERICA
MOL (America) Inc.
Head Office (New Jersey):
Chicago:
Atlanta:
MOL (Canada) Inc.
Head Office (Toronto):
Tel: 81-3-3587-6224
Tel: 81-52-564-7000
Tel: 81-6-6446-6500
Tel: 81-82-252-6020
Tel: 81-92-262-0701
Fax: 81-3-3587-7734
Fax: 81-52-569-1719
Fax: 81-6-6446-5503
Fax: 81-82-254-0876
Fax: 81-92-262-0720
MIDDLE EAST
MOL Middle East FZE
Head Office (Dubai):
Tel: 971-4-8855488
Fax: 971-4-3292268
MOL (Asia Oceania) Pte. Ltd.
Doha:
Muscat:
Tel: 974-4-836541
Tel: 968-2440-0950
Fax: 974-4-836563
Fax: 968-2440-0953
OCEANIA
Tel: 1-732-512-5200
Tel: 1-630-812-3700
Tel: 1-678-855-7700
Fax: 1-732-512-5300
Fax: 1-630-812-3703
Fax: 1-678-855-7747
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
Tel: 1-905-629-5925
Fax: 1-905-629-5914
ASIA
MOL (Asia Oceania) Pte. Ltd.
Head Office (Singapore):
Kuala Lumpur:
Tel: 65-6323-1303
Tel: 60-3-5623-9772
Fax: 65-6323-1305
Fax: 60-3-5623-3107
Beijing Representative Office
Tel: 86-10-85299121
Fax: 86-10-85299126
MOL (China) Co., Ltd.
Head Office (Shanghai):
Guangzhou:
MOL Hong Kong Ltd.
Head Office (Hong Kong):
MOL (Taiwan) Co., Ltd.
Head Office (Taipei):
MOL (Korea) Co., Ltd.
Head Office (Seoul):
Tel: 86-21-2320-6000
Tel: 86-20-8348-6948
Fax: 86-21-2320-6331
Fax: 86-20-8348-6246
Tel: 852-2823-6800
Fax: 852-2865-0906
Tel: 886-2-2537-8000
Fax: 886-2-2537-8098
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 City):
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
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 Africa) Ltd.
Head Office (London):
Brussels:
Hamburg:
Istanbul:
Moscow:
AFRICA
Fax: 44-20-3764-8393
Tel: 44-20-3764-8000
Tel: 32-2880-9856
Tel: 49-40-3609-7410
Tel: 90-2122514665/1501 Fax: 90-2128754666
Tel: 7-495-369-90-58
Fax: 49-40-8430-6105
MOL Ace South Africa (Pty) Ltd.
Head Office (Durban):
Tel: 27-31-580-2200
Fax: 27-86-660-3280
Tel: 82-2-559-3001
Fax: 82-2-561-9490
Stock Price Range (Tokyo Stock Exchange) and Volume of Stock Trade*
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
Mitsui O.S.K. Lines (Vietnam) Ltd.
Head Office (Ho Chi Minh): Tel: 84-83-8219219
Fax: 84-83-8219317
MOL Bulk Shipping (India) Pvt. Ltd.
Head Office (Chennai):
Mumbai:
Tel: 91-44-4861-5757
Tel: 91-22-4071-4500
Fax: 91-44-4861-5757
Fax: 91-22-4071-4501
MOL Bulk Shipping (Philippines)
Manila:
Tel: 63-2-717-8621
Fax: 63-2-524-8132
(¥)
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Fiscal 2015 High ¥4,370
Low ¥1,830
Fiscal 2016 High ¥3,890
Low ¥1,990
Fiscal 2017 High ¥4,170
Low ¥2,891
(Million shares)
15
/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
7
8
9
10
11
12
18
/1
2
3
4
5
80
70
60
50
40
30
20
10
0
112
Mitsui O.S.K. Lines
MOL Report 2018
113
113
* The Company consolidated its common shares on the basis of one (1) unit for every ten (10) shares effective October 1, 2017. Figures of FY2015/FY2016 are calculated
on the assumption that the consolidation of shares was conducted at the beginning of FY2015/FY2016.
For further information, please contact:
Investor Relations Team
Corporate Communication Division
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/
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
Continue reading text version or see original annual report in PDF
format above