Our Vision is
Our Vessel
MOL Report 2018Year ended March 31, 2018

Life andAs 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 fromdaily necessities such as food, clothing, household furniture and electronic appliances to energy resources
such as oil and natural gas.

OurVessel
MOL Report 2018

1

MOL GROUP CORPORATE PRINCIPLESAs a multi-modal transport group, we will:
1 actively contribute to global economic growth anddevelopment, 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 and­transparent management
3 nurture and protect the natural environment by­maintaining the highest standards of operational safety
and navigation

What is MOL CHART?

Long-Term Vision

To develop the MOL Group
into an excellent and resilientorganization that leads
the world shipping industry

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 ofaction 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 team2

VisionMitsui O.S.K. Lines

MOL Report 20183

Outline  5 Glossary

Our
Visionis
Our
Vessel  6 MOL’s History: “Spirit of Challenge and Innovation”  8 Our Fleet

10 Market Position in the Industry

Vision12

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 CFOManagement 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 MOL’s Communication Tools

MOL produces the following publications asa means of promoting communication withstakeholders. The latest versions of all reports
can be found on our website.

73 Corporate Social Responsibility (CSR)

Data Section

76 Consolidated Financial Statements
110 The MOL Group112 Worldwide Offices

113 Shareholder Information

http://www.mol.co.jp/en/ir/• MOL Report• Investor Guidebook• Market Data

 Forward-Looking Statements

This report contains forward-looking statements concerning MOL’s future plans, strategies and performance.
These statements represent assumptions and beliefs
based on information currently* available and are nothistorical 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

4

Mitsui O.S.K. Lines

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 withcargo. Usually, ballast water is taken on when cargo isunloaded, and is discharged when cargo is loaded. Ballast
water transports marine organisms across the ocean, which
may have a negative impact on the preservation of marine
ecosystems and biodiversity. After the Ballast Water Management Convention enters into force in September 2017,­ballast water treatment systems must be installed in all
ocean-going vessels within a certain period of time.

■ 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 holdtrucks, trailers and other vehicles. Cranes and other loading
equipment are not used in loading; instead vehicles are
driven onto the ship. In general, while ferries transport passengers and personal-use automobiles in addition to freightvehicles, RoRo ships mainly transport freight vehicles.

■ Chemical Tankers■ Shuttle Tankers■ Ethane Carriers■ Small- and Medium-sized Bulkers

Tankers fitted with multiple tanks to transport many different
types of liquid chemical cargo at the same time. These tankers have complex design specifications, as they are equippedwith independent pipelines, cargo pumps and temperature
regulating functions for each tank, in addition to dedicatedfacilities for cleaning and other features.
Ethane carriers are specialized for transporting liquefied
ethane, which has been cooled to −92°C, and equippedwith 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 andOffloading 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 projects to establish LNG receiving terminals all over the world
because of their advantages, including a shorter lead timeand lower costs compared to conventional onshore receiving 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/Offshorebusinesses under mid- and long-term contracts (two years ormore); 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 undershort-term cargo transport contracts, these vessels are
exposed to market rate fluctuations as a result of the­mismatch between the vessel procurement and operating
periods. MOL defines the number of mid- and long-term
procured vessels operating under cargo contracts of lessthan two years as “market exposure,” and monitors the ratio
of its market exposure with the aim of controlling the risk ofmarket fluctuation.

Tankers that transport crude oil from offshore oil rigs, such as
FPSOs, to onshore refineries as an alternative means of pipelines. Shuttle tankers are fitted with a unique system thatenables cargo to be loaded from the bow of the vessel,
rather than from the side like ordinary tankers, while maintaining a certain distance from the offshore platform.
In this report, small- and medium-sized bulkers consist of
Panamax, Handymax and Small Handy dry bulkers that transport general bulk cargo, such as coal, grain, salt, cement andsteel products.

■ SOxThe term “SOx” collectively refers to sulfur oxide emissions,
including sulfur dioxide (SO2), which are air pollutants emitted during the combustion of fossil fuels containing sulfur,
such as oil and coal. In the marine transport industry,­regulations requiring a drastic reduction in the sulfur content
of fuel will come into effect in 2020, in order to curtail theamount of SOx in vessel emissions.

■ Subsea Support Vessels

Vessels designed for arrangement and technical support
work during exploitation of offshore oil and gas fields.

■ “Visualization of Marine Operations”

Measures to provide visualization of the conditions of vessels
and cargo at sea using ICT, thereby achieving optimal vessel
operations, in conjunction with providing value-added services to customers. For example, big data on weather and sea
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 andship management efficiency, including remotely monitoring
the operational status of engines and other machinery andmaking maintenance arrangements in advance.

■ Yield Management

In the containership business, this refers to a management
technique to maximize profitability for the round-trip voyageof each container. Freight rates are set and sales activities
conducted to maximize net proceeds (gross profits calculated by deducting direct costs from freight revenues) rather
than freight rates themselves. Direct costs include loading
and unloading costs, feeder costs, and the costs of returning
empty containers (calculated to reflect the aspect of surplus
and shortage of containers at each point).

MOL Report 2018

5

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

History

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 demandsof 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 andmaintain course into the next 130 years.

1984

2018 March

Launched the SENSHU MARU, an LNG Carrier
Demand, mainly from electric power companies, increased
for imports of liquefied natural gas (LNG), an energy sourcewith a low environmental burden. Requiring transport at–162oC, LNG is technically challenging to transport. MOL roseto the challenge, entering the LNG transport field in 1983.
Since then, MOL’s fleet of LNG carriers has expanded to aworld-leading 94 (including outstanding orders) as of March
31, 2018.

1973~1985

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 WesternJapan and their in-kind contributions of 93 vessels.

2004

Daibiru Corporation
becomes a consolidated
subsidiary of MOL.
New Mitsui O.S.K. Lines is establishedby the merger of MOL and Navix Line.

1983

1996

Japan’s first specialized
methanol tanker, the
KOHZAN MARU is
launched.

1942

Mitsui & Co., Ltd. spins off
its shipping department tocreate Mitsui SteamshipCo., Ltd.

1961

Full containership service
commenced.

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

World’s first automated ship,
the KINKASAN MARU, is launched.

1965

Japan’s first specialized car carrier,the OPPAMA MARU, is launched.

6

1995

In containerships, massive investments are required for vessel
construction, operating a number of sea routes and other aspects ofthe business. MOL commenced the industry’s first global alliancewith container shipping companies based in the United States,
Europe and Hong Kong, to augment each other’s network of traderoutes. The allied companies also worked to enhance customer
service by sharing space on containerships and increasing the portsof call and the frequency of stops.

1945〜1970

Early 2000s

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 amajor 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 marinetransport, promoting diversification and specialization of its businesses to ultimately develop into afull-line marine transport group boasting a wide range of vessel types.

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.

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

Mitsui O.S.K. Lines

Mid 2000s~

China’s Commodity Import Boom Surges and Wanes
MOL’s aggressive investment in the field of natural resource andenergy transport was successful. With the unprecedented marinetransport boom brought about by China’s commodity importboom, we recorded historic profits in fiscal 2007. However, amid
slowing economic growth worldwide and the oversupply ofvessels following the economic crisis in 2008, the shipping
market stumbled and has continued to struggle with ongoingstagnation. To respond to this vastly different businessenvironment, MOL implemented the Business Structural Reforms
in the dry bulker business and decided on integrating thecontainership businesses of three Japanese shipping companies.

MOL acquires a share in chemical tanker
operator Tokyo Marine(Current: MOL Chemical Tankers Pte. Ltd.)

Commenced First Alliance in Containership
Services (The Global Alliance)
AMERICA MARU (700TEU)

World’s first large ethane
carrier ETHANE CRYSTAL
completed

Navix Line is established by the mergerof Japan Line and Yamashita-Shinnihon
Steamship.

1999

1968

2016

The first participation
in FPSO

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 Japaneseand foreign national seafarers, and reduced a large number of Japanese
seafarers as part of its restructuring process.

1964

Delivery of the MOL FSRU Challenger,
the first FSRU owned and operated
by an Asian company

The world’s first hybrid car
carrier, the EMERALD ACE,
is launched.

1989

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

2017

2012

2010

1884

World’s first ice-breaking LNG carrier project
Delivery of MOL’s first ice-breaking carrier,
VLADIMIR RUSANOV2018 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 containershipbusinesses to strengthen their global network and competitiveness. 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.

Aggressive Investment in Resource and Energy
Transport

Underlined words are explained in the Glossary on page 5.

MOL Report 20187

[Steaming Coal Carrier]
NAGARA MARU
[Chemical Tanker]
M/T NAEBA GALAXY[VLCC]KIRISHIMA[Car Carrier]
BELUGA ACE[LNG Carrier]
LNG SATURN[Methanol Carrier]
CAJUN SUN[FPSO]
Cidade de Caraguatatuba
MV27[FSRU]MOL FSRU Challenger

Photo: MODEC, Inc.

[Containership]
ONE COMMITMENT

Our[Dry Bulker
Capesize Bulker]
VEGA DREAM[Cruise Ship]NIPPON MARU

[Subsea Support Vessel]
Skandi Santos

8

Mitsui O.S.K. Lines

Fleet[Ferry]SUNFLOWER SATSUMA[Ice-Breaking LNG Carrier]
VLADIMIR RUSANOV[Shuttle Tanker]
Madre De Deus

Underlined words are explained in the Glossary on page 5.

[Tugboat]
ATSUMI MARU

MOL Report 20189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(Thousand TEU)

0

1,000

2,000

3,000

4,000

5,000

MaerskWorld Major Carriers’ Fleets (All Vessel Types)
MSC(Number of Vessels)
0
200

400

600

800

1,000

China COSCO+OOCL

1,200

China COSCO (China)

CMA-CGM

NYK (Japan)

857

63

MOL (Japan)
Oldendorff (Germany)

1,620

NEW
NEW J/V(OceanNetworkExpress)(OceanNetworkExpress)
Hapag-Lloyd(+UASC)APM-Maersk (Denmark)Evergreen

K Line (Japan)

Yang Ming

MSC (Switzerland)
Hyundai

CMA-CGM (France)
China Merchants (China)

Global fleet capacity Orderbook
Source: Alphaliner (As of April 2018)

Fredriksen
Swiss Marine
Euronav+Gener8

Dry Bulkers
0

20

40

60

80

100

Tankers

120(Million deadweight tonnage (DWT))(Thousand DWT)

(Thousand DWT)

0

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)

10,00020,000Global Seaborne
Trade

MOL

40

60

49

80

100

25 11 3 12

China COSCO

China COSCO

China Merchants

Mitsui O.S.K. Lines

20,00015,839TeekaySource: Companies’ published data and Clarkson (March 2018)

 Large bulkers  Small- and medium-sized bulkers

Car Carriers(Number of Vessels)0

China COSCO

MOL

TeekayNYK

CMA-CGM

Nakilat*20(Number of Vessels)

40

60

80

100

94

0

60

80

100

120

140

111

K LineK LineEUKOR

Oldendorff

GLOVIS

Maran Gas

HOEGH

* 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.

40

NYK

Teekay In operation  On order

20

MOL

Frontline

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)

15,000Source: Companies’ published data and Clarkson (March 2018)

APM-Maersk

Dry bulker Tanker LNG carrier Car carrier Containership

10,000MOL30,419Swiss Marine

5,000

Bahri

LNG Carriers

NYK

060,000Euronav+Gener8

K Line1050,000NYK

K Line20

40,000Oldendorff

MOL
(%)
0

30,000Source: MOL (March 2018)
Note: Excluding spot-chartered vessels

MOL Report 201811

PORTFOLIO

Current Business Portfolio
Fleet Table (Number of vessels)
As of March 31,
2018

As of March 31,
2017

Dry Bulkers(including Steaming Coal Carriers)

337

337

Tankers (including Chemical Tankers)

173

169

LNG Carriers (including Ethane Carriers)

83

80

Offshore Businesses*1

7

5

Car Carriers

119

120

Ferries & Coastal RoRo Ships

14

14

Cruise Ship

1

1

Others

32

31

766

757

Subtotal

91

91

857

848

Containerships*2
Total

Highly specialized*

OffshoreBusinesses
ChemicalTankers

Ferries &Coastal
RoRo Ships

LNG Carriers

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.

Tugboats
Terminals andLogistics
Businesses
Trading
Business

Car Carriers

Variable
profits
Product
Tankers

Daibiru
Corporation

Crude Oil
Tankers

MethanolTankers

Stableprofits

Large Bulkers

Small- andMedium-Sized
Bulkers

Containerships

Less specialized*

12

Mitsui O.S.K. Lines

MOL Report 201813

Business Strategies (Containerships)
Operations started in April 2018 at Ocean Network Express(ONE), an integrated containership business company
formed by three Japanese shipping companies

PORTFOLIO

Reinvention of MOL’s Business Portfolio
by Strategically Allocating Resources▶ : Major Specific Achievements

Roadmap to Profit Improvement (Ordinary Profit)

Strengthening Competitive Advantage

Fields for strategic resource allocation

Highly Stable Profits + Other Variable Profits (Losses) = Ordinary Profit
Operational
Efficiency

Economyof ScaleBusiness Strategies (Other than Containerships)

Competitiveness(Profitability)¥80.0–100.0 billion(¥ billion)

100.0
80.0

Investment of management resources in businesses thatwill generate highly stable profits and fields where
MOL can leverage its competitive edge

Highly specialized*

Projected medium-term levels¥31.4 billion

Synergy ofLargerBusiness Size

$1,050 million/year

Creation of more synergy andenhancement of operational
efficiency by integration of eachcompany’s best practices

Achievement of economy of scaleby integrating the three companies

Profit stabilization by accomplishment ofsynergy of $1,050 million/year

OffshoreBusinesses

40.0
20.0

55.0

56.0

63.0

63.0

Transitional costs related tocontainership business integration
FY2017
Results

FY2018
Forecasts

FY2019Plan

Tugboats
Terminals andLogistics
Businesses

FY2020Plan(as of April 27, 2018)

Reduction of variable costs $430 million: Reduction in costs for railroads, trucks, feeders, terminals, containers, etc.

Reduction of operation costs $250 million: Reduction in fuel consumption, rationalization of routes, etc.

Daibiru
Corporation

Trading
Business

Car Carriers

Variable
profits
Containerships（Ocean Network Express）

Appearance of Synergy Effects Timeline(Millions of U.S. dollars)

1,000

About
80%

800

About
60%

600

Stableprofits200

Economy ofscale throughintegration

Reduction ofoperation costs

0

FY2018FY2019FY2020● Highly stable profits● Other variable profits (losses)

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 withits 31% share of the company* Based on an assumed exchange rate of ¥105/$1(as of April 27, 2018)

Mitsui O.S.K. Lines

OffshoreBusinesses

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 vesselLess specialized*

15

Car
Carriers

Procure eco-friendly vessels (incl. LNG-fueled vessels)▶ Reduced core fleet to respond to changing trade patterns

Large Bulkers

Product
Tankers

Small- andMedium-Sized
Bulkers

Reduction ofvariable costs
Reduction ofoverhead costs

400

14

Crude Oil
Tankers

100%

1,200

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

MethanolTankers

Breakdown of the $1,050 million/year synergy effect:
Reduction of overhead costs $370 million: IT integration and organizational rationalization, promotion of outsourcing, etc.

LNG
Carriers

LNG Carriers

Ferries &Coastal
RoRo Ships■ Highly stable profits (existing)■ Highly stable profits (contract renewal)■ Other variable profits (losses)● Ordinary profit (total)–20.0

Appearance of Synergy Effects

ChemicalTankers0–40.0

Tankers

Strengthen chemical tankers and methanol tankers, while downsizing the producttanker fleet
Consider entering the tank terminal business▶ Entered the tank container business through capital and business alliancewith Nippon Concept Corporation¥40.0 billion

60.0

Best
Practices

Dry
Bulkers<Large bulkers>
Ensure the renewal of long-term contracts with domestic and overseas steelmakers<Small- and medium-sized bulkers>
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 midand long-term revenue▶ Signed deal for bauxite transport from Guinea* In plotting the vertical axis (highly to lessspecialized), each business was considered
comprehensively after taking account of theperspectives in the box to the immediate right.

16

Terminals &Logistics

Expand regionally focused logistics through M&A, etc. (with a focus on Southeast Asiaand 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)

AssociatedBusinesses<Real estate>
Expand business development in Asia
<Environment and emission-free businesses>
Gradually increase and diversify investments, primarily overseas, and transform theminto core businesses through domestic business development• Niche or mass market• Competitive environment• MOL’s relative superiority• Versatility of vessel type

Underlined words are explained in the Glossary on page 5.

MOL Report 201817

Message from the CEO

I strongly believe thatthe development of “stress-free services”
is key in strengthening trust andbeing the first choice for customers.

Progress and Evaluation of Management Plan “Rolling Plan 2017”

Junichiro Ikeda
President & CEO

18

Mitsui O.S.K. Lines

Last year, the Company formulated a new management plan
which revises our past practice of adopting fixed-term strategies every three years. Under this new approach, we firstdevised a vision for the MOL Group to be pursued in the
coming ten years. Next, we clarified what measures are to betaken to fulfill this vision. In today’s turbulent business environment, it is becoming increasingly necessary to adjust to
new realities and be flexible in our endeavors. Plans need tobe revised, or at least adjusted every year, hence, the title oflast year’s plan, “Rolling Plan 2017.” The plan seeks to achieve
our ten-year vision by reinventing the business portfolio intandem 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 to­generate highly stable profits and leverage the Company’s
strengths. Looking at the progress in terms of financial performance in fiscal 2017, MOL posted a substantial extraordinary
loss accompanying the integration of the containership businesses, 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 thereformation of our business portfolio.
LNG carriers and offshore businesses are positioned as thecore 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 established a foothold in the market for Floating Storage and Regasification Units (FSRUs) by becoming the owner and operator ofa project in Turkey and deploying MOL FSRU Challenger. This is
the first time an Asian shipping company has ventured into theUnderlined words are explained in the Glossary on page 5.

FSRU business. In addition, MOL further strengthened thebusiness through the SWAN project in India, providing operations and maintenance know-how without entering into ownership. This has allowed us to generate steady revenues on a
fee basis with minimal risk. In the area of dry bulkers and tankers, MOL has worked to solidify its mutual trust with existingcustomers 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 wasable 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 overcompetitors. For example, in the area of chemical tankers,
which requires extensive expertise and know-how, MOL isenhancing its competitiveness by developing new large-scaletankers. As for ferries and coastal RoRo ships, newly built ferries are being introduced to improve fuel efficiency andexpand cargo space. An intensifying shortage of truck drivers
combined with rising environmental concerns is propelling amodal shift from land transport to shipping, which MOL has
firmly leveraged. Meanwhile, the Company is taking steps tocultivate 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 individual items. MOL also invested in one of Malaysia’s leading­logistics companies. In addition to efforts to enter new
regional markets and provide tailor-made services to customers, the Company has established a capital and business alliance with Nippon Concept Corp., to gain a foothold in thetank container transport business.

MOL Report 201819

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 strategy 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 andlogistics businesses. Through this, the Company strives to accumulate further medium- and long-term contracts to ensure theretainment of a stable cash flow in the future, as well as toexpand 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 concentrate resources in the key strategic business fields, thefocus of the rolling plan, now in its second year, has shiftedslightly. 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-freeservices” is a vital way in which it can earn the trust of customers and become a truly reliable partner, which should lead tothe 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 customers have latent needs that they themselves have difficulty20

Mitsui O.S.K. Lines

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 conventional methods.
To take the lead in these new initiatives, MOL newly established the Corporate Marketing Division. This new division is
responsible for business intelligence—analyzing client companies and entire industries to identify needs that have notbeen met by conventional marketing activities and planningnew methods of approaching each market and each individual 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 digitalizationand information technology). MOL works in an integrated
manner to provide customers with optimal solutions.

Refining Company Strengths to Support­Sustainable Growth
Naturally, it is not possible to provide truly “stress-free services”
just by changing the approach or the structure of our operations. MOL needs to constantly monitor and respond tochanging customer needs, while cultivating its responsivenessand the ability to propose solutions. To this end, the Company
defined clearer priorities in five specific themes, identified lastyear as Group-wide priorities for strengthening the MOLGroup, and continues to develop its strengths in these prioritized items.
In terms of the ICT strategy, in addition to offering solutions
that employ digital technology, the Company is developing anext-generation type of ship management support systemthat aims for the “visualization of marine operations.” With thetechnology development and the environment, the Technology Innovation Unit is making progress in three particularareas. 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 poweredby sails. In doing so, we aim to improve fuel efficiency andreduce environmental impact. Thirdly, to ease the workload
for crews onboard and improve safety, it is working on thedevelopment of autonomous sailing technologies. Furthermore, 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 fuelbunkering vessels and businesses related to offshorewind-powered generators.
For the environment, in the future, marine transport businesses will be required to meet tighter environmental regulations. 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 andensure that customers understand the reasons for theincrease in the cost of our services, as this will be a burdenthat everyone must bear in the interest of protecting ourenvironment. (For details regarding environmental regulations, P. 72.)
Regarding the marine technical skills, which are fundamental in ensuring the safety and consistency of its shipping
operations, the Company is working to further enhancesafety 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 professionals 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 andthought patterns. To this end, it is important to introduce
workstyle reforms that promote greater creativity and flexibility to build a vibrant organization where new ideas andapproaches 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 canmotivate 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 conditions, and any other changes that can promote a more energetic and productive corporate structure.
In addition to pursuing Group-wide priorities for thestrengthening 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

Underlined words are explained in the Glossary on page 5.

s­ electing a transport company. One of the main topics newly
added to “Rolling Plan 2018” is the improvement of costcompetitiveness. MOL is trying to strengthen the competitiveness of its fleet through cost-cutting measures andenhanced utilization of vessels. The Company is also adopting RPA (Robotic Process Automation) to increase the efficiency of administrative work. We shall keep no stone
unturned and seriously take on this project.

1. V ision 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 andreliable partner at all times.
■ The Group will develop the environment and­emission-free businesses into one of its future
core operations.
■ The Group will strategically allocate resources tocarefully selected businesses that have a clear
competitive edge. The goal is to make the MOLGroup a collection of businesses boasting thehighest competitiveness in their respective fields.

2. Strategies for Realizing the Vision■ Carefully select opportunities for new investments andpursue business models focused on cash flow
■ Prioritize resources to develop and defend business fields■ Group-wide priorities for strengthening the MOL Group
MarineProvide services that fully harness the MOL
technical skills Group’s marine technical skills
Provide visualization of maritime operations (safeICTand optimal vessel operation) and added value forcustomers
Technology
Push ahead with the “ISHIN NEXT—MOL SMART
development SHIP PROJECT—”(advanced support technologies
for safer vessel operation and technologies for
reducing environmental impact)
Environment Develop and promote environment and emission-free businesses as innovative, future corebusinesses by staying on top of changes in theexternal environment
WorkstyleEnhance human resources competitiveness andreformsachieve innovation through an organizational
culture that encourages employees to work
vibrantly and productively

3. Medium- to Long-Term Profit Levels and Key
Financial Indicators
Ordinary profit
ROE
Gearing ratio

Projected
medium-term levels

2027 targets¥80.0–100.0 billion¥150.0–200.0 billion

8–12%

—

2.0 or less

1.0

MOL Report 201821

Message from the CEO

FeatureImproving Cash Flow and Capital Efficiency
In recent years, free cash flow has remained continuously innegative territory, elevating the gearing ratio to over 2.0. Thisis an important management issue we wish to improveupon. The Company aims to restore a positive free cash flow
as quickly as possible through the consolidation of its containership business to revive profitability and other measures
to expand businesses generating highly stable profits fromlong-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 investment decisions, which place a heavy emphasis on capitalefficiency 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 frominvesting activities by also considering selling off assets,
particularly stocks held for cross-­shareholding purposes.

Our Vessel &Value Creation
Process of Increasing Corporate Value
Sustainable Growth andCreating Social Value

Development of“Stress-Free Services”

Strengthening
Relationships with
Customers

Safe
Operation

The
Environment

Human
Resources

Technology
Innovation

Non-Financial Capital to Realize Sustainable Growth

To Our Shareholders and Investors
When I took over as CEO, the Company’s most importantmanagement priority was to deal with the containershipbusiness. 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 togenerate 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 acentral contributor to MOL’s earnings in the future. ONE will
operate under the firm governance of a holding company,

22

Mitsui O.S.K. Lines

Implementing Four Initiatives to Achieve Sustainable Growth
and as one of the shareholders, MOL can offer support whenever 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 afull-line marine transport operator that holds the top competitive position in many business sectors. The broad scope of theGroup’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 asolid foundation of reliability and brand strength accumulated
over 130 years of operations. I wish to thank shareholders fortheir support and understanding as we continue to work to
be our customer’s first choice for marine transport services.

Underlined words are explained in the Glossary on page 5.

MOL pursues the increase of its economic corporate value as well as the creation of social value, based on thefour initiatives of safe operation, human resources, the environment, and technology innovation, in order toachieve 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 of­stakeholders, 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 marinetransport groups, will contribute to realizing the Sustainable
Development Goals (SDGs) in the resolution adopted by the
UN General Assembly in September 2015, through the­aforementioned four initiatives.

MOL Report 201823

Our Vessel & Value Creation
VLCC

SHIZUKISAN&

Safe Operation· 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

SHIZUKISAN
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 longterm 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 passthrough 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
CaptainGoichi Umezaki

Safe operations are crucial for any type of vessel, but
VLCCs demand a higher level of tension because theyhandle and transport huge quantities of crude oil, ahazardous substance, meaning the risk of explosions,fire or environmental destruction from oil spills isconstant.
MOL is engaged in various initiatives for safe operations from both hard and soft aspects. From a hard
aspect, under our original MOL Safety Standard Specifications, we carry out numerous initiatives from the
shipbuilding stage to respond to risks, such as installingsecurity 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 leavetaking part and participants exchanging opinions on
actual accidents to prevent their recurrence. Amongthe activities, simulations reflecting operations on seasof varying conditions in the BRM drill* have proven to
be an effective training method for VLCCs, of which
maneuverability is markedly restricted compared toother 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 superintendentand a technical supervisor are dispatched to confirm
the unloading operation is conducted safely and thatthe entire ship is properly maintained. Detailed support
provided by each supervisor collaborating closely withcaptains 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 foreach and every seafarer on board to have the necessary 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 aculture 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 affiliatedcompanies, 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 atimely 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 informationof 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 andcausal 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 ofan 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-Tradeto jointly develop a system that supports ship operation during voyages using augmented reality (AR) technology.

Image of IAS in use

For details of the safe operation

24

Mitsui O.S.K. Lines

Underlined words are explained in the Glossary on page 5.

PP. 66–68.

MOL Report 201825

Our Vessel & Value Creation
Car Carrier

VALIANT ACE&

Human Resources
Achieve safe and reliable transportation
through top-quality seafarers andstrengthen the MOL brand· Training top-quality seafarers through­operation of training facilities· Create environments where people want to work

VALIANT ACE
Car carriers are vessels used exclusively for carrying motor vehicle cargo such as automobiles and construction machinery. Compared toother 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 andOceania, reflecting diversifying automobile trades.

Contributing to SDGs

Continuing to Be a Proud
Member of MOL

Training Highly Competent Seafarers on a Global Scale

VALIANT ACEFirst Officer (Philippine nationality)

I was born and grew up in Antique in the Philippines. I
had my first experience onboard a passenger ship atage 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 myresolve. In addition to my childhood dream, I decided
to aim for a seafaring career as it would help me support 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 conditioning, which gave me a sense of ease about mylong-term onboard cadet training. During training,senior Filipino seafarers made quite an impression by
mentoring newcomers with their knowledge andexperience. I got a glimpse of how MOL maintains andimproves its seafarers’ marine technical skills.

Louie John Q. Tuvillo

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 thesafety 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 thetrust 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 mostprestigious shipping companies, and by becoming aseafarer with sufficient skills and expertise, I hope tocontribute to further improving MOL’s overall value andcompetitiveness.
* Magsaysay Institute of Shipping
MIS was jointly established by MOL and Magsaysay Maritime Corporation in
1993. The institute provides various types of practical and theoreticaltraining to prepare students for careers at sea.

Mitsui O.S.K. Lines

A new maritime academy training facility

RUSSIAMONTENEGRO

JAPAN
INDIA

PHILIPPINESINDONESIA

Simulator
Training centers around the world

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 MOLGroup seafarer dispatch company, as well as hosted family day events for seafarers’ families every year.

Nationality Ratio of Seafarers(MOL-owned vessels as of March 2018)

Philippines 68%
India 14%Europe 6%
Indonesia 2%
Russia 5%
Others 2%26■ 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 alocal partner to take over from the abovementioned facility. The maximum number ofstudents is 300 per year.
■ MOL conducts a wide variety of training from lectures to learn theories to practicaltraining 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 concentrated real-life experiences of seafarers and enables an iterative approach under all
weather and ocean conditions.

Japan 3%

Recipients from the 2017 MOL Presidential Awards to Officers and Engineers

Underlined words are explained in the Glossary on page 5.

Family day scene

MOL Report 201827

Our Vessel & Value Creation
Floating Storage and Regasification Unit

MOL FSRU Challenger&

The Environment

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 isthe 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.

Expanding business domains to capture
growing demand for LNG, a fuel witha lower environmental burden· World’s largest fleet of LNG carriers· Solid relationships with partners worldwide

Contributing to SDGs

Meeting Customer andEnvironmental Needs
in the LNG Value Chain
Energy Business Strategy Division
General Manager, Strategy Division

Yusuke Hongo

Comparison of Emission Volumes When Combusted (Using coal as a base of 100)

CO2
Coal
Oil
Natural gas

SOx (Sulfur oxides)
100

60

NOx (Nitrogen oxides)
100

80

70

0

20‒40

LNG Carriers

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 otherregions, 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 inthe 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 the1980s, and currently has the world’s largest fleet of LNG
carriers, at 94 vessels (including outstanding orders) asof March 31, 2018. Through involvement in various
projects over the years, we have been building up asolid 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 enteredservice in 2005, FSRUs have been rapidly adopted
globally as they can be set up in less time and with lesscost 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 amajor first step into the FSRU field.
Going forward, environmental regulations will betightened in order to curtail the amounts of SOx (sulfur
oxides) and CO2 in vessel emissions. In response, agrowing number of shipping companies are introducing LNG as an alternative bunker fuel to conventional
heavy oil. Against this backdrop, MOL is currently­building an LNG-fueled tugboat that is scheduled forlaunch 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 fuelsupply business. Notably, in February 2018, MOL signed
a long-term charter contract with Total Marine Fuels
Global Solutions for a large LNG bunker vessel tosupply LNG fuel to mega containerships.
As environmental awareness rises around the world,
MOL will expand its business domains from the­conventional 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.

100

70

LNG Carrier

FSRUs

Regasification System

MarineTransport

FSRU
Jetty

Storage &Regasification

To onshore pipelines

LNG flow■ MOL has been involved in the marine transport of LNG
since the 1980s.
■ Expanded up to current fleet of 94 vessels including outstanding orders as of March 31, 2018.
■ The first of three ice-breaking LNG carriers was launched foruse in the Yamal LNG project in Russia. (March 2018)

Regasified gas flow

■ MOL FSRU Challenger was delivered, and is the first FSRU
independently built, owned and operated by an Asianshipping 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 andstart bunkering operations in northern Europe in 2020.

■ 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 Namura­Shipbuilding 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 otherpartners including a shipbuilding company, on a joint
research project for an LNG-fueled capesize bulker in­January 2017. (Photo below)

LNG Bunker Vessels

LNG-Fueled Vessels

LNG Fuel
SupplyUse asFuel
For details of the environment

28

Mitsui O.S.K. Lines

Underlined words are explained in the Glossary on page 5.

PP. 71–72.

MOL Report 201829

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 renewableenergy and ICT

Identify and resolve issues related tosocial 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 theamount of fuel consumed by large vessels currently
dependent on oil fuels by maximizing the use ofwind power for propulsion by attaching massive
sail panels on vessels.

Scan here to see a video on the Wind Challenger ProjectContributing to SDGs

The Ultimate Goal
Is to Bring Abouta Logistics Revolution

Three Areas of Focus

Senior Managing Executive Officer
Director General, Technology Innovation Unit

The Technology Innovation Unit was established in
April 2018. The mission of the unit is to anticipate theneeds of customers and the new era and bring about
exciting logistics innovations. The three divisions,
namely, the Technical Division handling the physicalside of the vessels, the Smart Shipping Division handling maritime ICT, and MOL Information Systems, Ltd.
taking responsibility for overall ICT will coordinate topromote the development of technology services
while using ICT to strengthen MOL’s competitiveness.
In order to provide “stress-free services” under theCompany’s management plan, we aim to identify andresolve customers’ issues by enhancing marine technical skills and sales skills which we have acquired andtechnologies 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 ofthese existing initiatives through further deepening

Yoshikazu Kawagoe

creative collaboration across industries. In the safe
operation field, MOL is focusing intensely on promotion of autonomous vessels and is working with multiple partners to verify automatic technologies, such asimage recognition, giving way to other vessels at sea,
as well as berthing and unberthing. The Company isaiming to achieve a practical demonstration around2020. In the environment field, MOL is promoting theWind 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 andcompletion of a design during 2018.
The prime goal of the unit, as well as of MOL, is theaforementioned “provision of stress-free services.” The
Company will actively aim to start a logistics revolution
to rival that of the home delivery services sector. Thismeans not only promoting technological development, but service development collaborating closelywith sales divisions.

Wind Challenger■ The Wind Challenger Project research and practical demonstration
phase finished in September 2017 and has now entered the application 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.

Conceptual image of the vessel equipped with a single sail while infull sail at sea

Roadmap So Far
CompletedNow

2009–September 2017

October 2017 onward

Research and practicaldemonstration phase

Application andcommercialization phase2020
Aim to start operations withvessel equipped with a single sail

Sail demonstration unit

Autonomous vessels

P. 25

LNG-fueled vessels

P. 29

Technology Innovation Unit Organization Chart
Technology
Innovation Unit

Technical Division
Smart Shipping Division
MOL Information Systems(Quasi in-house organization)

30

Mitsui O.S.K. Lines

Technology Research Center

LNG fuel tank

MOL Report 201831

Our Vessel & Value Creation
Non-Financial Indicators

MOL’s Workstyle Reforms

Safe Operation

MOL’s management plan has set various objectives forreforming operations and workstyles across the entire­organization, under our “Vision for the MOL Group Ten
Years from Now” (see page 21).

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 acontinuous 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 thisunblemished 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.

Enhancing efficiency

MOL aims to cultivate a vibrant, energetic and diverse workforce, based on human resources from a multitude of countries,­ enders, cultures and backgrounds, who share the values of the MOL Group as expressed in MOL CHART (see page 2).
g

Breakdown of Group Employees by Region (Consolidated)

FY2017Creating a vibrant work
environment that facilitatescommunication bothhorizontally and vertically,
throughout theorganization

Sustainablecorporate growth“Creating innovation”“Differentiation fromother companies”“Leading the industry
in individualcompetitiveness”

The president serves as chairman of the Improvement of Work Efficiency Committee

Human Resources● Japan● Southeast Asia
● East Asia
● Europe● North America● Others

New ideas
and constructive
deliberations(Workstyle reforms logo)

53%
15%
12%
8%
8%
4%

Numberof Employees / Ratio of Females /2,000
Ratio of Females in Managerial Positions*40(People)(%)
1,500
30

1,000

20

500

10

Creating internal structures that promote
innovative ideas and enhance efficiency• Establishing an organizational
culture• Accelerating the speed ofoperating processes• Rationalizing
administrative activities

Enhancing employee satisfaction• Clear separation of workand private life
• Working “smartly”• Creating momentum forthe future

Proceeding with workstylereforms for both the organizationand individuals

Organization

Individuals

Four areas of focus for reforming workstyles
Personnel structure reforms

0

2013

2014

2015

2016

2017 (FY)0■ 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

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.
25,000CO
2 Emissions of MOL Fleet (Thousand tons)

120 Group Emissions of CO2, SOx and NOx
MOL(per unit load) (%)

20,000110

15,000100

10,000

90

5,000

80

0

2012

2013

2014

2015

2016

2017 (FY)70

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

Organizational culture reforms• 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 thesummer to promote health and improve work performance

HOT Dialogue

Workplace reforms• 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

Set up conference rooms thatcan be used freely for nonconference matters

Administrative reforms• 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
2012

2013

2014

2015

2016

2017 (FY)○ CO2 emissions* ○ SOx emissions* ○ NOx emissions*

Conduct meetings using
Surface Hub* Emissions per unit (ton-mile) compared to fiscal 2012For details of the environment ⇒ PP. 71–72.

32

Mitsui O.S.K. Lines

Underlined words are explained in the Glossary on page 5.

MOL Report 201833

At a Glance

FY2017 Performance (Consolidated)

Revenues/Ordinary Profit by Segment

Revenues by Segment

Shipping and other revenues¥1,652.3

billion

AssociatedBusinesses

Equity ratio

Ferries & Coastal
RoRo Ships

23.0

5%

OthersLess than
1%

3%

17%

%
Dry Bulk
Business

AssociatedBusinesses
and Others

Ordinary profit

¥31.4

6%

Gearing ratio*1

billionDry Bulkers(excluding Steaming
Coal Carriers)

2.19

17%

Tankers

EnergyTransport
Business

LNG Carriers/
OffshoreBusinesses

8%

Ordinary Profit by Segment (¥ billions)

Product
Transport
Business

16%

61%

5%

Steaming
Coal Carriers

FY2017
performance

Dry Bulk Business

15.4

Energy Transport Business

13.6

Product Transport Business(6.3)

Containerships only

(10.6)

3%

Associated Businesses
Containerships

Net gearing ratio*

Total assets

Car Carriers

45%

13%

2

¥2,225.6

billion

1.82

Others2.6

Corporate/Eliminate

(6.5)

Total

31.4

Fleet Composition

Containerships

Others5%

Containerships

MOL’s fleet (number of vessels)

Net assets¥628.0billion

857

12.6

11%

Dry Bulkers

Car Carriers

14%

LNG Carriers/
OffshoreBusinesses

11%

Tankers

Numberof ships
(857)

12%

Car Carriers

39%

3%

LNG Carriers/
OffshoreBusinesses

11%

Dry Bulkers

Deadweight
tons

49%

(63 million)

Tankers25%

20%*1 Interest-bearing debt / Shareholders’ equity*2 (Interest-bearing debt – Cash and cash equivalents) / Shareholders’ equity

34

Mitsui O.S.K. Lines

MOL Report 201835

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 Businessand Product Transport Business from fiscal 2017.

Business Activities

Dry Bulk
Business

Dry Bulkers(excluding
Steaming Coal
Carriers)

Tankers

EnergyTransport
Business

LNG Carriers/
OffshoreBusinesses

Steaming Coal
Carriers

Year in Review

With one of the world’s largest fleets, MOL reliably transports such dry bulk cargo as iron ore, coal, grains, wood,
wood chips, cement, fertilizer and salt. Our fleet includes
highly versatile bulk carriers and specialized vessels for
specific cargo types.
[Iron Ore Carrier]Shinzan Maru

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 otherrefined petroleum products; chemical tankers that carryliquid 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 experiencing growing global demand. In addition, we are active inoffshore businesses, including FPSOs and FSRUs, which arepoised 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 toengage aggressively in coal transport for emerging countries, where growth is expected. As a division within the
Energy Transport Business Unit, the steaming coal carriers
division will coordinate with other divisions to meet
diversifying customer needs.

[Tanker]
HAKUSAN[LNG Carrier]
LNG FUKUROKUJUProfitability improved from the previous fiscal year
backed by market conditions moving toward gradual
recovery with the support of steady cargo volumes, inaddition to the assured effects of the Business Structural
Reforms that fundamentally reviewed the businessmodel for small- and medium-sized bulkers as well as
reduced the number of Capesize bulkers operated on
spot contracts.

Business Environment

Dry Bulker Market (BDI*1)(Jan 4, 1985=1,000)

2,000

1,500

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 aresult, we recorded a profit for fiscal 2017, despite ayear-on-year decrease due to a supply glut of newvessels that made supply outstrip demand.
The LNG carriers/Offshore businesses division continued
to secure stable profits from long-term contracts whilesteadily contributing to earnings through new projects
that started operations, though there was a slightdecrease 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.

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)80,00060,000[Steaming Coal Carrier]
ENERGY PROMETHEUS

40,000Car Carriers

MOL is stably expanding transport services to meet thechanging needs of automakers as they move production
to optimal sites around the world. We operate globallywith specialized car carriers that can effectively transport
any type of vehicle from passenger cars to construction
machinery.
[Car Carrier]
BELUGA ACE

Product
Transport
Business

Containerships

Ferries & Coastal
RoRo Ships

Through a global network of sea routes provided by Ocean Network
Express, a company formed by the integration of the containershipbusinesses at three Japanese shipping companies, we transport
containers loaded with electric products, automotive parts, clothes,furniture, food products and many other products to deliver themaround 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.

[Containership]
ONE COMMITMENT

MOL develops the ferry business, which transports bothpassengers and vehicles (automobiles, trucks, etc.), and thecoastal RoRo ships business which specializes in the transport of freight vehicles. We are raising our profile as theleader of an eco-friendly modal shift in domestic logistics.
[Ferry]SUNFLOWER FURANO

AssociatedBusinesses

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.

[Cruise Ship]NIPPON MARU

36

Mitsui O.S.K. Lines

Cargo volumes of completed cars to the U.S. and Europe
were firm, while imports by emerging countries andresource-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 inresponse 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 aresult, 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.

20,000

0

17/4

18/4

Containership Market (CCFI*3)(Jan 1, 1998=1,000)

A sound business environment continued due to factors
including advances in the trend toward a modal shift intransportation—i.e., a switch from long-distance landtransport by trucks to ferry transport—and a shortage oftruck drivers, but there was a decrease in ordinary profit
year on year due to delays in new vessel deliveries andrising bunker fuel prices.

1,600

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 realestate 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.

400

Underlined words are explained in the Glossary on page 5.

16/4

Source: MOL internal calculation based on Clarkson*2 Very Large Crude Carrier (300,000-DWT class)

Europe Trade
U.S. East Coast Trade

U.S. West Coast Trade
South America Trade

1,200

800

0

16/4

17/4

18/4

Source: SSE*3 China Containerized Freight Index

MOL Report 201837

Dry Bulk Business Unit

Energy Transport Business Unit

Product Transport Business Unit

Associated Businesses

Overview of Operations

Dry Bulk Business Unit
Fiscal 2017 in Review
In fiscal 2017, the business environment was relatively goodas the dry bulker market changed course to a recovery trackfrom the record slump in the previous fiscal year. By vessel
type, Capesize bulkers and wood chip carriers, for which theratio of medium- and long-term contracts is high, kept contributing to the posting of stable profits. Further, in generalbulk carriers, chiefly small- and medium-sized bulkers forwhich the ratio of spot contracts is high, we reinvented via
the Business Structural Reforms and were able to record acertain level of profit by effectively operating a lean, highly
competitive fleet with outstanding resilience to market fluctuations. Thanks to highly stable profits from medium- andlong-term contracts, along with tailwinds from a recovery inmarket conditions, the Dry Bulk Business Unit posted ordinary
profit of ¥15.4 billion.

Fiscal 2018 Initiatives
Hirofumi Kuwata

Toshiaki Tanaka

Nobuo Shiotsu

Executive Officer
Deputy Director General

Managing Executive Officer
Director General of Dry Bulk
Business Unit

Executive Officer
Deputy Director General

Dry Bulkers
Consolidated Revenues Breakdown (FY2017)● Iron Ore & Coal Carrier 54%● General Bulk Carrier 26%● Wood Chip Carrier
12%● ‌Short Sea Ship8%

Portfolio
Highly Specialized

Wood Chip
Carriers

Stable Profits

Variable Profits

Capesize
Bulkers

Short Sea
Ships

Small- and MediumSized Bulkers

Standard
DWT

At the end of At the end of
Mar. 2018
Mar. 2017

Capesize

180,000

88

90

Panamax

80,00026

24

Iron ore, coking coal,steaming coal, grains,etc.

Handymax

55,00054

57

Steaming coal, grains,salt, cement, steel
products, etc.

Small handy

33,00028

31

Steel products,
cement, grains, ores,
etc.

Wood chip
carriers

54,00039

39

Wood chips, soybean
meal, etc.

Short sea
ships

12,00061

55

Steel products, plants,
etc.

296

296

Total

38

Mitsui O.S.K. Lines

Use
Steel raw materials(iron ore, coking coal)Less Specialized

Vessels Supply (Capesize) (Number of vessels)
300

15%

200

10%

100

5%

0

0%

–100

2012

2013

2014

2015

2016

2017

–5%

■ Deliveries (left scale) ■ Demolitions (left scale)○ Net Increase (left scale) ○ YoY Change (right scale)

Source: MOL internal calculation based on IHS-Fairplay

FOCUS
MOL

Dry Bulker Fleet Table (Number of vessels)
Vessel typeIn fiscal 2018, we envision a relatively favorable businessclimate on the whole as in fiscal 2017. Although the market
is expected to see some short-term fluctuations due toseasonal factors and the international situation, the fundamentals 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 willfurther foster our relationships with customers built on trust
over the years through our safe operations, meticulous service 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, weare working to offer LNG-fueled vessels with a low environmental burden, and scrubbers for removing sulfur with aneye to the new regulations limiting the amount of sulfur invessel fuel oil from 2020.

Also in general bulk carriers, there are growing opportunities to acquire medium- and long-term contracts. For
instance, biomass power generation, one method of renewable energy production, requires a stable supply of wood fuelover the long term, which makes medium- to long-termtransport contracts a good fit. We aim to leverage the expertise 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-free­services” to customers, we will continue to work going forward to build a robust brand so that customers are confident
and satisfied in choosing MOL for dry bulk.

Contract with Alufer Mining Limited for­Transporting 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 bysmall- 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 inWest Africa, and we will actively engage in transport in this business area.

Underlined words are explained in the Glossary on page 5.

Left: CEO Bernard Pryor of Alufer Mining Limited
Right: Director General Toshiaki Tanaka of the Dry Bulk
Business Unit

MOL Report 201839

Dry Bulk Business Unit

Energy Transport Business Unit

Product Transport Business Unit

Associated Businesses

Overview of Operations

Energy Transport Business Unit
Fiscal 2018 Initiatives

Masato Koike

Managing Executive Officer
Deputy Director General(Tankers)

Tsuneo Watanabe Takeshi Hashimoto
Executive Officer
Deputy Director General(Tankers)

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 theirbest partner in energy transport.

Tankers
Fiscal 2017 in Review
Portfolio
Highly Specialized
MethanolTankers
LPG Tankers

Crude Oil
Tankers
Product Tankers

Less Specialized

40

Mitsui O.S.K. Lines

Stable Profits

Variable Profits

ChemicalTankers

In fiscal 2017, as part of our initial plan, we assumed thatmarket conditions would be sluggish due to an increase insupply arising from new vessel deliveries, and the impact ofOPEC production cuts. We responded appropriately for each
vessel type in accordance with such an assumption. While thespot 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 deployedon spot contracts, we made steady strides toward scaling
down the fleet to minimize the negative impact on businessresults. 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 indemand 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.

In fiscal 2018, we expect the tanker market to continue
facing adverse conditions due to increased supply and continuing production cuts by OPEC. Meanwhile, demolitions
centered on VLCCs are proceeding at a faster pace than theprevious year. We expect that this will be positive for a turnaround in market conditions.
In crude oil tankers, we will steadily address replacement
demand for the medium- and long-term contracts we haveaccumulated based on long-term relationships with Japaneseand South Korean customers over the years. In addition, we
will focus on capturing demand from overseas customers inIndia and other countries. Notably, India has begun to purchase increasingly more crude oil mainly from Central andSouth 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 interms 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, considering 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 arrangementswith 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 temporarily 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 toEurope. As a new initiative, we are also studying an entry into
the tank terminal business with an aim to integrate and streamline the cargo handling process, which is currently undertaken
in small lots at several different ports. We also expect to capturesynergies with the tank container business that we enteredthrough 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 conduct 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 At the end of
Mar. 2018
Mar. 2017

Vessel type underpool management(at the end of Mar. 2018)

Crude oil tankers

39

40

Chemical tankers*1

61

51

Methanol tankers

26

27

Product tankers*23943

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

LPG tankers

8

8

VLGC (Very Large Gas
Carrier, 80,000 m3)

173

169

Total

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

FOCUS
MOL

Delivery of the KIRISHIMA, the Cutting-Edge, Eco-Friendly VLCCIn November 2017, MOL launched the newly built VLCC KIRISHIMA,
its first newly built vessel in this class in about five years. With thelargest capacity of 310,000 DWT, this vessel is a ­cutting-edge,­eco-friendly VLCC offering enhanced energy-efficient performancethrough the use of modified bow and stern hull forms, electronicallycontrolled 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 aroundthe world.

Underlined words are explained in the Glossary on page 5.

VLCC KIRISHIMA

MOL Report 201841

Dry Bulk Business Unit

Energy Transport Business Unit

Product Transport Business Unit

Associated Businesses

Overview of Operations

LNG Carriers/Offshore Businesses
Fiscal 2017 in Review

From fiscal 2018, we expect business performance to continue to grow steadily as the long-term contracts signed overthe 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 destinedfor 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 toseize 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 costmore than ¥20.0 billion per carrier. In these respects, the LNG
transport business has high barriers to entry. There are several specialized LNG shipping companies in Europe thatcompete with MOL. However, MOL, as a full-line marinetransport company, has a competitive edge over these specialized shipping companies in terms of the size and breadthof 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.

42

Mitsui O.S.K. Lines

Highly Specialized
Offshore Businesses
LNG Carriers

Stable Profits

Fiscal 2018 Initiatives

Portfolio

Variable Profits

In fiscal 2017, the LNG Carriers/Offshore Project divisioncontinued to report stable profits as in fiscal 2016. In the past
few years, we have seen sluggish energy prices, along withgenerally stagnant energy cargo movements. However, our
LNG carriers are basically operated under long-term contracts 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 carrierordered in fiscal 2014 for use in the Yamal LNG project inRussia (see the FOCUS section). In offshore businesses similarly based on long-term contracts, we enlarged our base ofhighly stable profits following the delivery of a new FSRU, thefirst for a non-European shipping company, in addition to theexisting FPSO units. Our four FPSO units off the coast of Brazil,
along with one FPSO unit off the coast of Ghana are operating 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 longterm operation and maintenance of one FSRU and an­agreement for the provision and long-term operation andmaintenance of one FSU, both of which are scheduled tostart operation in early 2020.

Steaming Coal
Carriers

The offshore businesses are also difficult to enter given thestrong emphasis put on the track record of companies, in addition 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 thecountries that have begun importing LNG in the past decadechoosing to adopt FSRUs. With continued growth in demandfor LNG in South Asia, Southeast Asia, the Middle East andcertain other regions, FSRUs offer strong prospects for the future
because they can be installed quicker and less expensively thanbuilding onshore LNG terminals. We believe that FSRUs willcontribute further to MOL’s base of highly stable profits. Thatsaid, 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 offshore wind power generation systems in fiscal 2017, as a partof 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 environmental 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 andmaintenance of offshore wind power generation systems, aswell as finance leases for those systems. Therefore, we plan tostep up MOL’s level of engagement in these fields.

FOCUS
MOL

Less Specialized

New Projects Starting Operation in FY2018–2020
LNG Carriers
Osaka Gas

ex. USATo Japan1 vessel

JERA

ex. USATo Japan2 vessels

Tokyo Gas

ex. USATo Japan3 vessels

Mitsuiex. USATo Japan3 vessels

SINOPEC (China)

ex. Australia

To China

1 vessel

Yamal (Russia)

ex. Russia

To China

3 vessels

Launch of MOL’s Initial Vessel for the World’sFirst Ice-Breaking LNG Carrier Project

Scan here to see a video

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. ThisLNG 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 fromthe 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 creation of this new transport route is expected to enhance transport
efficiency and reduce CO2 emissions.

Ice-breaking LNG carrier VLADIMIR RUSANOVOffshore Businesses
Petrobras

BrazilFPSO

1 unitSwan Energy

India

FSRU

1 vessel

Swan Energy

India

FSU

1 vessel

LNG: Seaborne Trade (Million tons)
500
400
300
200
100
0

2014 2015 2016 2017 2018* 2019* 2020* 2021* 2022* 2023* 2024* 2025*■■Middle East ■■Australia ■■Other A/P■■Africa ■■South America ■■Europe■■North America

Source: MOL internal calculation based on Wood Mackenzie* Forecast

Steaming Coal Carriers
MOL’s steaming coal carriers are contributing to stable profits
as most of these vessels are operated under medium- tolong-term contracts with customers in Japan. In addition tothese 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 yearon-year increase in profits. The main factors behind therecovery in market conditions were firm cargo volume andprogress on the scrapping of aged vessels that could not
bear the additional costs of complying with stricter environment regulations, such as the ballast water treatment systems 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 climatechange, we have seen progress on efforts to move away fromfossil fuels and coal-fired thermal power generation and to

Underlined words are explained in the Glossary on page 5.

promote the shift to renewable energy, primarily in Europe.
However, the supply of renewable energy in Japan is projected 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 basepower mix. In fiscal 2018 and beyond, we will continue working 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 islikely 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, thesteaming coal carrier division will enhance overseas sales
activities in collaboration with the tanker division and the
LNG carriers/offshore businesses division as the Energy Transport Business Unit, with the aim of winning new contracts.

MOL Report 201843

Dry Bulk Business Unit

Energy Transport Business Unit

Product Transport Business Unit

Associated Businesses

Overview of Operations

Product Transport Business Unit
Fiscal 2018 Initiatives
In fiscal 2018, we expect global auto sales to stay strong andauto cargo volumes and trade patterns to be similar to fiscal
2017. On the other hand, there are concerns about a shortage of transporting capacity from fiscal 2018 onward, due toa decline in new vessel deliveries. In response, MOL will notfurther shrink its fleet for the time being, while we plan tokeep 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 (seethe FOCUS section), which should contribute to earnings bycarrying 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.

Michael P.Y. Goh
Executive Officer
Deputy Director General(Logistics)

Naotoshi Omoto

Senior Managing Executive Officer
Director General of ProductTransport 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)

Main Routes

The car carrier division previously operated overseas­ etworks and a portion of business systems jointly with thencontainership business. However, the division rebuilt a network of overseas sales and operating bases to maintain asorganizational revision progressed in light of the integrationof containership businesses by three Japanese shipping
companies. Also, regarding business systems, in summer
2018, we will start operating the new system we have beendeveloping. In addition to enhancing the efficiency of daily
operations, we expect the new system to encourage the useof data in making decisions since it will enable easier accessof amassed information.
As our initiatives to boost earnings are steadily beginning
to produce results, the division will continue to work persistently to bolster the business base and grow earnings
moving forward.

Car Export from Japan by Destination (Thousand units)
5,000
4,000
3,000
2,000

Car Carriers

1,000
0

Fiscal 2017 in Review
Portfolio
Highly Specialized

Less Specialized

44

Mitsui O.S.K. Lines

Stable Profits

Variable Profits

Car Carriers

In fiscal 2017, the division faced a tough business environment as in fiscal 2016. Cargo volumes from Japan and othermajor loading ports in East Asia to North America, Europe,and Oceania were strong, while those to Central and SouthAmerica and to Southeast Asia recovered somewhat fromsluggish levels in fiscal 2016. On the other hand, cargo volumes remained lackluster from Asia and the Atlantic Ocean
region to oil-producing regions such as the Middle East andAfrica. The situation continued where changes in trade patterns led to a decline in operation efficiency. Given this business 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 toimprove operation efficiency by increasing cargo loading per
vessel, and succeeded in raising the overall number of carstransported 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.

2012

2013

2014

■N. America ■Europe ■Middle East
■Latin America ■Africa

2015

2016

■Oceania

■Asia

2017

FOCUS
MOL

Delivery of BELUGA ACE, First Next-Generation
FLEXIE Series Car Carrier
The BELUGA ACE delivered in March 2018 is more advanced thanconventional car carriers with six rather than two liftable decks
allowing for height adjustment, enabling effective transport of awide array of vehicles, including large-sized construction equipment. As such, it is expected to contribute to enhancing earnings
capacity. In addition, the BELUGA ACE uses a rounded bow shapedeveloped in collaboration with Akishima Laboratories (Mitsui
Zosen) Inc. and the MOL Group. This reduces wind resistance andis expected to lower CO2 emissions by about 2% compared withconventional car carriers.

Scan here for a video introduction
to the FLEXIE Series

Next-gen car carrier BELUGA ACE

MOL Report 201845

Dry Bulk Business Unit

Energy Transport Business Unit

Product Transport Business Unit

Associated Businesses

Overview of Operations

Containerships
Portfolio
Highly Specialized
Terminals &Logistics

Stable Profits

Variable Profits
Containerships

Fiscal 2017 was also highly significant for MOL because
operations at the integrated containership business company formed by Japan’s three major shipping companies
were scheduled to begin in fiscal 2018. It was no easy feat tomaintain the same level of service quality in MOL’s own­containership business amid personnel constraints, whileadvancing preparations for integrating the containershipbusiness into ONE. Every staff member rose to the occasion
with a high level of motivation and selflessly fulfilled theirrespective roles. As a result, we successfully completed bothof those priorities.

Fiscal 2018 Initiatives

Less Specialized

Consolidated Revenues Breakdown (FY2017)● North America Trade● Europe Trade● North-South Trade● Intra-Asia Trade

43%
31%
10%
16%

ONE commenced services on April 1, 2018 as planned. In
conjunction with the integration, certain tasks related tobusiness withdrawal will remain at MOL. We expect to complete almost all of those tasks within fiscal 2018. MOL is ashareholder 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 managers and staff members from MOL will work together with
their new colleagues at ONE. They will strive to evolve themeticulous services that have earned a strong reputationfrom customers and improve revenues and earnings by
capturing integration synergies. In addition to the personnel
contribution, MOL has contributed significant assets to ONE

for use as business resources by chartering out vessels, containers, 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. However, there has been no change in the importance of the

Terminals & Logistics
Fiscal 2017 in Review

Fiscal 2018 Initiatives

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 byenhancing operational efficiency along with the completionof 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 maintained stable operations throughout the year.
In the logistics business, we are also making steady progress. We continued on a course of expanding the regional
logistics field through M&A and so forth, concluding a capitaland business tie-up with Nippon Concept Corporation (seethe FOCUS section) following our investment in a major
logistics company in Malaysia in fiscal 2016.

As the overseas terminals business is scheduled to be transferred to Ocean Network Express (ONE), a new liner company
jointly formed by three major Japanese carriers, we will seeka new growth strategy focusing on the logistics businessgoing forward.
In fiscal 2018, MOL will strengthen ties between the corecompanies of its NVOCC* business, MOL Logistics (Japan) Co.,
Ltd. (MLG) and MOL Consolidation Service Ltd. (MCS) in HongKong. We will integrate both companies’ NVOCC businesses
under a new company to be established in Hong Kong, anddevelop the business under the unified brand “MOL Worldwide Logistics.”
At the new company, we look to reduce purchasing costsby leveraging economies of scale in negotiating ocean
freight rates with shipping companies. At the same time, wewill consolidate marketing and other functions and aim togenerate synergies capitalizing on the customer bases of
MCS, which has strong support from customers engaging intrade between Asia and the United States, and MLG, which
has a robust Japanese customer base. As MOL’s containershipbusiness has been spun-off, we plan to expand the NVOCC
business further and make it an earnings pillar, also as ameans of maintaining MOL’s brand power, sales networks,
and relationships with customers forged over many years.

Plan to Improve Profitability in MOL’s Containership
Business

Fiscal 2017 in Review
The containership business continued to post a loss in fiscal
2017. However, the result improved significantly comparedto fiscal 2016, when the business environment came underpressure 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, suchas 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 wererecorded due to the establishment of Ocean Network
Express (ONE), an integrated containership business company, we still managed to drastically reduce losses in thecontainership business from the previous fiscal year.

46

Mitsui O.S.K. Lines

ONE: MOL’s ONE-related equity in earnings ofaffiliates (31% of ONE’s net profit and loss)* NVOCC (Non-Vessel Operating Common Carrier)

MOL’s containershipbusiness ordinary＝
profit (loss)
MOL: Ordinary profit excluding the above

equity in earnings of affiliates (including
terminal & logistics businesses, etc.)(¥ billions)containership business within MOL’s business portfolio. We
are confident that ONE, having the competitiveness to prevail in the containership industry, will achieve steady growthin the years to come.

FOCUS
MOL

30

Ordinary profit (loss)
Total¥–10.6 billion

20

Total
¥0.5 billion

Embarking on the Tank Container Business via­Capital and Business Alliance with Nippon
Concept Corporation

10
0
–10
Transitional costs–20

FY2017
Results■ONE ■MOL

FY2018
Forecasts

FY2019Plan

FY2020Plan

Ordinary profit (loss)(April 27, 2018)

In February 2018, MOL entered into a capital and business allianceagreement 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 toexpand 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.

Underlined words are explained in the Glossary on page 5.

Photo: Nippon Concept Corporation

MOL Report 201847

Dry Bulk Business Unit

Energy Transport Business Unit

Product Transport Business Unit

Associated Businesses

Overview of Operations

Ferries & Coastal RoRo Ships
Portfolio
Highly Specialized

Stable Profits

Variable Profits

Ferries & Coastal
RoRo Ships

producing strong results. In cargo transportation services,
there remains a strong modal shift from long-distance transport by trucks to ocean transport by ferries driven by theneed to reduce environmental impact and a shortage oftruck drivers. As a result, cargo volume continued to trend athigh levels as in the previous fiscal year. In fiscal 2017, wetook 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 andoperations 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 infiscal 2017.

demand, we have added a variety of innovative upgrades toour new ferries so that passengers can fully enjoy our “casual
cruise” experience (see the FOCUS section). In terms of services, we plan to enhance marketing by utilizing our database 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 wasmanaged by each of the MOL Group ferry companies with astrong focus on their respective regions. Going forward, we

Associated Businesses

Fiscal 2018 Initiatives
Less Specialized

Fiscal 2017 in Review

Fiscal 2018 Initiatives
Portfolio
Highly Specialized
Tugboats

Trading

Daibiru
Corporation

Stable Profits

Variable Profits

In fiscal 2017, passenger transportation and cargo transportation 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 theform of a sea voyage. We believe that these efforts are

In fiscal 2018, demand for passenger and cargo transportation is projected to remain firm. Following on from thelaunch 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 peakseasons when the ferries operate at mostly full occupancy.
Conversely, this means that the ferry business has morepotential for growth. To realize this potential and increase

Scan here for the introductory website
for “casual cruises”

FOCUS

Less Specialized

MOL

Launch of the New SUNFLOWER SATSUMAIn May 2018, the new ferry SUNFLOWER SATSUMA was launched on the Osaka-South Kyushu route. The new­SUNFLOWER KIRISHIMA is planned for launch in September. We seek to make ferries more than just a mode of transportation by providing passengers with a “sea voyage” experience. To do so, we have upgraded and expanded thefacilities 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, aswell as suite rooms. Through the launchof these ferries, we seek to provide“casual cruises” that offer the excitement
and anticipation of a first-time experience to customers spanning a broad
Entrance lobby
Launch of the new SUNFLOWER SATSUMA
range of age groups.

48

Mitsui O.S.K. Lines

will foster closer collaboration within the MOL Group by, forexample, 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 transportation services between major urban areas and Hokkaido andKyushu. 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 groupto strengthen transportation capabilities and enhance transportation quality, as we seek to contribute even further tothe economic vitality of Hokkaido and Kyushu as well as thesurrounding regions.

Fiscal 2017 in Review
This segment comprises MOL’s real estate, cruise ship, tugboat, trading and other businesses. In the office leasing
business, vacancy rates remained low in the Tokyo andOsaka areas and rent levels gradually increased. Under these
conditions, Daibiru Corporation, the core company of thisbusiness, posted a year-on-year increase in profits, achieving
high occupancy as a result of efforts to provide tenant services, including promoting initiatives to enhance the qualityof building management. Meanwhile, in the cruise shipbusiness, profits decreased year on year, mainly due to theimpact 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 thatwe 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 inprofits year on year.

Underlined words are explained in the Glossary on page 5.

In fiscal 2018, we expect to continue managing each business steadily, with results forecast to be mostly unchanged
from the previous fiscal year. In April 2018, Daibiru formulated 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 andenhancing the competitiveness of existing buildings byinvesting in renovations, and continuously pushing ahead
with overseas businesses in markets such as Vietnam. In thecruise ship business, we will strive to attract more guests andimprove profitability by further evolving the high-class services that have proven popular on the NIPPON MARU. In the
tugboat and trading businesses, we will continue working toenter 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 theenvironment and emission-free businesses that MOL will
strengthen going forward into one of its future core businesses by leveraging and refining the MOL Group’s management resources.

Corner Stone Building (Vietnam)

MOL Report 201849

Financial and Non-Financial Highlights

MOL ADVANCEGEAR UP ! MOL

RISE 2013              STEER FOR 2020

ROLLING PLAN

Millions of yen

2008/3

2009/3

2010/3

2011/3

2012/3

2013/3

2014/3

2015/3

2016/32017/3

2018/3

Shipping and other revenues¥1,945,696¥1,865,802¥1,347,964¥1,543,660¥1,435,220¥1,509,194¥1,729,452¥1,817,069¥1,712,222¥1,504,373¥1,652,393

Shipping and other expenses

1,544,109

1,564,485

1,228,478

1,328,959

1,368,794

1,432,014

1,587,902

1,683,795

1,594,568

1,388,264

1,513,736

For the year:

Selling, general and administrative expenses

110,302104,104

98,54691,30090,88592,946

100,458

116,024

115,330

113,551

115,972

Operating profit (loss)

291,284

197,211

20,939123,400(24,459)(15,766)

41,092

17,249

2,323

2,558

22,684

Ordinary profit (loss)

302,219

204,510

24,234

121,621(24,320)(28,568)

54,98551,33036,26725,426

31,473

Income (loss) before income taxes andminority interests

318,202

197,732

27,776

95,366(33,516)(137,938)

71,71058,332(154,385)

23,303(28,709)

Profit (loss) attributable to owners of parent

190,321

126,987

12,72258,277(26,009)(178,846)

57,39342,356(170,447)

5,257(47,380)

Free cash flow [(a) + (b)]23,291(71,038)(40,055)

46,970(129,298)(25,285)(25,615)(66,656)

182,508(56,318)(2,471)

Cash flows from operating activities (a)283,359

118,984

93,428

181,755

5,014

78,95594,25592,494

209,189

17,623

98,380Cash flows from investing activities (b)(260,068)(190,022)(133,483)(134,785)(134,312)(104,240)(119,870)(159,150)(26,681)(73,941)(100,851)

74,48078,15588,36677,44585,624

94,68583,98387,803

92,77187,19086,629Depreciation and amortization
At year-end:
Total assets

1,900,551

1,807,079

1,861,312

1,868,740

1,946,161

2,164,611

2,364,695

2,624,049

2,219,587

2,217,528

2,225,636

Net vessels, property and equipment

1,047,824

1,106,746

1,209,175

1,257,823

1,293,802

1,303,967

1,379,244

1,498,028

1,376,431

1,323,665

1,290,929

Interest-bearing debt

601,174

702,617775,114724,259

869,619

1,046,865

1,094,081

1,183,401

1,044,980

1,122,400

1,118,089

Net assets

751,652

695,021735,702740,247

717,909619,492

783,549

892,435

646,924

683,621628,044

Shareholders’ equity

679,315

623,715

659,508

660,795

637,422535,422679,160

782,556

540,951

571,983

511,242

Profit (loss) attributable to owners of parent (Yen)¥1,591.40¥1,061.30¥  106.30¥  487.50¥ (217.60)¥(1,495.70)¥  479.90¥  354.20¥(1,425.00)¥   43.95¥ (396.16)

Net assets (Yen)

5,677.39

5,212.26

5,517.01

5,528.30

5,332.70

4,477.60

5,679.00

6,542.60

4,522.80

4,782.25

4,274.81

310

310

30

100

50

0

50

70

50

20

20

0.88

1.13

1.18

1.10

1.36

1.96

1.61

1.51

1.93

1.96

2.19

Amounts per share of common stock:*1

Cash dividends applicable to the year (Yen)Management indicators:
Gearing ratio (Times)
Net gearing ratio (Times)

0.79

0.99

1.05

1.00

1.23

1.58

1.35

1.35

1.64

1.64

1.82

Equity ratio (%)

35.7

34.5

35.4

35.4

32.8

24.7

28.7

29.8

24.4

25.8

23.0

ROA (%)*2

17.1

11.0

1.3

6.5

(1.3)

(1.4)

2.4

2.1

1.5

1.1

1.4

ROE (%)

30.9

19.5

2.0

8.8

(4.0)

(30.5)

9.5

5.8(25.8)

0.9(8.7)

Dividend payout ratio (%)

19.5

29.2

28.2

20.5

—

—

10.4

19.8

—

45.5

—

CO2 emissions of MOL fleet (Thousand tons)

20,065

20,374

18,68420,053

19,435

19,053

18,86018,803

18,67618,204

17,774

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

9,626

10,012

9,707

9,438

9,431

9,465

10,28910,50810,50010,794

10,828* 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

50

Mitsui O.S.K. Lines

MOL Report 201851

Key Indicators

Shipping and Other Revenues/
Ordinary Profit (Loss)

Total Assets / Net Assets

Ordinary Profit (Loss) by Segment

Interest-Bearing Debt / Net InterestBearing Debt / Shareholders’ Equity

Gearing Ratio / Net Gearing Ratio /Equity Ratio

FY2017FY2017FY2017
Dry Bulk Business

FY2017FY2017

Shipping and Other Revenues
Ordinary Profit (Loss)¥1,652.3 billion¥31.4 billion¥2,225.6 billion¥628.0 billion

Total Assets
Net Assets

Energy Transport Business
Product
160 Transport Business
Associated Businesses/
Others/Adjustments
120(¥ billions)(¥ billions)(¥ billions)

2,000

200

3,000

1,000

80

1,500

150

2,400

800

40

1,000

100

¥15.4   billion¥13.6   billion¥(6.3) billion¥8.7   billion

1,800

Net Interest-Bearing Debt*
Shareholders’ Equity**¥1,118.0 billion¥928.4 billion¥511.2 billion

Type of rating

2.19
1.82
23.0%

Gearing Ratio
Net Gearing Ratio
Equity Ratio

JCR

(%)

(¥ billions)
1,200
1,000

2.50

50

2.00

40

R&I

800

0

600

Interest-Bearing Debt

Credit Ratings (As of June 2018)

1.50

30

1.00

20

0.50

10

600
500

50

1,200

400

0

0

600

200

−50

0

13/3 14/3 15/3 16/3 17/3 18/3

13/3 14/3 15/3 16/3 17/3 18/3

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

400
200
0

■ Bulkships■ Containerships■ Other segments, etc.

13/3 14/3 15/3 16/3 17/3 18/3

The gearing ratio worsened 23 points and theequity 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.

Ordinary profit increased ¥6.0 billion, due to a
drastic decrease in losses in the containershipbusiness, despite headwinds such as a deteriorationin the tanker market and a rise in bunker prices.

Total assets as of March 31, 2018 were mostly
unchanged from a year earlier, despite slightincreases in vessels and investment securities. Net
assets decreased ¥55.5 billion, primarily due to a
decline in retained earnings.

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 ProductTransport 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.

* Interest-bearing debt – cash & cash equivalents** “Shareholders’ equity” in this section comprises the totalof owners’ equity and accumulated other comprehensive
income (loss).

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

Cash Flows

ROA (based on Ordinary Profit)/ROE

Capital Expenditure

FY2017FY2017
Cash Flows from Operating
Activities
Cash Flows from Investing
Activities

FY2017FY2017

Cash Dividends Applicable to the Year
Dividend Payout Ratio(Yen)(%)
500

50¥98.3 billion¥(100.8) billion(¥ billions)
250

1.4 %
(8.7)%

ROA
ROE

(%)
20

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.

Capital Expenditure

JCR
R&I

 Gearing ratio (left scale)  Net gearing ratio (left scale) Equity ratio (right scale)■ Total assets (left scale)■ Net assets (right scale)¥(396.16)¥20.00—%0

13/3 14/3 15/3 16/3 17/3 18/3

■ Interest-bearing debt ■ Net interest-bearing debt
■ Shareholders’ equity■ Shipping and other revenues (left scale)■ Ordinary profit (loss) (right scale)

Net Income (Loss)* per Share0

Moody’s

Moodyʼs

RatingShort-term debt
rating (CP)J–1

Long-term seniordebt (issuer) ratingA–

Long-term debt
ratingA–

Issuer rating

BBB

Short-term debt
rating (CP)a–2

Long-term debt
ratingBBB

Corporate family
rating

Ba1

A–
BBB
Ba1

MOL has maintained its current ratings, reflecting
steady, albeit gradual, improvement in the overallmarine transport market and in MOL’s businessperformance. Going forward, MOL will continue
working to bolster its profitability and improve its
financial standing, in an effort to enhance its
ratings.

Fleet Size (All Types of Vessels)*¥105.6 billion

FY2017
Number of Vessels

857 vessels

Deadweight

62,676 thousand tons(¥ billions)(Vessels)

(Thousand tons)

200

1,000

100,000

800

80,000600

60,000400

40,000200

20,000

200
0

0

10

150

150

100

0

50
–500

0

100

–10

–50
–20

–100

–1,000

50

–150

–30

–200
–1,50013/3 14/3 15/3 16/3 17/3 18/3

–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

MOL posted a net loss* after a year-on-year deterioration of¥52.6 billion from the previous fiscal year, reflecting therecording of an extraordinary loss of ¥73.4 billion inconnection with the integration of the containershipbusinesses. MOL paid an interim dividend of ¥1 per share(before the consolidation of shares) and a year-end dividendof ¥10 per share (after the consolidation of shares).

Free cash flow was slightly negative as a result of
an increase of ¥26.9 billion in net cash used ininvesting activities, despite an increase of ¥80.7
billion in net cash provided by operating activities.

–40

13/3 14/3 15/3 16/3 17/3 18/3

0

13/3 14/3 15/3 16/3 17/3 18/3

* Profit (loss) attributable to owners of parent

13/3 14/3 15/3 16/3 17/3 18/3

0

■ Number of vessels (left scale)■ Deadweight (right scale)

 ROA
 ROE

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.

0

Capital expenditure represented here is the net
amount calculated by deducting proceeds fromthe sale of vessels when delivered from “Tangible/
intangible fixed assets increased” contained in theannual securities report.

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 byjoint ventures

Note: The Company consolidated its common shareson the basis of one (1) unit for every ten (10)shares effective October 1, 2017. Accordingly,
each figure was calculated as if the consolidationof shares had been conducted at the beginningof the fiscal year ended March 31, 2013.

* Profit (loss) attributable to owners of parent

52

Mitsui O.S.K. Lines

Underlined words are explained in the Glossary on page 5.

MOL Report 201853

Message from the CFO

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

Projected medium-term levels¥80.0–100.0 billion¥31.4 billion

1.

¥40.0 billion

2.

40.0
55.0

56.0

63.0

63.0

–40.0

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 steadyrecording of highly stable profits from mid- and long-term
contracts, in addition to which, expenses associated withthe establishment of the integrated containership businessventure were lower than expected, and the dry bulker
market performed stronger than we had anticipated. On theother 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 wasincurred by chartering out containerships to the integrated
containership business venture Ocean Network Express(ONE), which started service in April 2018. Specifically, werecorded 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 procuredin the past (which under current market conditions unfortunately 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

54

Mitsui O.S.K. Lineslegacy of the containership business, seizing this timing
when the integrated venture started its operations. At thesame time, the course toward improved business performance from fiscal 2018 onwards is now much clearer, and wehave 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 containershipbusinesses, two major segments that had caused the Company’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 completed our business model transformation by means of Business Structural Reforms executed in fiscal 2015, and thebusiness has been reinvented with a structure that can stably
deliver profits without being too heavily influenced bymarket 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 ahindrance to earnings in the recent years, by expanding andstrengthening the strategic priority business fields, such as

Start operations of existing projects (LNG carriers/Offshore­businesses)/Acquire new mid- and long-term contracts (Dry­bulkers, Tankers, Offshore businesses)
Improving other variable profits

0
–20.0

Improve/restore profitability in the containership business
Accumulating highly stable profits

60.0

20.0

Improving other variable profits (losses)

3.
Transitional costs related tocontainership business integration

FY2017FY2018FY2019FY2020Results
Forecasts
Plan
Plan■Highly stable profits (existing) ■Highly stable profits (contract renewal)■Other variable profits (losses)
Ordinary profit (total)(as of April 27, 2018)

In the Improving other variable profits
mediumExpect recovery of dry bulker and tanker markets to some extent
term

chemical tanker and ferry business where MOL has its competitive 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 isclearer going forward, as mentioned above, in fiscal 2017, theCompany 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 thegearing 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 containership services. However, we will strive for improvementby continuing to pursue a business model of controlling

Underlined words are explained in the Glossary on page 5.

Expand and enhance businesses in which MOL has competitive
advantages (chemical tankers, ferries, etc.)

Medium-Term Profit Levels and Key Financial Indicators
Projected
medium-term levels

Ordinary profit¥80.0–100.0 billion

ROE

8–12%

Gearing ratio

2.0 or less

Gearing Ratio* / Equity Ratio
(%)
2.50

40
2.19

2.15

1.96

2.00
30
26%

1.50
23%

1.00

FY2016(Result)

FY2017(Result)

24%

FY201820(Forecast) Gearing ratio (left scale)  Equity ratio (right scale)* Interest-bearing debt / Shareholders’ equity

MOL Report 201855

CFO Message

cash outflows, for example by utilizing charter-in and­second-hand vessels, in addition to selling off assets, including cross-shareholdings.
We initially projected free cash flow as significantly negative for fiscal 2017. However, strict selection of investments
and proceeds from sales of overseas real estate could minimize 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 thefirst 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 withfinancial institutions and our investments over the next three
years will be mainly in projects where we invest in accumulation of highly stable profits through mid- to long-term­contracts with customers who have excellent credit ratings.
Moreover, we plan to invest in responding to environmental
regulations and in the environment and emission-free businesses, 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 restructuring for fiscal 2017 has also been understood by the­agencies. 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 toincrease 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

億円
733billion
¥73.3

3ヵ年
Three-Year
約3,500億円¥350.0billion● LNG Carriers● Offshore Businesses● Chemical/Methanol Tankers● Ferries/Associated Businesses/
Terminals/Logistics● Environment/IT/Others

12%
21%
30%
26%
11%

● LNG Carriers●O ffshore Businesses●C hemical/Methanol Tankers● F erries/Associated Businesses/
Terminals/Logistics● Other Vessels● E nvironment/IT

Management
Foundation
27%
29%
9%
11%
12%
12%

Environment/IT/Others includes Other Vessels only in fiscal 2017

56

Mitsui O.S.K. Lines

Underlined words are explained in the Glossary on page 5.

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

MOL Report 201857

Board of Directors, Audit & Supervisory Board Members
and Executive Officers(At the end of June 2018)

Board of Directors

Audit & Supervisory Board Members

Takashi Nakashima Born 1959

Kenji Jitsu

Apr. 1982 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2009 General Manager of Research OfficeJun. 2011 General Manager of General Affairs
Division
Jun. 2015 Audit & Supervisory Board Member of
Mitsui O.S.K. Lines, Ltd. (current)

Apr. 1984 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2009 General Manager of CSR andEnvironment Office, Corporate Planning
Division
Jun. 2013 General Manager of Investor Relations
OfficeJun. 2015 General Manager of Accounting DivisionJun. 2017 Audit & Supervisory Board Member of
Mitsui O.S.K. Lines, Ltd. (current)

Audit & Supervisory Board Member

Koichi Muto

Born 1953

Representative Director

Junichiro Ikeda 

Born 1956

Representative Director

Apr. 1976 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2002 General Manager of Bulk Carrier Division
Jan. 2003 General Manager of Corporate Planning DivisionJun. 2004 Executive Officer, General Manager of Corporate Planning DivisionJun. 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)

Shizuo Takahashi 

Born 1959

Representative Director

Apr. 1979 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2004 General Manager of Human Resources DivisionJun. 2007 General Manager of Liner DivisionJun. 2008 Executive Officer
Jun. 2010 Managing Executive Officer
Jun. 2013 Director, Senior Managing Executive Officer
Jun. 2015 Representative Director, President,
Chief Executive Officer (current)

Born 1960

Audit & Supervisory Board Member

Independent Officers

Apr. 1981 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2006 General Manager of Corporate Planning DivisionJun. 2008 Executive Officer, General Manager of Corporate Planning DivisionJun. 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)

Hiroyuki Itami

Hideki Yamashita

Jun. 2011 Audit & Supervisory Board Member of
Mitsui O.S.K. Lines, Ltd. (current)
Sept. 2017 President, International University ofJapan (current)

Apr. 1982 Attorney-at-Law (current)
Apr. 1985 Established YAMASHITA & TOYAMA LAW
AND PATENT OFFICE
Mar. 1993 Patent Attorney (current)
Mar. 2012 Outside Corporate Auditor of I-Cell
Networks Corp. (current)
Jun. 2014 Audit & Supervisory Board Member of
Mitsui O.S.K. Lines, Ltd. (current)

Outside Audit & Supervisory
Board Member

Outside Audit & Supervisory
Board Member

Executive Officers

Koichi Muto

Chairman, Executive Officer

Junichiro Ikeda
Takeshi Hashimoto

Born 1957

Director

Apr. 1982 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2008 General Manager of LNG Carrier DivisionJun. 2009 Executive Officer, General Manager of LNG Carrier DivisionJun. 2011 Executive Officer
Jun. 2012 Managing Executive Officer
Jun. 2015 Director, Managing Executive Officer
Apr. 2016 Director, Senior Managing Executive Officer (current)

Akihiko Ono

Born 1959

Director

Apr. 1983 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2010 General Manager of Corporate Planning DivisionJun. 2011 Executive Officer, General Manager of Corporate Planning DivisionJun. 2015 Managing Executive Officer
Apr. 2017 Senior Managing Executive Officer
Jun. 2018 Director, Senior Managing Executive Officer (current)

Takashi Maruyama

Born 1959

Director

Apr. 1983 Joined Mitsui O.S.K. Lines, Ltd.
Jun. 2010 General Manager of Finance DivisionJun. 2011 Executive Officer, General Manager of Finance DivisionJun. 2015 Managing Executive Officer
Jun. 2017 Director, Managing Executive Officer
Apr. 2018 Director, Senior Managing Executive Officer (current)

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)

Independent Officers

Akihiko Ono

Masayuki Matsushima

Hideto Fujii

Etsuko Katsu

Jun. 2011 Director of Mitsui O.S.K. Lines, Ltd. (current)
Jan. 2013 Senior Advisor, Taniguchi Partners International Accounting &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)

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

Outside Director

58

Mitsui O.S.K. Lines

Outside Director

Outside Director

Senior Managing Executive Officer(Deputy Director General of Safety
Operations Headquarters, Deputy
Director General of Product Transport
Business Unit, Responsible for:
Corporate Planning Division, LinerBusiness 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 Eastand 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 KatoManaging Executive Officer(Director General of Safety Operations
Headquarters, Responsible for: Human
Resources Division, Marine Safety
Division, Secondarily Responsible forSmart 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 ProductTransport Business Unit, Responsible forPort 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)

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 ProductTransport Business Unit, Responsible forFerry Business Division, President ofFerry 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 ProductTransport Business Unit, Responsible
for Port Projects & Logistics Business
Division (NVOCC Business), Secondarily
Responsible for Asia, the Middle Eastand Oceania Area, Chief Executive Officerof MOL Consolidation Service Ltd.)

Hirofumi Kuwata

Executive Officer(Deputy Director General of Dry Bulk
Business Unit, Deputy Director Generalof Energy Transport Business Unit,
Responsible for Steaming Coal Carrier
Division, Secondarily Responsible for
Dry Bulk Carrier Division (B))

MOL Report 201859

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 corporate­governance, the most important issue is that it actually
performs a useful function rather than that it is simply aformality. 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 aculture that encourages people to openly speak their mind.
For example, when an Audit & Supervisory Board (ASB)
member comments about policies, the Board of Directors arequite open to the input even when the comments are proactive 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 “Deliberation on Corporate Strategy and
Vision,” which isheld in conjunction with theBoard of Directors
meeting, is particularly useful. It
enables outside
directors and ASB
members to contribute their opinions before any importantcompany decisions are made. My only concern is that discussion usually tends to be limited to strategies only foreach specific division. I think the discussions could be evenmore productive if we also deliberated broader issues suchas risk management and capital utilization policy over thewhole company.
Yamashita You’re right. Some discussions have been limited 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 atimelier manner. On the other hand, we can see the benefitsof the “Deliberation on Corporate Strategy and Vision” in theway that MOL addressed restructuring of its containershipbusiness. Because the Company had analyzed various scenarios for improvement in the past, the entire Board, including outside directors and ASB members shared common
awareness of the need for drastic action, which then led tothe significant decision to merge the containership businesses.
As you pointed out, corporate governance should not just be

60

Mitsui O.S.K. Lines

Masayuki Matsushima

Hideki Yamashita

Outside Director

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 tobe taken based on a vision of what theCompany 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 toenvision what the Company should be ten years in the
future, compare that vision with MOL’s current situation, andidentify 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, inmy opinion, is to make sure the plans that management
adopts are specific, and grounded in reality.
Matsushima As one of the people who strongly advocatedthe use of this Rolling Plan approach, I know that “Rolling
Plan 2018” is based on a great deal of analysis and discussionof the business sectors that are likely to experience growth in
the future, and the ways that MOL can enhance its competitiveness. When you adopt a long-term vision and aim at
distant objectives, it allows you to see a much broader rangeof 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.

Outside Member of the Audit& Super­visory Board

The key to better compliance is to makesure that every single employee in the
Company is aware of its importance
Theme: Evaluation of the Company’s approachto 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 compliance. 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 reallyl­ istening. Top
management
needs to seize any
occasion toemphasize theimportance ofcompliance, as theessential prerequisite to all company
operations. I
believe that MOL
recognizes this fact. However, as business becomes moreglobal, 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 acontinuous 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 theissue in a comprehensive way, with everyone in the Company
from the CEO on down discussing key questions: “what specifically went wrong?” and “what must be done to set things right?”
I believe that this process elevated awareness of complianceconsiderably, throughout the Company. Unfortunately, thehuman being is a forgetful creature. It is vital that the Company
continue to discuss the issue, to maintain a constant awarenessof compliance issues. It isn’t enough to just write down therules in some manual and ask employees to memorize the text.
Compliance is something that people need to really take toheart, not only learning a lot of rules, but understanding theunderlying purpose of those rules, and the reasons why theyneed to be followed. MOL should strive to keep complianceawareness fresh in the minds of everyone in the Company.

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 ourmanagement strategy, long-term vision or managementin general. A free exchange of opinions ensues at thesedeliberations which include outside directors and outside
ASB members.

“Deliberation on Corporate Strategy and Vision”
Agenda FY2016

FY2017

AgendaApril
September
January
February

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)

AgendaMay

Strategy in capital markets

July

Strategy for Port Projects & Logistics Business Division

September

Strategy for New Business Creation and Group
Business Division

October

Review on governance organizational structure andevaluation of Audit & Supervisory Committee

December

Discussion on personnel system reform

January

Outline proposal for the next management plan
“Rolling Plan 2018”

February

Outline proposal for the next management plan
“Rolling Plan 2018” (continued)

MOL Report 201861

Corporate Governance

Governance Summary
System of governanceTotal directors

9

Total Audit & Supervisory
Board members

4Company with an audit &supervisory board

Outside directors (ratio)

Independent officers(directors and Audit &Supervisory Board members)

Number of board meetings
held in fiscal 2017

Attendance rate of outside
directors for board meetingsin fiscal 2017

5

10

93%

Term of directors

Stock option system

Retirement benefit system

1 yearYes

No

Anti-takeover measures

Compliance rules

External compliance advisory
service deskNo

3 (1/3)

Yes

Outside Audit & Supervisory
Board members (ratio)

2 (1/2)

Yes

Corporate Governance—Enabling Sustainable Growthand Raising Corporate Value
Effective corporate governance has two sides. The defensive side
focuses on eliminating risks and ensuring business is conductedin line with social norms and corporate ethics. The other side isoffensive, striving to maximize corporate value by accurately
evaluating latent risks in the process of pursing business opportunities, 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 inplace, a company can gain the trust of its customers, stockholders, business partners, employees, local communities and otherstakeholders to sustainably conduct business.
MOL greatly shored up its management structure in the years
surrounding 2000. Taking a lead position among Japanese companies, MOL established an advanced, highly transparent corporate governance structure by, for example, inviting outside
directors and introducing an executive officer system. We arereaping the benefits of those efforts, yet MOL has only arrived at
its current position through a process of continuous improvement and evolution. We work hard to enhance corporate value.

Corporate Governance Organization
MOL has established a corporate governance system that maximizes shareholder profits through the most appropriate allocation of management resources, with higher transparency ofcorporate management as shown in the chart on the next page.
The Board of Directors (with the participation of independent
outside directors, who are indispensable to corporate governance) supervises and encourages business operations, which
are carried out by the president as chief executive officer. In
addition, as a company with an Audit & Supervisory Board,business and accounting audits are conducted by four Audit &62

Mitsui O.S.K. Lines

HISTORYHISTORY

2000

2011

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 OfficeStarted holding the Annual General Shareholders’Meeting on a day relatively free of othershareholders’ meetings

Revised MOL’s Compliance Policy and Rulesof Conduct

2001

Established the Compliance Policy andCompliance Committee

2014

Revised the Compliance Policy and establisheda 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

Supervisory Board members, including two outside members.
To make even better use of the Board of Directors, we areworking to carefully select and revise issues taken up by theboard so that it can dedicate more of its meeting time to the
MOL Group Long-Term Vision, strategy direction and management oversight. Accordingly, we have expanded the scope of
authority transferred to the Executive Committee to accelerate
decision-making related to business operations.
At MOL, we believe that the essence of corporate governance lies not in its structure or organization, but in whether or
not it functions effectively. The framework described in thepreceding paragraph is operated in the manner outlined in thefollowing sections.

vision, and overall management, with both outside directors andoutside Audit & Supervisory Board members.

Nomination Advisory Committee and Remuneration
Advisory Committee
MOL established the Nomination Advisory Committee and theRemuneration Advisory Committee as discretionary organizations under the Board of Directors. Both committees arechaired by an outside director, consist of three outside directors and two internal directors, and aim to enhance outside
directors’ supervision of directors responsible for businessexecution. The committees conduct investigations from an
objective standpoint emphasizing the perspective of shareholders, the Nomination Advisory Committee regarding theselection of directors and executive officers and the Remuneration Advisory Committee regarding the status of remunerationof directors, including incentives for long-term improvement ofcorporate value. The Board of Directors respects the content ofreports from both committees, and uses it in formulatingnecessary resolutions.

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 importantmatters 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 ofbolstering oversight of the execution of business operations bybringing an outside perspective to management.
MOL has appointed three outside directors whose experience
encompasses the realms of finance, business, and academia inJapan. MOL has adjudged that all three individuals are

Corporate Governance Organization (as of June 26, 2018)
General Shareholders’ Meeting
Business audit/
accounting audit

Elect and appoint/dismiss
Board of Directors
Outside directors: 3 Internal directors: 6 Total: 9Elect andappoint/
dismiss

Elect and appoint/dismiss
Audit & Supervisory Board
Outside members: 2 Internal members: 2 Total: 4

Accounting Auditors

Audit & Supervisory Board Manager
Accounting audit

Elect and appoint/supervise

Submit basic
management policies
and other issues
for discussion

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 Groupmanagement.
The Board of Directors consists of six (6) inside directors andthree (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 experience 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 outside 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 “Deliberation on Corporate Strategy and Vision”, in which opinions arefreely exchanged about management strategies, our long-term

Executive Committee and Committees

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

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

Executive Committee
Internal directors and executive officers: 11

Audit plan/
audit report

Submit to Executive Committee
after preliminary deliberations
Instruction
Provide direction on
important business issues

Committees under the Executive Committee
STEER Committee, Budget Committee,
Investment and Finance Committee,
Operational Safety Committee, Compliance Committee,
SOx 2020 Regulation Response Committee

Communicate and coordinate
with Audit & Supervisory
Board members andthe Accounting Auditors

Corporate Audit
Division

Submit for discussion and/or reporton 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

MOL Report 201863

Corporate Governanceindependent and have neutral positions with no conflicts ofinterest with the Company. The outside directors draw on theirindividual experience and insight to check the appropriatenessof management and the status of execution of business operations from the shareholders’ standpoint. At the same time, theyexpress 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
Name
MasayukiMatsushima

Hideto Fujii

Etsuko Katsu

Position

Reason for appointment

Senior Advisor of Integral Corporation MOL adjudged that he has a neutral position with
Outside Director of JGC Corporation no conflicts of interest with the Company as well
as extensive, wide-ranging experience in andSenior Advisor, Taniguchi Partners
knowledge of finance and other sectors. He will
International Accounting & Tax Office thus be able to bring a global perspective to theCompany’s management and appropriately
Member of Management Council,
supervise business execution.
Grant Thornton Taiyo LLC
Adviser of Sumitomo Corporation

MOL adjudged that he has a neutral position withno conflicts of interest with the Company and that
he has extensive, wide-ranging experience inand knowledge of the management from his
involvement in Japan’s finance and financial policy
as an administrative vice minister of finance. He willthus be able to help maintain and strengthen the
Company’s corporate governance from an
independent and fair perspective.

Professor, School of Political Science MOL adjudged that she has a neutral position withno conflicts of interest with the Company as well as
and Economics, Meiji University
experience and insight in university management
Chairman of Fund Management
and global human resource development. She is
Advisory Committee, The Japan
also an expert in international finance. She will
Foundation
thus be able to offer advice on the Company’s
Director, Center for Entrance
management and business execution from an
Examination Standardization
independent perspective and contribute to themaintenance and reinforcement of corporate
Administrative Board Member,governance.
International Association of
Universities

Reasons for Appointment of Outside Audit & Supervisory
Board Members
Name

Position
President, International Universityof Japan

MOL adjudged that he has a neutral position withno conflicts of interest with the Company, and that
he has wide-ranging experience and knowledge forchecking the appropriateness of management
decisions and supervising the execution of business
operations from the shareholders’ perspective basedon his specialist knowledge as a scholar of businessadministration.

Hideki Yamashita

Attorney-at-Law and Patent
Attorney,
YAMASHITA & TOYAMALAW AND PATENT OFFICE

MOL adjudged that he has a neutral position withno conflicts of interest with the Company, and that
he has wide-ranging experience and knowledge forchecking the appropriateness of management
decisions and supervising the execution of business
operations from the shareholders’ perspective basedon his specialist knowledge as an attorney at law.

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 & Supervisory 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 presidentsof 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)(Thousandsof U.S.$)

Directors (excluding
outside directors)

7

¥330

$3,106

Audit & Supervisory Board
members (excluding
outside members)

3

63

592

Outside directors andoutside members

5

56

527

(As of June 30, 2018)

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 whoare 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 independence of members from management and policy execution isassured. Our Audit & Supervisory Board members work closelywith the Corporate Audit Division and independent public
accountants to assure effective corporate governance. They also
work on strengthening corporate governance and compliancethroughout the Group.

64

Mitsui O.S.K. Lines

Reason for appointment

Hiroyuki Itami

Compensation for the Accounting Auditors

Parent company

Compensation for audit
operations(¥ millions)Compensation for
non-audit
operations(¥ millions)

Total(¥ millions)

¥108

—

¥108

Internal Control System
MOL has established a basic policy on the establishment ofinternal control systems* and goes beyond the scope requiredby law to promote activities to further enhance MOL Groupmanagement effectiveness, efficiency and transparency, namely
ensuring the appropriateness of business operations and thetrustworthiness of financial reporting. We have chosen two
extracts from the policy and introduce them below: 1. Compliance and 2. Role of the Audit & Supervisory Board members.
* Established by resolution of the Board of Directors in 2006, partially amended
in 2015

1. Compliance
The Company has established a Compliance Committee, which
is headed by the chief compliance officer, and formulated theCompliance Policy. General managers of divisions are appointed
as Compliance Officers. They are responsible for enforcing­compliance regulations and are also required to report to theCompliance 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 the­Company’s divisions, provides a counseling service. The divisionalso undertakes investigations of breaches and reports theresults to the Compliance Committee. In addition to the existingcounseling service, we established an external complianceadvisory 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 importantmatters that may impact business performance. These rules also
safeguard appropriate frameworks for reporting legal violations
and other compliance issues to Audit & Supervisory Board­members. Furthermore, the representative directors strive toregularly meet with Audit & Supervisory Board members, andthe 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.

(Thousandsof U.S.$)$1,017

Consolidated
subsidiaries

122

1

123

1,158

Total

231

1

232

2,184

for full and fair disclosure to all investors, whether in Japan oroverseas. In releasing its quarterly financial results, the Company
releases the financial results in Japanese and English on the Tokyo
Stock Exchange’s TDnet, while simultaneously posting the Japanese and English drafts of presentation materials on its website.
This information is e-mailed on the same day to foreign investors
registered with the Company. MOL actively disseminates information about management strategy, investment plans, market
conditions and other information through its website.
As recommended by the Corporate Governance Code, MOL
proactively holds constructive dialogues with institutional 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 toquickly disclose information, even if it is negative such as information on accidents, to all stakeholders. Furthermore, we holdregular drills for responding to the media in emergencies and areworking to strengthen our ability to quickly and properly disclose information.
MOL will continue working to raise confidence in its business
policies and management through close communication withvarious stakeholders.
IR Activities in Fiscal 2017 (April 2017–March 2018)
ActivityFrequency

Details

4 timesQuarterly results/forecasts

President’s small
meetings

2 times

Held for analysts in JapanFor overseas Overseas investor
institutional road shows
investors

3 times

Twice in Europe, once inAsia (Hong Kong andSingapore)

Conferences held bysecurities companies

4 times

Attended conferences inJapan and held individual
meetings

For individual Corporate presentainvestors
tions for individual
investors

4 times

Attended seminars forindividual investors inTokyo, Osaka, Nagoya
and Kanazawa, once ineach city

For securities Business performance
analysts and presentations
institutional
investors

IR Materials (available on MOL’s website)
Japanese

EnglishAccountability

Financial reports

Material

Yes

Yes

MOL believes that timely, full and fair disclosure of corporate andfinancial information is an important aspect of corporate governance. In addition to being accountable to shareholders andinvestors 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 thepresident takes the lead in their implementation. In fiscal 2017,
the president participated in the Company’s presentations ofinterim and full-year results and attended meetings with domestic and foreign investors. The Company is also aware of the need

Stock exchange filings (financial highlights, etc.)

Yes

Yes

Business performance presentation materials(including summaries of Q&A sessions)

Yes

Yes

Integrated Report

Yes

Yes

Securities reports

Yes

No

Quarterly reports

Yes

No

Business reports for shareholders

Yes

No

Investor guidebooks

Yes

Yes

Market data

Yes

Yes

MOL Report 201865

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 horizontally 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 operational safety measures, and developing an organizational structure that focuses all the authority necessary to be responsible forthe entire Group’s safe vessel operations into the Marine Safety
Division. Under the new structure, all land-based and oceangoing personnel are united to strive to maximize operating safety,
with the goal of becoming the world leader in safe operation.

■ Safety Operation Supporting Center (SOSC)The SOSC is staffed at all times by two marine technical specialists, including an experienced MOL captain. They use the FMS.
Safety system, which was developed in cooperation with Weathernews Inc., to monitor weather and related developments
where our vessels are operating. FMS.Safety is used to check on
the weather, sea, and other conditions surrounding the approximately 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 otherfactors 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.

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 companies­leading 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)■ Accident Response Drills
MOL regularly conducts accident response drills on vessels whileat sea. These drills simulate various situations such as an onboard
fire or water immersion, or acts of piracy or terrorism, so thatseafarers 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 premise of a fire breaking out in the engine room of a car carrier thatis 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.

Safe Operation Measures

Preventing New or a Recurrence of Serious Incidents

Efforts to ensure safe operation will never end. Coupled with therevision and continuation of policies already in place tostrengthen safe operation, MOL will thoroughly implement
policies to prevent a recurrence of serious marine incidents.

MOL is constantly and repeatedly implementing and raisingawareness of fundamental matters while striving to thoroughly
keep fresh the memory of serious incidents we have experienced and prevent a recurrence of serious incidents while giving
due consideration to improving teamwork, safety awareness,
awareness of relevant parties and vessel management quality.
We will continue to adapt our accident prevention system bymaking 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 lessexperienced seafarers. We are also enhancing land-based education 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 toraise safety awareness among seafarers by collecting informationfrom each vessel in operation on examples of incidents andproblems as well as close calls*5 and by using videos, photos andillustrations to appeal to the visual sense of seafarers. In terms ofship facilities, we are working to equip ships with error-resistantequipment and promoting the adoption of information technology. This involves promoting the fail-safe design concept byproviding shipyards and equipment manufacturers with feedback from vessels in operation on areas of non-conformance andareas in need of improvement.

Making Processes for Realizing Safe Operation Visible
MOL has introduced objective numerical indicators for measuring 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 inthe 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 ormore. 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, andtransportation equipment manufacturing industry 0.43. (Source: 2017
Survey on Industrial Accidents issued by the Ministry of Health, Labourand Welfare)*2 Operational stoppage time: Expresses the amount of ship operational
stoppage time due to an accident per ship per year.
*3 Operational stoppage accident rate: Expresses the number of accidents that
result in ship operational stoppage per ship per year.

Lost Time Injury Frequency (LTIF)*4 Bridge resource management drill: Simulating an incident on a vessel
operation simulator to enable seafarers to acquire response techniques. It
includes MOL’s original programs.
*5 Close calls: Risky incidents that came very close to causing a more serious
accident.

Average Operational Stoppage Time and Operational
Stoppage Accident Rate
(Hours/ship) 

1.8
1.5

(Accidents/ship)

40
2017 average for all industries: 1.66

30

1.2

2.0
Average operational stoppage timetarget: 24 hours or below
28.45

31.08

1.5

25.56

25.04

22.53

MOL target: 0.7 or below for 2015 onward

20

0.9
0.6
Evacuation drill on board

0.44
0.30

0.53

0.50

0.51

0.51

0.91

0.94

10

0.3
0

0.99
0.52

1.0

0.5
Operational stoppage accident rate
target: 1.0 or below

2013

2014

2015

2016

2017 (FY)

0

2013

2014

2015

2016

2017 (FY)0○ Average operational stoppage time (left scale)○ Operational stoppage accident rate (right scale)

66

Mitsui O.S.K. Lines

MOL Report 2018

67

Risk Management

Safe Operation

Cooperation for Safe Operation
The MOL Group works together with vessels, shipowners, andship management companies to work toward achieving theworld’s highest level of safe operation of all owned and chartered vessels by sharing safety-related information. The Company 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 discusssafety 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 takecorrective actions, communicating with the vessel, shipownerand ship management company in the process.

Third-Party Evaluations
Safe Operation, Including Evaluations of Seafarer
Educational Programs■ Standard Training Courses for liquefied gas transportation
certified by DNV GL AS
The LNG Carrier Standard Training Course and the LEG/LPG Carrier Standard Training Course implemented globally by MOL werecertified by Norway’s Det Norske Veritas (DNV) GL AS in 2007 forcompliance with the LNG carrier crew ability standards and in2016 for compliance with the LEG/LPG advocated by SIGTTO.**** Society of International Gas Tanker and Terminal Operators Ltd.

Opening a Self-Operated Maritime Academy in thePhilippines in August 2018
Filipino seafarers form the core of the crews on MOL's operated
vessels. As operation technology grows increasingly sophisticated, we expect to see more activity for these seafarers. As theculmination of MOL’s initiatives aimed at safe operations, inAugust 2018, MOL will open the Maritime Academy in the­Philippines. The academy facility, which has been already constructed, imitates its layout of the practice facilities as realisticallyas possible. The academy will provide students with training thatmakes them work-ready as soon as they complete their studies.
Through operation of the academy, we will reinforce efforts tosecure and train excellent seafarers and achieve the world’s
safest operations.

■ Management program for seafarer education and training
acquired certification from DNV GL AS
MOL’s management program for
seafarer education and training wasrecognized to be effective and­certified in its tanker and LNG carrier
operations by DNV GL AS in 2012 forcompliance with the CompetenceManagement System (CMS).

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 reinforcementof total risk control as one measure to strengthen its managementfoundation 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 multitudeof factors that are subject to change, such as fluctuations in theeconomies of individual countries, changes in trade structures,
vessel supply and demand balance, market conditions and cargovolumes. Achieving the best performance hinges on objectively
analyzing information so as to continually increase the probabilityof generating higher earnings. With this in mind, MOL has
adopted a strategy of “diversifying operations to reduce risk” and“raising highly stable profits” by aligning its fleet to match international marine transport demand in the transport of both raw
materials and finished goods. In this way, we strive to maximize
returns and sustain profit growth. In accordance with our internalmarket risk management regulations, we appropriately reducerisks related to fluctuation, especially those arising from freightrates, bunker prices, exchange rates, and interest rates. The Investment and Finance Committee also identifies, analyzes and evaluates risks related to such material issues as investment in ships.
Variation of Procurement and Contract Terms(as of March 2018)0
Dry Bulkers(337 ships)
Tankers(173)

A bridge training facility at the academy

20%

40%

60%

46%

21%

35%

100%

Car Carriers
(119)

98%

2%

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(as of March 2018)

Total numberof fleet

68

Mitsui O.S.K. Lines

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 considering 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 contracts that are not largely affected by changes in the externalbusiness environment and constitute a source of highly stableprofits. By expanding these contracts from a long-term perspective, MOL will create an even steadier earnings structure. To
achieve this objective, one of the options we will look closely at
as a matter of priority is M&A deals in growing sectors whichenjoy a relatively stable cash flow.

Although MOL has concluded transport contracts on a yen-​denominated basis with some Japanese clients, most transactionsin the international marine transport business are concluded on
a U.S. dollar-denominated basis. Despite our best efforts to incur
expenses in U.S. dollars, U.S. dollar-denominated revenue currently exceeds U.S. dollar-denominated expenses, so when the
yen strengthens against the U.S. dollar this can have a negative
impact on Group earnings. In fiscal 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

Market Exposure by Vessel typeA main engine training facility at the academy

Building Up Highly Stable Profits through the Use of
Medium- and Long-Term Contracts and Other Means

Exchange Rate Fluctuations
17%

79%

MOL operates a “full-line marine transport group.” As of the endof March 2018, we operated around 860 vessels, ranging fromdry bulkers, tankers, and LNG carriers to car carriers and containerships, 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 particularmarkets. While some of these markets are highly correlated witheach other, others are negatively correlated depending mainlyon the economic environment, so the impact in one sector
offsets the impact in another. By assessing the suitability of aparticular vessel type for medium- to long-term contracts andmarket exposure the Company expects, MOL constructs an
optimum business portfolio, which allows the Company topursue higher profits while mitigating risks.

100%

33%

48%

LNG Carriers(83)

Containerships
(91)

80%

Diversifying Operations to Reduce Risk

Market exposure

Capsize

88

Small- and medium-sized bulkers

108

6%

VLCCs

31

16%

Product tankers

39

74%

LPG tankers

850%

Underlined words are explained in the Glossary on page 5.

24%

MOL depends mainly on the issuance of corporate bonds andfunds borrowed from banks and other financial institutions tomeet 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

MOL Report 201869

Environment

Risk Management

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 approximately ¥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 tochanges in financial conditions, taking into consideration thebalance 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$1 per
metric ton in the average annual price of bunker would lower
earnings, including from equity-method affiliates, by approximately ¥0.18 billion (net of hedging) at the maximum.
A stricter regulatory rule to reduce SOx emissions generatedby ships will be introduced in 2020. This regulation would
require the use of low-sulfur fuel oil containing less than 0.5%
sulfur, the installation of SOx scrubbers on vessels to remove
sulfur, or the use of alternative fuels such as LNG, LPG, and­methanol, which could have an impact on fuel costs or capitalcosts. In this case, the Company intends to put in effort to gain
the understanding of customers and reflect these additionalcosts in freight rates and other fees.
Sensitivity of Earnings to Exchange Rate/Interest Rate/
Bunker Price Fluctuations
Exchange rate(¥/US$)A ¥1 appreciation reduces ordinary profit byapproximately ¥0.8 billion

Interest rate (%)

A 1 percentage point rise in both yen- and U.S. dollardenominated interest-bearing debt reduces ordinary
profit by approximately ¥4.0 billion

Bunker price(US$/MT)

A US$1/MT increase reduces ordinary profit byapproximately ¥0.18 billion

Impact of Exchange Rate
Fluctuations (Model)

Impact of Bunker Price
Fluctuations (Model)

Impact=1+2
ExpensesProfitU.S. Dollar Revenue

1

Japanese Yen
ExpenseJapanese Yen Revenue

70

Mitsui O.S.K. Lines

Total Consumption

U.S. Dollar Expense

Exposure2

Hedged Portion

Recoverable
by Surcharge, etc.

ImpactRevenues

Vessel Operations

Initiatives on the Environment

MOL operates a fleet of approximately 860 vessels and it is therefore 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, comprehensivecrew 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.

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 themarine 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 community to mitigate global warming. With this in mind, the MOLGroup believes that it has a social obligation to take innovative
steps to help solve environmental issues such as greenhousegas 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 emissions per unit load by 25% by 2030 and by 50% by 2050 compared to fiscal 2014.

Roadmap to Reduce Greenhouse Gas Emissions(%)

Group Company Operational Management

Greenhouse Gas Emissions Targets(per transport unit)

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 accordance with Group Company Management Regulations. Afterproperly ascertaining the financial conditions and business risks,
the Company, as a shareholder, requests Group companies obtain
permission prior to executing important management matters.

50

FY2050–25%–50%

Radical innovation
Offset greenhouse gas emissions
by environment and emission-freebusinesses

25

New technologies that are proven to beeconomically 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)

Natural Disaster or Similar Event
An earthquake, other natural disaster or an outbreak of an infectious disease (hereinafter “disaster or similar event”) could affectMOL-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 documenting procedures to enable it to continue providing coreocean transport services and quickly restore operations in theunlikely event that they are suspended. This business continuity
plan establishes organizations and delegates authority for duties
relating to maintaining the safe operation of vessels, executionof transportation contracts and charter agreements, financial
preparation, securing required personnel, and other matters.
Furthermore, for some years, MOL has been conducting regulardisaster-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 ahigh state of readiness. Nevertheless, in the event of a disaster orsimilar event in which MOL cannot completely avoid damage,
the Company’s business performance may be affected.

FY2030

0

2014

2030

2050

（年度）

* Power Assist Sail: Sailing rigs that provide supplementary propulsion force for the vessel byusing 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 frominternational conditions regarding environmental issues; theopinions of stakeholders including customers, investors, and soon; and our own internal viewpoints. Finally, we formulated thefollowing eight action plans.
1. Promote use and innovation of technologies for reducing
environmental impact and advanced support technologies for safer vessel operation through the “ISHIN NEXT—
MOL SMART SHIP PROJECT—.”
2. Participate in projects to build vessels that run on alternative fuels such as LNG and supply alternative fuels.
3. Reduce greenhouse gas emissions by using ICT to optimize sailing even further.
4. Utilize renewable energy such as wind and solar power for
vessel propulsion and at Group-related facilities in Japanand overseas.
5. Create environment and emission-free businesses.
6. Investigate emissions trading as a way to achieve greenhouse 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 theferry and coastal shipping business in Japan.

Underlined words are explained in the Glossary on page 5.

Environmental Investments
Environment-related R&D activities
Utilization and expansion ofexisting environmental
technologies
Responses to environmental
regulations
Initiatives to save bunker fuelInitiatives of Group companies
Total

Fiscal 2015

Fiscal 2016

(Billions of yen)
Fiscal 2017

0.3

0.4

0.5

0.9

0.5

0.8

2.2

3.1

3.1

1.0
0.3
4.6

1.1
0.3
5.4

0.8
0.5
5.7

Organizational Structure for Environmental Initiatives
Organizational reforms implemented on April 1, 2018 created aframework where the New & Clean Energy Business Division willtake the lead in promoting new and clean energy businessgoing forward. The division will conduct feasibility studies andactively 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 inorder to steadily advance initiatives.
Moreover, ahead of stricter regulation on sulfur content in fueloil scheduled for 2020, the SOx 2020 Regulation Compliance
Committee established in November 2016 will collect information and work in collaboration with sales divisions to promote
Company-wide initiatives taking into account customers’ needs.

MOL Report 201871

Environment

Corporate Social Responsibility (CSR)

Environmental Regulations

MOL’s Approach to CSR

Schedule of Environmental Regulations by IMO, etc.

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 otherconsiderations, and developing together with society sustainably and harmoniously while earning the support and trust of
stakeholders, including shareholders, customers, business partners, 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 Committee. Moreover, the Corporate Planning Division will administrate overall CSR policy, propose targets and manage progress,
while the divisions named in the chart below will take charge ofthe individual areas of Compliance, Safety Operations, the­Environment, and Human Resources Development/Social Contribution Activities. This creates a framework capable of dealingsoundly with each field.
To further ensure sustainable growth, MOL CHART was established 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.

Ballast Water Management Convention
2016

2017

2018

SOx Regulation

2019

2020

2021

2016

2017

Mandatory(Adopted in 2004)(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 marineorganisms through vessel ballast water was adopted by the IMO
in 2004 and has been in effect since September 2017. Under theconvention, vessels, including existing vessels, are mandated to
install ballast water treatment systems, by September 2024.
Ballast voyage departure port

Destination port

2018

2019

2020

Sulfur limit: 3.5%

2021

Sulfur limit: 0.5%

Regulate the sulfur content in fuel oil to control SOx volume inexhaust emissions. The sulfur limit will be tightened from 3.5% orless to 0.5% or less from 2020. Shipowners/operators have tochoose a method from the following menu:
MethodAdvantages

Complied oil

No initial costs• High fuel cost
• Supply availability in question

Disadvantages/Issues

SOx scrubber

Lower fuel costs• High initial cost
• Large space required

Alternative fuel
(LNG, etc.)

Effective for otherenvironmental
regulations• High equipment cost
• Insufficient supply system• Difficult modifications

MOLʼs Initiatives
Marine organisms

Unloading cargo andtaking in ballast water

Destruction of themarine ecosystem

Loading cargo anddischarging 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 convention took effect.
• We have already completed installation on more than 114
owned vessels (as of April 2018).

• 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 withdual-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.

OthersRegulations
Tackling global
warming

2016
GHG emissions

EEDI*1

2017

2018

2019

Phase 1

2020

2025

Phase 2Phase 3

Mandatory

SEEMP*

2* R eference: 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 atleast 50% by 2050, and ultimately endeavor to eliminate greenhouse gas emissions as soon as possible within this century.

Preventing air
pollution

Marine environment protection

NOx emissions*3

General Sea
Areas

Tier II

ECA*4Tier III

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 theNorth Sea areas (currently only SOx). (From 2021 onward, new shipbuilding will be subject
to third-generation NOx regulations.)

72

Mitsui O.S.K. Lines*5 The guideline aimed at minimizing transfer of invasive aquatic species attaching to thebottom 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 thequantity 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 lessthan 3% of the combined tonnage of the ratifying countries. (As of May 2018, 6 countries
have ratified.)

Underlined words are explained in the Glossary on page 5.

10 Principles of the UN Global Compact

Organizational Framework for CSR Initiatives
CSR Policies and Goals

Executive
Committee

Corporate Planning
Division

ComplianceCorporate Audit Division
Secretaries & General
Affairs Division

Safety Operations

Marine Safety Division

Environment

New & Clean Energy
Business Division

Human Resources
Development/Social
Contribution Activities

Human Resources
Division

Human
RightsPrinciple
1. Business should support and respect the protectionof internationally proclaimed human rights; and2. Make sure that they are not complicit in humanrights abuses.

Labour

3. Businesses should uphold the freedom of­association and the effective recognition of theright to collective bargaining;
4. The elimination of all forms of forced and­compulsory labour;
5. The effective abolition of child labour; and6. The elimination of discrimination in respect of
employment and occupation.

Environment

7. Businesses should support a precautionary
approach to environmental challenges;
8. Undertake initiatives to promote greater­environmental responsibility; and9. Encourage the development and diffusion ofenvironmentally friendly technologies.

Anti10. Businesses should work against corruption in all
Corruption
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 theGroup’s procurement activities. To embed this policy in the MOLGroup, we work throughout our supply chain to observe laws
and regulations and social norms, incorporate consideration forenvironmental protection in our activities, pursue safety, engage
in fair trading and build trust, with the understanding and cooperation of business partners. In this way, we aim to contributetowards the realization of sustainable societies together.

The MOL Group Basic Procurement Policy
The MOL Group procures goods and/or services in ­accordancewith the following basic policy:

Participating in the UN Global Compact
CSR activities are broad and, from time to time, the strength andpriority of those activities change depending on the operating
environment, global circumstances and region where business isbeing developed. With business activities spread across theglobe, MOL believes that building good relationships with various stakeholders worldwide and contributing to the realizationof sustainable growth of society are vital as it seeks to realize theideas set forth in the MOL Group Corporate Principles. In order tocontribute to an international framework for realizing thesegoals, MOL became the first Japanese shipping company toparticipate 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 thesame values as MOL’s Rules of Conduct, which were established
as a set of guidelines for executives and employees.

1. We comply with applicable laws, regulations and social norms,
and pay due consideration to the protection of theenvironment.
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 therealization of sustainable societies together.

MOL Report 201873

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

Data Section
76

Consolidated Financial Statements
76 Since 2017, MOL has been included in the FTSE Blossom Japan Index. The index was developed

Consolidated Balance Sheets

in 2017 by FTSE and targets Japanese companies making a superior response to environment,

78 Consolidated Statements of Operations andConsolidated Statements of Comprehensive Incomesocial, and governance (ESG) issues.

79

Consolidated Statements of Changes in Net Assets

80

Consolidated Statements of Cash Flows MOL has been included in the MSCI ESG Leaders Indexes for its superior efforts on measures

81

Notes to Consolidated Financial Statements

taken for risks and opportunities related to ESG. (Since 2010; index name changed in 2017)109

Independent Auditor’s Report■ MSCI ESG Leaders Indexes■ MSCI Japan ESG Select Leaders Index

110 The MOL Group Since 2017, MOL has been included in the Japan ESG Select Leaders Index, which was newly

112 Worldwide Offices

developed in 2017 and targets companies with a superior ESG evaluation relatively speaking for

113

Shareholder Informationeach 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 in­promoting 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 thatcan be expected to encourage workstyle reform in the future (2018).

74

Mitsui O.S.K. Lines

MOL Report 201875

Consolidated Financial Statements

Consolidated Balance Sheets
Mitsui O.S.K. Lines, Ltd. March 31, 2018 and 2017

Thousands of
U.S. dollars (Note 1)

Millions of yen

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

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
OthersNet vessels, property and equipment

2018

2017

2018

¥  189,591
125,851
38,67961,9181,334
63,063(401)
480,036¥  186,844
130,420
36,35860,888
1,273
66,121(428)
481,477$ 1,784,553
1,184,591
364,071582,812
12,556
593,589(3,774)4,518,411

776,554
148,598
31,581
4,137
221,045
106,1282,884
1,290,929

756,930
153,767
26,6305,366
221,342
156,935
2,693
1,323,665

7,309,431
1,398,701
297,260
38,9402,080,619
998,945
27,146
12,151,063

Thousands of
U.S. dollars (Note 1)

Millions of yen

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

2018

2017

2018

¥  131,405
31,872
180,539
5,000
6,395
34,409
590
4,567
186
—
15,8797,068
60,372478,287¥  125,118
20,000133,155—
6,642
32,258
1,188
4,402
153
2,753
1,239
—
56,544383,456$ 1,236,869
300,000
1,699,350
47,06360,193323,879
5,553
42,9871,750—
149,463
66,528568,260
4,501,948

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

175,748
706,944
15,97755,225
12,9091,487
20,64750,933620
78,8101,119,304
1,597,591

210,595
738,163
18,371
56,67812,445
1,459
18,566226
620
93,3251,150,450
1,533,907

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

65,40045,385
306,642(6,807)
410,620

65,40045,382355,263(6,820)459,226

615,587
427,1932,886,314(64,071)3,865,022

33,40037,87323,442
5,905
100,621
2,026
114,776
628,044¥2,225,636

28,35354,32627,178
2,898
112,757
2,447
109,190683,621¥2,217,528

314,382
356,485
220,651
55,581
947,110
19,0701,080,346
5,911,558$20,949,134

Commitments and contingent liabilities (Note 8)

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

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
15,3903,535
62,661(2,089)412,385¥2,217,528

283,9132,584,026
690,916
60,128177,061
30,233476,120(22,788)4,279,640$20,949,134

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

See accompanying notes.

76

Mitsui O.S.K. Lines

MOL Report 201877

Consolidated Financial Statements

Consolidated Financial Statements

Consolidated Statements of Operations andConsolidated Statements of Comprehensive Income

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
OthersTotal non-operating income
Non-operating expenses:
Interest expense
Equity in losses of affiliated companies
OthersTotal non-operating expenses
Ordinary income
Other gains:
Gain on sales of vessels, property, equipment and others
OthersTotal 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
OthersTotal 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)

Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

2017

2018

¥1,652,393
1,513,736
138,656
115,972
22,684¥1,504,373
1,388,264
116,109113,551
2,558$15,553,397
14,248,268
1,305,120
1,091,603
213,516

7,976
6,661
—
16,8343,930
35,402

5,918
6,021
5,543
24,1793,875
45,53875,07562,697—
158,452
36,991
333,226

20,4133,428
2,771
26,61331,473

19,037—
3,633
22,67025,426

192,140
32,26626,082
250,498
296,244

16,9794,587
21,566

6,125
29,08035,206

159,817
43,175
202,993

1,310
73,476——
6,962
81,748(28,709)

1,259—
22,2736,490
7,304
37,32823,303

12,330691,603——
65,530769,465(270,227)

10,7292,002(41,440)5,939¥  (47,380)

13,323(625)
10,6055,348¥    5,257

100,988
18,844(390,060)
55,901$  (445,971)
Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

2017

2018

¥(41,440)¥10,605$(390,060)

5,839(22,402)
(773)
3,007

8,768
13,0702,463
2,944

54,960(210,862)(7,275)28,303Comprehensive income

3,501(10,828)¥(52,268)

4,100
31,347¥41,952

32,953(101,920)$(491,980)

Comprehensive income
Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests¥(59,516)
7,247¥35,1836,769$(560,203)
68,213

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(AMOUNTS PER SHARE OF COMMON STOCK)(*1)
Net income (loss)
Diluted net income (Note 2)
Cash dividends applicable to the year

Yen

Millions of yen

Balance at April 1, 2016

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at cost¥65,400¥45,388¥354,179¥(6,847)

Unrealized
holding gains
on availablefor-salesecurities,
net of tax

Unrealized
gains onhedging
derivatives,
net of tax¥20,950¥ 35,033

Remeasurements ofForeigndefinedSharecurrencytranslation benefit plans, subscription
rightsadjustments net of tax¥26,885¥  (39)¥2,681

Noncontrollinginterests

Total
net assets¥103,292¥646,924

Issuance of new shares—exercise of subscription
rights to shares

—

—

—

4

—

—

—

—

(4)

—

—

Dividends paid——

(4,186)

—

—

—

—

—

—

—

(4,186)
5,257

Net income (loss) attributable to owners of parent

—

—

5,257

—

—

—

—

—

—

—

Due to change in consolidated subsidiaries

—

—

36

—

—

—

—

—

—

—

36

Purchases of treasury stock

—

—

—

(23)

—

—

—

—

—

—

(23)

Disposal of treasury stock

—

—

(23)

45

—

—

—

—

—

—

22

Purchases of shares of consolidated subsidiaries

—

(6)

—

—

—

—

—

—

—

—

(6)

Net changes of items other than owner’s equity
during the year
Balance at March 31 and April 1, 2017

—

—

—

—

7,403

19,292

292

2,938

(228)

5,898

35,596¥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

—

—

—

12

—

—

—

—

(12)

—

—

Dividends paid——

(1,196)

—

—

—

—

—

—

—

(1,196)(47,380)

Net income (loss) attributable to owners of parent——(47,380)

—

—

—

—

—

—

—

Due to change in consolidated subsidiaries

—

—

3

—

—

—

—

—

—

—

3

Purchases of treasury stock

—

—

—

(98)

—

—

—

—

—

—

(98)

Disposal of treasury stock

—

—

(47)

98

—

—

—

—

—

—

51

Purchases of shares of consolidated subsidiaries

—

2

—

—

—

—

—

—

—

—

2

Net changes of items other than owner’s equity
during the year
Balance at March 31, 2018

—

—

—

—

5,046

(16,453)(3,735)

3,006

(408)

5,585

(6,959)¥65,400¥45,385¥306,642¥(6,807)¥33,400¥ 37,873¥23,442¥5,905¥2,026¥114,776¥628,044

Treasurystock,
at costUnrealized
holding gains
on availablefor-salesecurities,
net of tax

Remeasurements ofForeigndefinedSharecurrencytranslation benefit plans, subscription
rightsadjustments net of tax

Noncontrollinginterests

Total
net assets

Thousands of U.S. dollars (Note 1)

Commonstock

Balance at April 1, 2017

CapitalsurplusRetainedearnings

Unrealized
gains onhedging
derivatives,
net of tax$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

—

—

—

112

—

—

—

—

(112)

—

—

Dividends paid——

(11,257)

—

—

—

—

—

—

—

(11,257)(445,971)

Net income (loss) attributable to owners of parent——(445,971)

—

—

—

—

—

—

—

Due to change in consolidated subsidiaries

—

—

28

—

—

—

—

—

—

—

28

Purchases of treasury stock

—

—

—

(922)

—

—

—

—

—

—

(922)

Disposal of treasury stock

—

—

(442)

922

—

—

—

—

—

—

480

Purchases of shares of consolidated subsidiaries

—

18

—

—

—

—

—

—

—

—

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

Net changes of items other than owner’s equity
during the year
Balance at March 31, 2018
See accompanying notes.

U.S. dollars (Note 1)

2018

2017

2018

¥(396.16)—
20.00¥43.9540.61
20.00$(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 share­consolidation took place at the beginning of the year ended March 31, 2017.

78

Mitsui O.S.K. Lines

MOL Report 201879

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

Thousands of
U.S. dollars (Note 1)

Millions of yen

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 totalInterest 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-consolidationof subsidiaries
Cash and cash equivalents at end of year

2018

2017

2018

¥ (28,709)¥   23,303$  (270,227)

86,629——73,476
3,428
1,021
785
539
(14,637)
20,41387,19022,273
6,490—(5,543)(20,053)
1,996
(755)
(11,939)
19,037815,408——
691,60332,266
9,610
7,388
5,073
(137,772)
192,140(13,471)(17,480)(3,938)(25,818)(126,797)(164,533)

4,690(2,423)
6,218(6,549)113,934
18,662(21,208)(13,007)
98,380(1,683)(8,691)(573)(51,690)
29,602
15,351(18,778)(8,551)
17,62344,145(22,806)
58,527(61,643)
1,072,420
175,658(199,623)(122,430)
926,016(41,288)
2,029(142,570)
89,446(28)(29,866)
22,092(666)(100,851)(14,533)
27,738(143,177)
71,350(6,652)(21,374)
9,832
2,876
(73,941)(388,629)
19,098(1,341,961)
841,923(263)(281,118)
207,944(6,268)(949,275)

60,1255,000
96,812(127,272)—(20,000)(1,214)(1,450)(2,757)
9,243(4,025)
2,746
186,844

9,907—
239,075(119,252)
10,000(45,000)(4,258)(1,018)(2,323)87,129(3,454)27,357
159,449

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 the­Japanese Financial Instruments and Exchange Act and its related accounting regulations, and in conformity with accounting­principles generally accepted in Japan (together “Japanese GAAP”), which are different in certain respects as to application anddisclosure 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 withJapanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial­Instruments and Exchange Act. Some supplementary information included in the statutory Japanese language consolidated­financial 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 lessthan 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 CONSOLIDATIONThe 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 total­revenues, 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 theirbooks 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 theexchange 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 andliabilities 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.

See accompanying notes.

80

Mitsui O.S.K. Lines

MOL Report 201881

(5) SECURITIESSecurities are classified into (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended tobe 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 notcollectible. Equity securities issued by subsidiaries and affiliated companies which are not consolidated or accounted for using theequity 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) INVENTORIESInventories 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 and­equipment is computed mainly by the declining-balance method. Amortization of intangible assets is computed by the straightline method. Computer software is amortized by the straight-line method based principally on the length of period it can be usedinternally (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, suchinterest 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 estimated uncollectible amount with respect to certain identified doubtful receivables and an amount calculated using the actual
percentage of the Company’s collection losses.
(11) ALLOWANCE FOR BONUSES
Allowance for bonuses to employees is based on the estimated amount of future payments attributed to the fiscal year.
(12) ALLOWANCE FOR DIRECTORS’ BONUSESThe Company and several domestic consolidated subsidiaries record allowance for bonuses to directors based on the estimatedamount of future payments.
(13) PROVISION FOR CONTRACT LOSSThe Company recognizes provision for contract loss to cover potential losses with higher probability for the future performance ofcontract 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 be­carried 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.

82

Mitsui O.S.K. Lines(17) PROVISION FOR ENVIRONMENTAL MEASURES
Provision for environmental measures is based on the estimated amounts of future obligations associated with polychlorinatedbiphenyl (PCB) waste.
(18) EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITSThe 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 valueof 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 ofthe 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 TAXESThe Group recognizes tax effects of temporary differences between the financial statement basis and the tax basis of assets andliabilities. The provision for income taxes is computed based on the pretax income included in the consolidated statements ofoperations. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax­consequences 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 theyear 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 orlosses 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 recognition of gains or losses resulting from changes in fair value of derivative financial instruments until the related losses or gains on thehedged 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 theswap 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:
Hedged items:    Loans payable in foreign currencies	  Foreign currency future transactions    Forward foreign exchange contracts	  Foreign currency future transactions    Currency option contracts	  Foreign currency future transactions    Currency swap contracts	  Charterage and foreign currency loans payable    Interest rate swap contracts	  Interest on loans and bonds payable    Interest rate cap contracts	  Interest on loans    Fuel oil swap contracts	  Fuel oil   Freight futures	 FreightThe derivative transactions are executed and managed by the Company in accordance with the established policies in order tohedge 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 fairvalue of hedged items and the cumulative changes in cash flows from or the changes in fair value of hedging instruments.

MOL Report 201883

(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 theabove 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 newstandards 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 newstandards 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 and­operating 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 nameAmount 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 nameAmount of Capital
Shareholders/Contribution Ratio				
Location
Date of Establishment

Ocean Network Express Pte. Ltd.
US$800 million
Kawasaki Kisen Kaisha, Ltd.
Nippon Yusen Kabushiki Kaisha
The Company (including indirect investment)
Singapore
July 7, 2017

31%
38%
31%

3. FINANCIAL INSTRUMENTS(1) Qualitative information on financial instruments
I. Policies for using financial instruments
We raise capital investment funds to acquire vessels and other fixed assets primarily through bank loans and corporate bonds.
In addition, we secure short-term operating funds primarily through bank loans. Furthermore, we have established commitment line with Japanese banks to maintain a sufficient amount of working capital and prepare supplementary liquidity for
emergency situations.
Derivatives are utilized to hedge risks as discussed below and are executed within the scope of real requirements. Our policy
is not to use derivatives for speculative purposes.
II. Details of financial instruments / Risk and its management
Trade receivables are exposed to the credit risks of customers. We strive to mitigate such risks in accordance with internal­regulations. 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 bankloans 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, apart 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, andcorporate 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 withseveral financial institutions, and adjusting funding period (balancing short-term/long-term combination), in consideration ofmarket 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 varydepending on condition of calculation as several variation factors are included in the calculation. On the other hand, derivativetransactions mentioned in following (2) do not indicate the market risk of such derivatives.

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(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;Book values and fair values of the financial instruments on the consolidated balance sheet at March 31, 2017 were the following;
Millions of yen

Millions of yen

AssetsCash 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)

Book value

Fair value

Difference¥  189,591
3,705
125,851
16,735¥  189,591
3,705
125,851
16,735¥————106,775
2,915
74,661¥  520,236

106,775
3,099
76,789¥  522,549

—
184
2,128
¥ 2,313¥  131,405
98,5895,000
207,620
788,895¥1,231,509¥    8,615¥  131,405
98,5895,000
209,668
801,041¥1,245,705¥    8,484

¥—
—
—
2,048
12,146¥14,195¥(131)

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
29,169722,788$ 4,918,571—
1,731
20,030$ 21,771$ 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$———
19,277
114,326$133,612$(1,233)*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.

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Fair value

Difference¥  186,844
3,101
130,420
17,262¥  186,844
3,101
130,420
17,262¥————98,67570,799¥  507,103

98,67574,695¥  510,999—
3,896¥ 3,896¥  125,118
39,163
230,595
832,154¥1,227,031¥   18,745¥  125,118
39,163
231,949
849,862¥1,246,094¥   18,592

¥—
—
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.

Thousands of U.S. dollars (Note 1)

AssetsCash 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)

AssetsCash 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)

Book value

Cash and cash equivalents, Time deposits with a maturity of more than three months, Trade receivables andShort-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 isevaluated 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 theborrower 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 ofprincipal 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 fairvalue is almost equal to the book value.
Bonds
The fair value of corporate bonds is evaluated on their market price.

MOL Report 201887

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 suchbank 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 methodof 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.
Thousands of
U.S. dollars (Note 1)

Millions of yen
Book value

Unlisted stocks
Investments in unconsolidated subsidiaries and affiliated companies
Others
Total

Book value

Millions of yen

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

After one year
through five years

After five years
through ten years

After ten years¥186,844
3,101
130,420
17,262

¥—
—
—
—

¥—
—
—
—

¥—
—
—
—

—
—
8,002
¥345,631

10
200
3,853
¥4,063——
5,785¥5,785——
53,158¥53,158

Book value

2018

2017

2018

¥  7,782
157,043
9¥164,836¥  7,662
125,628
11¥133,302$   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 fairvalue of financial instruments, because the fair value is extremely difficult to estimate as they have no quoted market price and thefuture cash flow cannot be estimated.
At March 31, 2018, the aggregate annual maturity of monetary claims and securities was as follows;
Millions of yen

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

At March 31, 2017, the aggregate annual maturity of monetary claims and securities was as follows;

Within a year

After one year
through five years

After five years
through ten years

After ten years¥189,591
3,705
125,851
16,735

¥—
—
—
—

¥—
—
—
—

¥—
—
—
—

—
—
1,257
¥337,141

10
200
2,787
¥2,997——
11,048¥11,048——
59,568¥59,568

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
Millions of yen
Type

Equity securities
Bonds
Governmental/municipal bonds
Corporate bonds
Total

Acquisition cost

Book value

Difference¥43,384¥96,449¥53,06510
200¥43,59410
208¥96,6680
8¥53,073

Thousands of U.S. dollars (Note 1)
Type

Equity securities
Bonds
Governmental/municipal bonds
Corporate bonds
Total

Acquisition cost

Book value

Difference$408,358$907,840$499,48294
1,882$410,335

94
1,957$909,902075$499,557

Securities with book values exceeding acquisition costs at March 31, 2017
Millions of yen

Thousands of U.S. dollars (Note 1)

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

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Type

Within a year

After one year
through five years

After five years
through ten years

After ten years$1,784,553
34,873
1,184,591
157,520

$—
—
—
—

$—
—
—
—

$—
—
—
—

—
—
11,831$3,173,390

94
1,882
26,233$28,209——
103,990$103,990——
560,692$560,692

Equity securities
Bonds
Governmental/municipal bonds
Corporate bonds
Total

Acquisition cost

Book value

Difference¥43,974¥89,266¥45,29110
200¥44,18410
211¥89,4880
11¥45,303

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6. DERIVATIVE TRANSACTIONS

Securities with book values not exceeding acquisition costs at March 31, 2018
Millions of yen
Type

Equity securities
Total

Acquisition cost

Book value¥11,353¥11,353

Difference¥10,107¥10,107¥(1,245)¥(1,245)

Thousands of U.S. dollars (Note 1)
Type

Equity securities
Total

Acquisition cost

Book value$106,861$106,861$95,133$95,133$(11,718)$(11,718)

Millions of yen

Equity securities
Total

Acquisition cost

¥11,065¥11,065

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 wereas follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

Proceeds from sales
Gross realized gains
Gross realized losses

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.

Difference

Securities with book values not exceeding acquisition costs at March 31, 2017
Type

The Group enters into derivative transactions to hedge the Group’s exposure to interest rate increases, fuel oil increases, freightdecreases, and currency exchange fluctuations, in accordance with the guidance determined by the management of the Company.

2018

2017

2018

¥1,145687
3¥3,346
2,249
406$10,7776,466
28

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 as­impairment 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 as­impairment losses of ¥12 million.
With regard to the impairment losses, the Company principally reduces the book value on the securities to the amount which isconsidered the recoverability, etc. in the event the fair market value declines more than 50% in comparison with the acquisition cost.

(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

2018

2017

2018

¥749
3

¥1,563
5$7,050
28

¥ 32
(0)

¥   410$  3010¥ 23
0¥   24(0)$  2160Thousands of
U.S. dollars (Note 1)

Millions of yen(2) Interest relatedInterest rate swaps
Receive floating, pay fixedContracts outstanding
Fair values
Receive fixed, pay floating
Contracts outstanding
Fair values

2018

2017

2018

¥19,721(993)¥22,825(1,684)$185,626(9,346)¥14,202(881)¥15,590(615)$133,678(8,292)Thousands of
U.S. dollars (Note 1)

Millions of yen

5. INVENTORIESInventories as at March 31, 2018 and 2017 consisted of the following:Thousands of
U.S. dollars (Note 1)

Millions of yen

Fuel and supplies
Others
Total

Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

2017

2018

¥37,483
1,196¥38,679¥34,684
1,674¥36,358$352,814
11,257$364,071(3) Othersa. Fuel oil swaps
Receive floating, pay fixedContracts outstanding
Fair values
b. Freight futures
Contracts outstanding
Fair values

2018

2017

2018

¥ —
—

¥ 375
(167)

$   —
—

¥205
28

¥ 239
(7)

$1,929263

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.
Thousands of
U.S. dollars (Note 1)

Millions of yen

2018(1) Deferred hedge accountinga. 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 valuesc. Interest rate swaps to hedge the risk for the long-term bank loans
and charterages
Receive floating, pay fixedContracts outstanding
Fair valuesd. Interest rate caps to hedge the risk for the long-term bank loans
BuyContracts outstanding
Fair valuese. Fuel oil swaps to hedge the risk for the fuel oil
Receive floating, pay fixedContracts outstanding
Fair values
f. Freight futures to hedge the risk for the freightContracts outstanding
Fair values

2017¥ 67,676136$  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¥  2,935593¥  5,917
378$   27,626
5,581¥     377¥     ——

$      348
65

2018

(2) Special treatment
Interest rate swaps to hedge the risk for the long-term bank loans
Receive floating, pay fixedContracts outstanding
Fair values

Thousands of
U.S. dollars (Note 1)¥20,450—2017¥20,617—(1) SHORT-TERM DEBT
Short-term debt at March 31, 2018 and 2017 consisted of the following:

2018$192,488—

Thousands of
U.S. dollars (Note 1)

Millions of yen

2018¥ 48,752
148

Millions of yen

7. SHORT-TERM DEBT AND LONG-TERM DEBT

Short-term bank loans
Commercial paper
Total

2018

2017

2018

¥ 98,589
5,000¥103,589¥39,163—¥39,163$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:Thousands of
U.S. dollars (Note 1)

Millions of yen

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

2018

2017

2018

¥—
31,872
18,50010,00021,24815,00017,8005,000
8,700
10,00015,00029,50015,00010,000¥   20,000
33,65718,50010,00022,43815,00017,8005,000
8,700
10,00015,00029,50015,00010,000$—
300,000
174,134
94,126200,000
141,189
167,545
47,06381,89094,126
141,189
277,673
141,189
94,126

81,95093,991

771,367

706,944996,514
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* Zero coupon convertible bonds, details are as follows.
Thousands of
U.S. dollars (Note 1)

Millions of yen

2018(3) Allocation method
Currency swaps to hedge the risk for the foreign bonds and long-term bank loans
Contracts outstanding
Fair values¥1,943—2017¥6,285—2018

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$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, theirfair values are included in fair values of such hedge items.

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9. NET ASSETSAt March 31, 2018, the aggregate annual maturity of long-term debt was as follows:Year ending March 31

2019
2020
2021
2022
2023
2024 and thereafter
Total

Millions of yen

Thousands of
U.S. dollars (Note 1)¥113,822
120,299
113,124
111,673
78,228459,365¥996,514$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 DEBTAt March 31, 2018 and 2017, the following assets were pledged as collateral for short-term debt and long-term debt.
Thousands of
U.S. dollars (Note 1)

Millions of yen
Assets pledged

Vessels
Vessels and other property under construction
Investment securities
Total

2018

2017

2018

¥240,140
16,042
55,779¥311,962¥216,193—
83,029¥299,222$2,260,353
150,997525,028$2,936,389

Thousands of
U.S. dollars (Note 1)

Millions of yen
Secured debt

Long-term bank loans due within one year
Long-term bank loans due after one year
Total

2018

2017

2018

¥ 14,288
185,856¥200,144¥ 12,175
160,119¥172,294$  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 designated 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 dividendor 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 accompanying 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:
Shares ofcommon stock(Thousands)

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

Shares oftreasury stock(Thousands)

1,206,286——
1,206,286—(1,085,657)
120,628

10,222
84(75)
10,231
72(9,269)1,034* 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:

8. COMMITMENTS AND CONTINGENT LIABILITIES(A) COMMITMENTAt March 31, 2018 and 2017, certain subsidiaries had loan commitment agreements. The nonexercised portion of loan commitments was as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

Total loan limits
Loan executions
The nonexercised portion of loan commitments

2018

2017

2018

¥15,404
15,404¥—¥16,267
16,267¥ —$144,992
144,992$—(B) CONTINGENT LIABILITIESAt March 31, 2018 and 2017, the Company and its consolidated subsidiaries were contingently liable mainly as guarantors or­co-guarantors of indebtedness of related and other companies in the aggregate amount of ¥132,844 million ($1,250,414­thousand) and ¥159,430 million, respectively.
U.S. dollars-denominated liabilities were included in the above amount, which were $1,112,045 thousand and $1,260,875­thousand respectively.

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Thousands of
U.S. dollars (Note 1)

Millions of yen

Stock options
Total

2018

2017

2018

¥2,026¥2,026¥2,447¥2,447$19,070$19,070

Millions of yen

Thousands of U.S.
dollars (Note 1)¥1,196¥1,196$11,257$11,257(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

Thousands of U.S.
dollars (Note 1)¥1,195¥1,195$11,248$11,248

MOL Report 201895

10. BREAKDOWN OF LOSS RELATED TO BUSINESS RESTRUCTURING

13. SEGMENT AND RELATED INFORMATION

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 theliquidation 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.

(A) SEGMENT INFORMATION:
Millions of yen
Reportable segment
Product Transport Business

For the year ended March 31, 2018:

Dry Bulk
Business

EnergyTransport
Business

Container
Ships

Car Carries,
Ferries andCoastal
RoRo Ships

Associatedbusinesses

Sub Total

Others

Total

Adjustment
andelimination

Consolidated¥1,652,393

11. LEASES

1. Revenues:

AS LESSEE:
FUTURE LEASE PAYMENTS UNDER OPERATING LEASES FOR ONLY NON-CANCELABLE CONTRACTS AT MARCH 31, 2018 AND 2017:(1) Revenues from customers¥272,956¥262,245¥749,714¥261,171¥ 90,095¥1,636,184¥ 16,208¥1,652,393¥—(2)Inter-segment revenues

3

8,712

1,909

234

28,36639,226

6,305

45,531(45,531)—¥272,960¥270,957¥751,624¥261,406¥118,462¥1,675,410¥ 22,514¥1,697,925¥ (45,531)¥1,652,393

Thousands of
U.S. dollars (Note 1)

Millions of yen

Amount due within one year
Amount due after one year
Total

2018

2017

2018

¥ 34,784
255,730¥290,515¥ 45,021
284,385¥329,407$  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:
Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

Amount due within one year
Amount due after one year
Total

2017

¥16,008
34,630¥50,639¥17,716
34,958¥52,6742018$150,677
325,960$476,647

Total revenues
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¥ 11,749¥ 37,105¥ 11,525¥ 15,758¥  9,143¥   85,282¥    361¥   85,644¥     985¥   86,629

—

22

0

—

159

182

—

182

—

182

Interest income

1,152

4,565

1,126

116

44

7,005

2,928

9,933

(1,957)7,976Interest expense

2,863

13,190

1,581

1,221

1,331

20,1891,951

22,141(1,727)

20,413Equity in earnings(losses) of affiliatedcompanies, net(4,507)8,240(6,808)377

277(2,421)(1,007)(3,428)—(3,428)

2. Others
Depreciation andamortization
Amortization of goodwill

Loss related to businessrestructuring——

73,476——73,476—73,476—73,476

Investment in affiliates

15,78484,54735,751

2,776

2,218

141,078369

141,448—

141,448

Increase in vessels,
property andequipment andintangible assets

5,912

87,43021,735

26,773

5,967

147,819763

148,582612

149,195

Adjustment
andelimination

Consolidated

12. RENTAL PROPERTIES

Thousands of U.S. dollars (Note 1)
Reportable segment

The Company and some of its consolidated subsidiaries own real estate for office lease (including lands) in Tokyo, Osaka andother areas.
Information about the book value and the fair value of such rental properties was as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen
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

2018

2017

2018

For the year ended March 31, 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

In addition, information for rental revenue and expense from rental properties was as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

2017

2018

¥30,869
17,815¥13,054¥30,245
17,844¥12,400$290,559
167,686$122,872

Dry Bulk
Business

EnergyTransport
Business

Car Carries,
Ferries andCoastal
RoRo Ships

Container
Ships

Associatedbusinesses

Sub Total

OthersTotal

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(2)Inter-segment revenues

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.

Rental revenue
Rental expense
Difference

Product Transport Business

28

82,003

17,9682,202

266,999369,220

59,346

428,567$— $15,553,397(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) $20,949,134$  110,589 $  349,256 $  108,480 $  148,324 $   86,059 $   802,729 $    3,397 $   806,137$     9,271 $   815,408

2. Others
Depreciation andamortization

—

207

0

—

1,496

1,713

—

1,713

—

1,713

Interest income

10,84342,968

10,5981,091

414

65,93527,56093,495(18,420)75,075Interest expense

26,948124,152

14,881

11,492

12,528190,032

18,364208,405(16,255)

192,140

Equity in earnings(losses) of affiliatedcompanies, net(42,422)

77,560(64,081)

3,548

2,607

(22,788)(9,478)(32,266)—(32,266)

Amortization of goodwill

Loss related to businessrestructuring——691,603——691,603—691,603—691,603

Investment in affiliates

148,569

795,811

336,511

26,12920,877

1,327,917

3,473

1,331,400—

1,331,400

Increase in vessels,
property andequipment andintangible assets

55,647

822,948

204,583

252,004

56,165

1,391,368

7,181

1,398,550

5,760

1,404,320

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.”

96

Mitsui O.S.K. Lines

MOL Report 201897

Millions of yen
Reportable segment
Product Transport Business

For the year ended March 31, 2017:

Dry Bulk
Business

EnergyTransport
Business

Car Carries,
Ferries andCoastal
RoRo Ships

Container
Ships

Associatedbusinesses

Sub Total

OthersAdjustment
andelimination

Total

Consolidated

Millions of yen

1. Revenues:(1) Revenues from customers(2)Inter-segment revenues¥267,864¥257,834¥620,714¥250,648¥ 90,025¥1,487,087¥ 17,286¥1,504,373¥—¥1,504,373

14

8,378

1,816

181

27,51837,9096,658

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

For the year ended March 31, 2018:

Revenues
Vessels, property and equipment

For the year ended March 31, 2018:¥ 12,944¥ 36,958¥ 12,130¥ 14,134¥  9,395¥   85,564¥    433¥   85,997¥   1,192¥   87,190

Amortization of goodwill

—

21

0

—

164

185

0

186

—

186

Interest income

846

3,295

895

36

43

5,117

2,119

7,236

(1,318)5,918Interest expense

3,163

11,589

1,728

1,279

1,436

19,197

1,076

20,274(1,237)

19,037

Equity in earnings(losses) of affiliatedcompanies, net(4,550)10,341

(4)

360

226

6,373

(829)

5,543

—

5,543

Investment in affiliates

19,05375,474

12,635

2,448

2,139

111,750

1,049

112,799—

112,799

Increase in vessels,
property andequipment andintangible assets

13,70963,61728,30730,011

4,937

140,584253

140,838955

141,793

Revenues
Vessels, property and equipment

For the year ended March 31, 2017:

Revenues
Vessels, property and equipment¥1,442,585¥  984,611

Europe¥31,806¥45,382

Asia¥39,369¥ 2,955¥136,530¥219,260

OthersConsolidated¥ 2,101¥38,720¥1,652,393¥1,290,929

Japan

North America

EuropeAsia

OthersConsolidated$13,578,548$ 9,267,799$299,378$427,164$370,566$ 27,814$1,285,109$2,063,817$ 19,775$364,457$15,553,397$12,151,063

Japan

North America

EuropeOthersConsolidated¥   422¥35,581¥1,504,373¥1,323,665¥1,264,121¥1,020,253¥27,570¥43,966

Asia¥32,195¥ 2,975¥180,063¥220,888(2) Information about impairment loss by reportable segment:
Millions of yen
Reportable segment
Product Transport Business

For the year ended March 31, 2017:

Impairment loss

Dry Bulk
Business

EnergyTransport
Business

¥896

¥370

Container
Ships

Car Carries,
Ferries andCoastal
RoRo Ships

AssociatedBusinesses

Sub total¥21,007¥—¥—¥22,273

OthersAdjustment
andelimination

Consolidated¥—¥—¥22,273

Consolidated

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 endof current year

Dry Bulk
Business

EnergyTransport
Business¥—¥44

Container
Ships

Car Carries,
Ferries andCoastal
RoRo Ships

AssociatedBusinesses

Sub total

OthersAdjustment
andelimination¥—¥—¥1,845¥1,890¥—¥—¥1,890Thousands of U.S. dollars (Note 1)
Reportable segment
Product Transport Business

For the year ended March 31, 2018:

Goodwill at the endof current year

Mitsui O.S.K. Lines

North America

Millions of yen*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) ofinter-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 notallocated 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 notallocated 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 intersegment 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 not­allocated 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 millionof 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 ofinter-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 millionof 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 millionof 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.

98

Japan

Thousands of U.S. dollars (Note 1)

2. Others
Depreciation andamortization(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 ­locationof our customers.
Therefore, revenues by geographic areas are revenues by geographic areas of each company’s registration.

Dry Bulk
Business

EnergyTransport
Business$—$414

Container
Ships

Car Carries,
Ferries andCoastal
RoRo Ships

AssociatedBusinesses

Sub total

OthersAdjustment
andelimination$—$—$17,366$17,789$—$—

Consolidated$17,789

MOL Report 201899

(B) Reconciliation of the statutory tax rate to the effective tax rate for the year ended March 31,2017, was as follows:

Millions of yen
Reportable segment

2017

Product Transport Business

For the year ended March 31, 2017:

Goodwill at the endof current year

Dry Bulk
Business

EnergyTransport
Business

Container
Ships

Car Carries,
Ferries andCoastal
RoRo Ships

¥—

¥66

¥0

¥—

AssociatedBusinesses

Sub total¥2,073¥2,140

OthersAdjustment
andelimination

Consolidated¥—¥—¥2,14014. INCOME TAXESThe Company is subject to a number of taxes based on income, which, in the aggregate, indicate statutory rates in Japan ofapproximately 28.8% for the years ended March 31, 2017 and 2018.

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
OthersTotal deferred tax assets
Valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Reserve deductible for tax purposes when appropriated fordeferred gain on real properties
Reserve deductible for tax purposes when appropriated forspecial 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
OthersTotal deferred tax liabilities
Net deferred tax liabilities

100

Mitsui O.S.K. Lines

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 for­consolidated 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.

(A) Significant components of deferred tax assets and liabilities at March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

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

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
13,309154,583
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)

15. EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITS(A) OUTLINE OF EMPLOYEES’ SEVERANCE AND RETIREMENT BENEFITSThe 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 tothe 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 tothe 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
Thousands of
U.S. dollars (Note 1)

Millions of yen

Balance at beginning of the year
Service cost
Interest cost
Actuarial loss (gain)
Benefits paid
Balance at end of the year

2018

2017

2018

¥46,752
1,776
409
(520)
(2,057)¥46,361¥46,769
1,768
407
(193)
(1,998)¥46,752$440,060
16,716
3,849(4,894)(19,361)$436,379

MOL Report 2018101

(6) REMEASUREMENTS OF DEFINED BENEFIT PLANS(2) MOVEMENTS IN PLAN ASSETS EXCEPT PLAN APPLIED SIMPLIFIED METHOD
Thousands of
U.S. dollars (Note 1)

Millions of yen

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

2018

2017

2018

¥58,956
1,179
2,265
1,294
(1,757)¥61,939¥56,777
1,135
2,773
28
(1,757)¥58,956$554,932
11,09721,31912,179(16,538)$583,010

Thousands of
U.S. dollars (Note 1)

Millions of yen

Actuarial loss (gain)

2018

2017

2018

¥4,206¥4,118$39,589(7) ACCUMULATED REMEASUREMENTS OF DEFINED BENEFIT PLANS
Thousands of
U.S. dollars (Note 1)

Millions of yen

Unrecognized actuarial differences

2018

2017

2018

¥8,276¥4,070$77,899(3) MOVEMENTS IN NET LIABILITY FOR RETIREMENT BENEFITS BASED ON THE SIMPLIFIED METHOD
Thousands of
U.S. dollars (Note 1)

Millions of yen

Balance at beginning of the year
Retirement benefit costs
Benefits paid
Contributions paid by the employer
Increase in retirement benefit obligations from change ofscope of consolidation
Balance at end of the year

2018

2017

2018

¥9,259
1,574
(482)
(676)

¥10,158
1,750(1,979)(682)$87,151
14,815(4,536)(6,362)—¥9,67612¥ 9,259—$91,076(4) RECONCILIATION FROM RETIREMENT BENEFIT OBLIGATIONS AND PLAN ASSETS TO LIABILITY (ASSET) FOR RETIREMENT BENEFITSINCLUDING PLAN APPLIED SIMPLIFIED METHOD
Thousands of
U.S. dollars (Note 1)

Millions of yen

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

2018

2017

2018

¥ 54,642(72,310)(17,668)
11,766(5,902)
12,909(18,811)¥ (5,902)¥ 54,257(68,910)(14,652)
11,707(2,944)
12,445(15,390)¥ (2,944)$ 514,326(680,628)(166,302)
110,749(55,553)
121,507(177,061)$ (55,553)(8) PLAN ASSETS
1. Plan assets comprise:
Equity securities
Bonds
Jointly invested assets
Cash and cash equivalents
Other
Total
Retirement benefit trust

2018

2017

33%
22
38
7
0
100%
29%

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 indetermining 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.

(5) RETIREMENT BENEFIT COSTS
Thousands of
U.S. dollars (Note 1)

Millions of yen

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

102

Mitsui O.S.K. Lines

2018

2017

2018

¥ 1,776409(1,179)
1,420
1,574
(79)
¥ 3,922¥ 1,768407(1,135)
1,153
1,750
(23)
¥ 3,919$ 16,716
3,849(11,097)
13,365
14,815(743)$ 36,916

MOL Report 2018103

16. STOCK OPTIONS(C) CHANGES IN NUMBER AND UNIT PRICESThe following tables summarize changes in number and unit prices of stock options for the years when they were granted:(A) EXPENSED AMOUNT
Expensed amounts on stock options for the years ended March 31, 2018 and 2017 were as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

Selling, general and administrative expenses
Total

2018

2017

2018

¥171
¥171

¥88
¥88

$1,609$1,609(1) Changes in number of stock options
Non-vested stock options

Balance at March 31, 2017
Options granted during the year

Number of grantees

Number of stock options
Grant date
Vesting conditions
Service period
Exercise period

Number of grantees

Number of stock options
Grant date
Vesting conditions
Service period
Exercise period

Number of grantees

Number of stock options
Grant date
Vesting conditions
Service period
Exercise period

2008

2009

2010

Directors: 11
Executive officers: 20
Employees: 33
Presidents of the Company’s
domestic consolidated
subsidiaries: 36
Common stock 171,000
August 10, 2007
No provisions
No provisions
From June 20, 2008 toJune 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 toJune 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 toJune 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 toJune 21, 2020

2011

2012

2013

2014

Directors: 10
Executive officers: 22
Employees: 35
Presidents of the Company’s
domestic consolidated
subsidiaries: 33
Common stock 173,000
August 9, 2011
No provisions
No provisions
From July 26, 2013 toJune 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 toJune 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 toJune 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 toJune 23, 2024

2015

2016

2017

Directors: 8
Executive officers: 18
Employees: 37
Presidents of the Company’s
domestic consolidated
subsidiaries: 32
Common stock 155,000
August 17, 2015
No provisions
No provisions
From August 1, 2017 toJune 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 toJune 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 toJune 25, 2027

2009

2010

2011

2012

2013

2014

2015

2016

—

—

—

—

—

—

—

155,000

158,000

2017

—

—

—

—

—

—

—

—

—

—

—

157,000

—

—

—

—

—

—

—

—

—

—

—

Options vested during the year

—

—

—

—

—

—

—

—

155,000

—

—

—

—

—

—

—

—

—

—

—

158,000

157,000

2017

Vested stock options

2007

2008

—

Options expired during the year
Balance at March 31, 2018(B) TERMS AND CONDITIONS
The following table summarizes terms and conditions of stock options for the years when they were granted:

2007

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

164,000

171,000

163,000

170,000

171,000

129,800

156,800

146,000

—

—

—

—

—

—

—

—

—

—

—

155,000——

Options exercised during the year

—

—

—

—

—

13,000

—

2,000

800

—

—

Options expired during the year

164,000

—

—

—

—

—

—

2,000

—

—

—

—

171,000

163,000

170,000

171,000

116,800

156,800

142,000

154,200——

Balance at March 31, 2017
Options vested during the year

Balance at March 31, 2018

(2) Unit prices of stock options exercised during the year
Exercise price
Average market price of shareat exercise
Fair value per stock option
at grant date

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

¥19,620¥15,690¥6,390¥6,420¥4,680¥2,770¥4,470¥4,120¥4,270¥2,420¥3,780

—

—

—

—

—

¥3,642—¥3,100¥3,100——¥ 3,520¥ 2,170¥1,360¥2,030¥  870¥  670¥1,720¥1,320¥  940¥  560¥1,090Note: 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 wereas follows:2017

Stock price volatility
Expected remaining term of the option
Expected dividends
Risk-free interest rate

40.39%
5 years and 11 months¥2 per share(0.05)%

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.

104

Mitsui O.S.K. Lines

MOL Report 2018105

17. COMPREHENSIVE INCOME

18. RELATED PARTY TRANSACTIONS

For the years ended March 31, 2018 and 2017, the amounts reclassified to net income (loss) that were recognized in other­comprehensive income and tax effects for each component of other comprehensive income were as follows:

For the year ended March 31, 2018

Millions of yen

2018

Unrealized holding gains on available-for-sale securities, net of tax:
Increase (Decrease) during the year
Reclassification adjustments
Sub-total, before tax
Tax effectUnrealized gains on hedging derivatives, net of tax:
Increase (Decrease) during the year
Reclassification adjustments
Adjustments of acquisition cost
Sub-total, before tax
Tax effectForeign 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

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)

2017

2018

¥   9,035
(690)
8,344
(2,505)
5,839¥ 13,932(1,413)
12,518(3,750)8,768$   85,043(6,494)78,539(23,578)
54,960(5,972)(19,954)(201)(26,128)
3,725(22,402)30,282(19,502)166
10,945
2,124
13,070(56,212)(187,820)(1,891)(245,933)
35,062(210,862)

(767)
(5)
(773)

3,148
(684)
2,463

(7,219)(47)(7,275)

2,785
1,420
4,206
(1,199)
3,007

2,965
1,153
4,118
(1,174)
2,944

26,214
13,36539,589(11,285)
28,303(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)

Thousands of U.S. dollars(Note 1)Millions of yen

Thousands of
U.S. dollars (Note 1)

Category

Name ofcompany

Address

Affiliated TARTARUGA NETHERLANDS
company MV29 B.V.
Affiliated Ocean
company Network
Express
Pte. LtdSINGAPORE

Paid-in
capitalRatio ofthe Group’s
Businessvotingdescription
rights

US$110,000 Energy
Transport
Business
US$800,000,000 Containerships

Transactions during the year
ended March 31, 2018

Balance at
March 31, 2018

Transactions
during theyear ended
March 31,2018

Balance at
March 31,2018

Relation withrelated party

Description oftransaction(*1)

Transacted
amountAccount

AmountTransacted
amountAmount20.60% Interlocking
directorate
Debt guarantee

Debt  guarantee¥35,170——$331,042——(*2) Interlocking
directorate

Underwriting  of capital  increase

27,456——258,433—*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.
*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 commonshares of Ocean Network Express Pte. Ltd.

For the year ended March 31, 2017
Millions of yen

Category

Name ofcompany

Address

Paid-in
capitalRatio ofthe Group’s
Businessvotingdescription
rightsTransactions during the year
ended March 31, 2017
Relation withrelated party

Description oftransaction (Note)

Transacted
amountBalance at
March 31, 2017
Account

AmountAffiliated TARTARUGA NETHERLANDS
company MV29 B.V.

US$110,000

EnergyTransport
Business

20.60% Interlocking
directorate
Debt guarantee

Debt  guarantee¥29,235——

Affiliated T.E.N.
company GHANA
MV25 B.V.

NETHERLANDS€100,000

EnergyTransport
Business

20.00% Interlocking
directorate
Debt guarantee

Debt  guarantee

28,741——Affiliated CARIOCA
company MV27 B.V.

NETHERLANDS€100,000

EnergyTransport
Business

20.60% Interlocking
directorate
Debt guarantee

Debt  guarantee

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 thesummary of its financial statements was as follows:
Thousands of
U.S. dollars (Note 1)

Millions of yen

2018

2017(*1)

2018

Total current assets
Total non-current assets¥ 53,642
25,924——$ 504,913
244,013

Total current liabilities
Total non-current liabilities

12,6685,231——

119,239
49,237

Total net assets

61,666—580,440

Shipping and other revenues
Income (Loss) before income taxes
Net income (loss)

26(23,325)(23,325)

—
—
—

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 affiliatedcompany from the year ended March 31, 2018.

106

Mitsui O.S.K. Lines

MOL Report 2018107

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:

Singapore(5) Date of Establishment:

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 typeof 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 thesuspicion 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

Registered Office

Dry Bulk Business■ Mitsui O.S.K. Kinkai, Ltd.
■ MOL Bridge Finance S.A.
■ MOL Cape (Singapore) Pte. Ltd.

MOL’s Voting
Rights (%)*

Paid-In Capital(Thousands)Japan
PanamaSingapore

100.00100.00100.00¥660,000
US$8
US$62,752■ Other (1 company)▲ Gearbulk Holding AG▲ Shipowner company (1 company) in Panama

Switzerland

49.00

US$228,100■ 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.

PanamaPanamaUruguay
BahamasLiberia
PanamaJapan
Singapore
Japan
Japan
Netherlands
BahamasSingapore
PanamaPanamaSingapore

100.00100.00100.0080.10
75.00
100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00

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$344SingaporeJapan
NorwayNetherlands
Netherlands
Netherlands
BahamasBahamasNetherlands
Netherlands
Netherlands
BahamasBahamasBahamasNorwayNorway

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
—

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$338Singapore
ThailandThailand
Japan
Japan
Japan
Japan
Netherlands
BelgiumJapan
Hong Kong
Japan
U.S.A.
Australia
Japan
Nigeria
Thailand
U.S.A.
BrazilChina
Netherlands
PolandU.K.
Ghana
Singapore
Hong Kong
China
ThailandIvory CoastJapan
Hong Kong
Germany
Netherlands
Hong KongJapan
Netherlands
Singapore

100.00100.0074.62
100.00100.00100.00100.00
75.50
50.00
99.00
100.0051.00
51.00
100.00100.00100.0047.00
100.00100.00100.00100.00100.00100.00100.00100.00100.00100.0099.60
100.00100.00100.00100.00100.00100.0075.06
100.00100.00

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

Registered Office■ 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 (66 companies) in Panama, Marshall Islands,■ Liberia, Hong Kong, Cayman Islands, and Singapore

Energy Transport
Business▲ 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■ 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)

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.

Shipowner/Chartering companies (48 companies) in Panama, Marshall Islands, Liberia,

110

Mitsui O.S.K. Lines■ 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.

TaiwanThailandU.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.

100.0099.00
100.00100.00100.00100.00100.00
90.00
76.00
79.98
100.00100.00100.0067.55
100.00100.00100.00100.00100.00100.00

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

Japan
Japan
Japan
Singapore
Malaysia
Netherlands
Japan
VietnamThailand

40.33
15.00
31.00
—
20.86
20.00
31.98
21.33
24.44

¥880,000¥600,440¥50,000
US$800,000
MYR276,354€14,018¥100,000
VND732,966,020
THB100,000

Japan
VietnamJapan
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

51.07
99.00
100.00100.00100.00100.00100.00100.00100.0095.25
100.0062.00
100.00100.00100.00100.00100.00100.00100.00100.00100.0087.26
100.00100.0070.00
99.39
100.00¥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

Japan
Hong Kong
Vietnam

36.00
25.00
40.00

¥100,000
HK$12,400
US$4,500

Netherlands
Liberia
U.S.A.
Netherlands
U.S.A.
Singapore
U.K.
Japan
Japan
Japan
Japan
Panama
Japan
Japan
Japan
Japan
Singapore

100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00100.00€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

Shipowner/Chartering companies (52 companies) in Panama, Marshall Islands, Liberia,▲ Hong Kong, Cayman Islands, Singapore, Indonesia, Cyprus, Bahamas and Malta

Product Transport
Business

Paid-In Capital(Thousands)■ Hong Kong, Cayman Islands, Singapore and Isle of Man

Shipowner/Chartering companies (115 companies) in Panama, Marshall Islands,■ Liberia, Hong Kong, Singapore, Indonesia and Malta

MOL’s Voting
Rights (%)*

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

MOL Report 2018111

Worldwide Offices

Shareholder InformationJAPAN

MIDDLE EAST

Mitsui O.S.K. Lines, Ltd.

MOL Middle East FZEHead Office (Tokyo):
Nagoya Branch:
Kansai Branch:
Hiroshima Branch:
Kyushu Branch:

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

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

Capital¥65,400,351,028

Head office

1-1, Toranomon 2-chome, Minato-ku,
Tokyo 105-8688, Japan

Number of MOL employees

975

Number of MOL Group employees

10,828(The parent company and consolidated subsidiaries)

OCEANIANORTH AMERICA

Mitsui O.S.K. Lines (Australia) Pty. Ltd.

MOL (America) Inc.
Head Office (New Jersey):
Chicago:Atlanta:

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

Tel: 1-905-629-5925

Fax: 1-905-629-5914

Head Office (Sydney):Tel: 61-2-9320-1600

Fax: 61-2-9320-1601

Mitsui O.S.K. Lines (New Zealand) Ltd.
Head Office (Auckland):Tel: 64-9-300-5820

Fax: 64-9-309-1439

MOL (Canada) Inc.
Head Office (Toronto):

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

MOL (Asia Oceania) Pte. Ltd.
Fax: 1-201-395-5820
Fax: 1-832-615-6480
Fax: 1-562-528-7515

CENTRAL AND SOUTH AMERICA
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

MOL (Chile) Ltda.
Head Office (Santiago):

Head Office (Shanghai):
Guangzhou:

Head Office (Hong Kong):

Head Office (Taipei):

Tel: 52-55-5550-1612
Tel: 55-11-3145-3980

Head Office (Seoul):

86,927

Shares listed inTokyo

Share transfer agent(Contact information)

Sumitomo Mitsui Trust Bank, Limited
Stock Transfer Agency Business Planning Department
8-4, Izumi 2-chome, Suginami-ku, Tokyo 168-0063, Japan

Communication materials

MOL Report (English/Japanese)
Investor Guidebook (English/Japanese)
Market Data (English/Japanese)
News Releases (English/Japanese)
Website (English/Japanese)Tel: 86-10-85299121

Fax: 86-10-85299126

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

Tel: 82-2-559-3001

Fax: 82-2-561-9490

Stock Price Range (Tokyo Stock Exchange) and Volume of Stock Trade*

Fax: 62-21-5292-0920(¥)

P.T. Mitsui O.S.K. Lines Indonesia
Fax: 52-55-5089-2280
Fax: 55-11-3145-3946

Head Office (Jakarta):

EUROPE

Tel: 62-21-5288-0008

Mitsui O.S.K. Lines (Thailand) Co., Ltd.
Head Office (Bangkok):Tel: 66-2-234-6252

(As of March 31, 2018)

Head Office (Ho Chi Minh):
Tel: 44-20-3764-8000 Fax: 44-20-3764-8393
Tel: 32-2880-9856
Tel: 49-40-3609-7410 Fax: 49-40-8430-6105
Tel: 90-2122514665/1501 Fax: 90-2128754666
Tel: 7-495-369-90-58

Tel: 84-83-8219219

Tel: 91-44-4861-5757
Tel: 91-22-4071-4500

Tel: 63-2-717-8621¥4,370¥1,830Fiscal 2016 HighLow

¥3,890¥1,990Fiscal 2017 HighLow

¥4,170¥2,891

6,000

4,000
3,000

Fax: 91-44-4861-5757
Fax: 91-22-4071-4501

2,000
1,000

(Million shares)0

MOL Bulk Shipping (Philippines)
Manila:Fiscal 2015 High
Low

5,000

Fax: 84-83-8219317

MOL Bulk Shipping (India) Pvt. Ltd.
Head Office (Chennai):
Mumbai:

8,000
7,000

Fax: 66-2-237-9021

Mitsui O.S.K. Lines (Vietnam) Ltd.

MOL (Europe Africa) Ltd.
Head Office (London):Brussels:
Hamburg:
Istanbul:
Moscow:

Number of shareholders

Beijing Representative Office

MOL (Korea) Co., Ltd.

Mitsui O.S.K. Bulk Shipping (USA) LLC
Mexico City:
Sao Paulo:

Fax: 65-6323-1305
Fax: 60-3-5623-3107

120,628,611

MOL (Taiwan) Co., Ltd.

MOL (PERU) S.A.C.
Head Office (Lima):

Tel: 65-6323-1303
Tel: 60-3-5623-9772

Number of shares issued

MOL Hong Kong Ltd.

MOL (Panama) Inc.
Head Office (Panama City):

Head Office (Singapore):
Kuala Lumpur:

315,400,000

MOL (China) Co., Ltd.

MOL (Brasil) Ltda.
Head Office (Sao Paulo):

ASIA

Total number of shares authorized

80
70

Fax: 63-2-524-8132

60

AFRICA50

MOL Ace South Africa (Pty) Ltd.
Head Office (Durban):Tel: 27-31-580-2200

40

Fax: 27-86-660-3280

30
20
10

15
16
17
18
/4 5 6 7 8 9 10 11 12 /1 2 3 4 5 6 7 8 9 10 11 12 /1 2 3 4 5 6 7 8 9 10 11 12 /1 2 3 4 50* 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 calculatedon the assumption that the consolidation of shares was conducted at the beginning of FY2015/FY2016.

112

Mitsui O.S.K. Lines

MOL Report 2018113

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.

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