President Akimitsu Ashida's Speech on the Anniversary of MOL's Founding

April 02, 2007

On the occasion of Mitsui O.S.K.Lines (MOL) 123_rd anniversary, we are pleased to bring you a message from our President, Akimitsu Ashida.

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April 1, 2007, marked the 123_rd anniversary of the founding of our company.

MOL ADVANCE Starts

Today marks MOL's 123_rd anniversary and brings to a close of MOL STEP, our three-year management plan that began in 2003. At that time, we set some very ambitious goals, and the anticipated result of more than ¥170 billion level in consolidated ordinary income (FY2006) represents three consecutive years of very favorable performance. Declines in the containership segment, due to changing market conditions, were offset by increased profits in other fields and have resulted in an overall high-level of profitability, which is very encouraging.

While we cannot ignore that FY2006 brought considerable such tragedy as a result of four serious incidents involving our vessels and we should avoid any similar occurrences in the future by working together.

To that end, today we begin MOL ADVANCE, our new three-year management plan. The first objective of our new plan is the implementation of measures designed to reinforce safe operations. The restoration of trust from our customers and the global community is critical and our plan is to invest a total of ¥35 billion in safety operations over the three year period of MOL ADVANCE, while continuing to increase the quality of our transportation service.

Demand for global ocean transport will continue to grow in step with the worldwide economy so we can expect to see our business increase rapidly as well. Our new three-year plan will chart a course to our destination of becoming an "excellent and resilient MOL Group."

Global Company

Something that will not change with MOL ADVANCE is the importance of the "3Gs" - Growth, Group, and Global.

Regarding growth, the MOL STEP term saw our fleet increase from 645 vessels (FY2003) to 800 vessels (FY2006), while consolidated revenue increased from ¥997.2 billion to over ¥1,500 billion. Consolidated ordinary income rose from ¥90.5 billion to over ¥170 billion for three consecutive years, and consolidated net income grew from ¥55.3 billion to about ¥110 billion. These numbers represent major increases in every category. Additionally, our equity capital, which is the index of corporate soundness, grew from ¥221.5 billion to ¥530 billion. We have made steady progress on our course for growth and our goal for MOL ADVANCE is even more ambitious - more than ¥2 trillion in consolidated revenue and ¥220 billion in consolidated ordinary income.

Considering group activities, it is clear that MOL group companies have grown steadily during the MOL STEP period. Looking at consolidated ordinary income, profits by group companies increased from ¥19.6 billion in FY2003 to ¥34 billion, ¥51 billion, and ¥57 billion in succession. Contributions of group companies have grown each year in terms of business performance. We will increase group-wide strength and competitiveness, and aim at further development by focusing our management resources on growth.

From a global viewpoint, we will continue to face challenges on the path to becoming a truly global company, and our focus on this issue must be vigilant. We cannot expect great increases in the Japan-based ocean cargo trade, because the nation's economy is already mature. We must look to overseas markets, to businesses that are expanding as a result of the accelerating globalization. Only then we can hope to achieve the financial goals set forth in our new three-year plan. While exploring overseas opportunities, we must also maintain good service for our Japanese customers. In the containership segment, we have already established a global network that fully utilizes human and other management resources, but we must work harder to duplicate these achievements in other fields. By enhancing our sales and marketing capabilities in growing regional markets and proactively expanding cross-trade in markets outside Japan, we will successfully forge new global business. In addition, MOL ADVANCE will see the establishment of organizations and structures in overseas subsidiaries and our continued growth in the world market while moving forward with the integration of Head Office functions.

A flexible response to changes

The development of an international economy changes every second of every day, and the economic climate that we experience one day may be completely different the next. Like sakaro*, we must always be prepared for drastic changes; hoping for the best while preparing for the worst, always striving toward our goals in a time of favorable market conditions during MOL ADVANCE. But we must also remember that "there is a seed of failure in success," and therefore approach each new situation with optimism, but also with a seed of caution. That means because of such changes in business, we must always be aware of the potential that we may not be able to use the same approaches to business that now seem to fill our sails with a strong tailwind.

* Sakaro:

Military commander Kajiwara no Kagetoki advised building double-ended ships that could sail both forward and backward, when Minamoto no Yoshitsune was planning to invade Yashima in the Gempei War between the Minamoto and the Taira clans during the Heian Era (784-1184).

Achieving safe operation and recovery in the containership segment

The success of MOL ADVANCE depends on our ability to increase transport quality while ensuring safe operation and improving our business performance in the containership segment.

Over the course of three years, we will be investing ¥35 billion toward the improvement and reinforcement of safety measures, ensuring the utmost level of transport quality. This will include the development of the Safety Operation Supporting Center and the recruitment/training of seafarers. We will also focus on the development of safety standards for our current and future operated vessels. To put it concretely, three ship management company groups for dry cargoships, tankers, and LNG carriers will formulate basic ship management policies for each type of vessel, and each ship management company among the groups will take the initiative to implement those policies through its daily operations. The Marine Management Division (new name: Marine Safety Division) will support these ship management companies' operations. We also established the Safety Operations Headquarters as a parent organization to integrate the emergency response and safety management standards which are common among ship management companies. We expect vessels and ship management companies to work together to achieve a new world standard in transport quality under this new site-oriented organizational structure.

We will also develop a more direct management approach for the Liner Division. Recovery of this division is essential for achieving the MOL ADVANCE financial goals. We need to work quickly in today's rapidly changing market and transform the Liner Division under the VLC system to the Liner HQ. This will create a nerve center to link all regional divisions while maintaining the three-polar structure of Asia, North America, and Europe.

In "The Book of Changes", I Ching said, "When you are in real trouble, you shall change quickly and will find a way out." This is how we must think in today's business climate. There is no permanent organizational structure. We must remain flexible, and be prepared to change and adapt as necessary.

Toward A New Leap Forward

Comparing today to our situation three or four years ago, it was a great leap to achieve ¥170 billion for three consecutive years during the MOL STEP period. Once again, I'd like to express my thanks to all Group management and employees for their hard work. Inevitably, and in spite of an expanding fleet scale, there are those who would probably say that our business performance has remained on the same level for three consecutive years; that we have hit the ceiling. Others may think that we can exceed ¥170 billion in profits in the future by continuing to do exactly as we've been doing. To these people I say that in the new three-year plan, we will cast aside all sense of limitation. By the end of FY2009, the final year of the MOL ADVANCE, our goal is consolidated revenue topping ¥2 trillion and a consolidated ordinary income of more than ¥220 billion.

Japanese novelist Taichi Sakaiya has been writing a serial called "Genghis Khan, the man who created the world" in the Nihon Keizai Shimbun (Japan's leading financial newspaper), and he suggests in the serial story that individuals, companies, and nations can experience "great leaps" during their lifetimes. These periods last five or six years for individuals, 10 years for enterprises, and up to two decades for nations. If such periods come three times in succession, an individual will become a national success, a company will become a blue-chip mega corporation, and a nation or group will become an empire of historic proportions. If the enterprise can repeat a 10-year leap period three times, the theory of an enterprise's 30-year lifespan is not true. Applying this thinking to our Group, we have just completed three consecutive years of achieving a consolidated ordinary income of ¥170 billion, and we have now passed the three-year mark in the first decade leap. Moving forward, let us set higher goals, dream bigger dreams, and work toward continued growth together achieving great strides during the three years of the MOL ADVANCE plan and completing the decade leap during next three years.

Finally, I pray for the safety of all of our Group vessels, and hope that fiscal year 2007 will be a healthy, happy, and prosperous one for everyone in the MOL Group around the world.