Mitsui O.S.K. Lines Ltd.

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

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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.

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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

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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

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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

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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

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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

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RoRo Ships

Less Specialized

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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

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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

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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.

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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.

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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.

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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.

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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

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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.

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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

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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

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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