MOL President Akimitsu Ashida's 2008 New Year Message

January 04, 2008

Success is Never Final

Happy New Year to everyone in MOL and the MOL Group. The financial results for fiscal 2007, the first year of the new three-year midterm management plan MOL ADVANCE started in April 2007, are projected to greatly exceed our initial targets for the first year, thanks to booming markets in worldwide seaborne trade and especially a significant upswing in the dry bulker market.

Reinforcing Our Solid Operational Foundation

Our group consolidated results have increased steadily since fiscal 2003, posting one record high after another. For FY2007, we project consolidated revenue of ¥1,920 billion; ordinary income of ¥280 billion; and net income of ¥185 billion. We seized opportunities to take advantage of ongoing record highs in the market, which largely helped maximize our profits.

Our robust performance would place our company in the top 40 among 3,000 listed corporations in Japan, even as other companies also increase consolidated ordinary income. Thus, we are solidifying our position as a blue-chip company. This is due to the continued efforts of all group management and employees, and I would like to express my sincere thanks to everyone.

Equity capital (shareholders' equity) has increased along with our improved performance, and the balance sheet is reflecting greater soundness and true blue-chip quality with an improved gearing ratio^*1. However, our consolidated equity capital ratio^*2 for the first half of FY2007 ended in September 2007, stayed at 34%, which is still insufficient, placing us in one-third from the bottom among the listed companies. We are seeking to boost equity capital, which is the basis for an excellent and resilient company target to ¥1 trillion from the current ¥650 billion. Former U.K. Prime Minister Winston Churchill once said, "Success is never final."Let's continue to move toward higher goals.

• *1: Gearing ratio = Interest-bearing debts/equity capital
• *2: Equity capital ratio = equity capital/total assets (average)

MOL - a True Global Organizaton

We expect the MOL Group's crosstrade to account for over 50% of total revenue and ordinary income for the first time in FY2008. To ensure further growth, I want to set 2008 as the first "global" year of a drive to transition from a Japanese shipping company to a global shipping company. In other worlds, we will truly become "Global MOL."

Japanese customers are the origin and foundation of our business, but we will drive to expand our business focusing on cross trade as the core of expanded seaborne trade in the future. We will proactively work to expand crosstrade in the Atlantic as well as in nations that are expected to see rapid economic growth, such as India, Russia, Black Sea coastal nations, and Central and South American nations including Brazil. And I want to increase the ratio of overseas revenue and ordinary income to 60% and 70% as a result. For that, we must not only proactively acquire customers overseas, but also further globalize our human resources to support that effort.

Containership Business Facing a Crucial Moment in its Turnaroundn

As I already told you, overall results of the company are favorable, but my area for concern is the containership business. Consolidated ordinary income of this segment, including terminal business, is projected at about ¥10 billion for this year, but losses on the North America route will be significant and total results of all routes will not be able to break even. This segment faces a severe situation that, if left unprofitable, threatens its viability. 2008 is a crucial year for the turnaround of the containership business . We set forth an achievable target of at least 5% in ordinary income margin for this segment, and are building a structure that can generate stable profits of ¥50 billion in consolidated ordinary income by 2010. This year, we must take a solid step toward the target.

An Uncompromising Approach to Safe Operation

It is important to take continual steps to ensure safe operation and increase quality so we can achieve "growth with enhanced quality," which is the main theme of MOL ADVANCE. Last year, we drew upon the lessons of a series of major marine incidents two years ago, and exerted every possible group-wide effort on safe operation. I would like to express my appreciation to everyone, including the seafarers who directly support safety on the front lines, for their critical efforts to ensure safety. We will continue this uncompromising approach.

And the MOL Group attracts a great deal of attention from society as profits increase. So everyone, always acknowledge the public and social responsibilities of our activities, including our group's core ocean shipping business, without being overconfident about our strong earnings, and act as a good corporate citizen.

Make Every Effort to Optimize Costs

The business climate surrounding our group changes every second. What we must keep an eye on at the moment is rising costs. Many costs such as repair, labor, and lubricants as well as skyrocketing bunker prices, are rising sharply. Please do not readily accept higher costs, and once again go a step further to reduce costs. But remember the adage "You get what you pay for," and never compromise on vessel repairs relating to safe operation. Please be painstaking in optimizing costs and consider the primary objective - to ensure safe and high-quality services over the long term.

Achieve Resilient Management

Our group is now riding on a wave of strong performance backed by record highs in the dry bulk market. We expect this momentum will continue in 2008, so I want to carry it even further, into a solid advance. However, the world economy always has uncertainties, such as the U.S. subprime loan crisis, which came to ahead in late 2007. But we will seek to maximize market-sensitive profits based on stable earnings from medium-to long-term contracts as the external business climate changes, and to earn stable profits and always prove worthy of our shareholders' trust even when the market sags. So we must quickly grasp and respond to high-quality information in today's global information society. Let's all be keenly aware of the winds surrounding us, and achieve a "resilient" management style that can always steer our group in the right direction.

Finally, I pray for the safe operation of all MOL Group vessels, and hope that 2008 will be a healthy, happy, and prosperous year for you and your families in MOL and the MOL Group.