FAQ

MOL Outline and Management Strategies
Stock Information
Sustainability
Group companies

MOL Outline and Management Strategies

What specific business activities is MOL involved in?

The MOL Group centers on the ocean shipping business, operating one of the world's leading merchant fleets, with over 800 vessels. Our ships meet a wide range of international ocean transport needs, with containerships (NOTE) that transport consumer goods such as electrical appliances and apparel; pure car and truck carriers that transport motor vehicles; dry bulkers that transport iron ore, coals, grain, wood chips for paper manufacturing, and other raw materials; tankers that transport crude oil and refined petroleum products; and LNG carriers that transport liquefied natural gas. In recent years, based on the increasing demand for energy in emerging markets, we have taken a step into a new business domain in addition to ocean transport services, namely offshore businesses encompassing FSRUs(*1) and FPSOs(*2).
We also offer ferry, coastal shipping, tugboat, real estate, and cruise ship services, which are operated by group companies.

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(NOTE) Operated by the affiliated company accounted for by the equity-method, Ocean Network Express Pte. Ltd., from April 2018

(*1) FSRU (Floating Storage and Regasification Unit): An FSRU is a floating facility for storing LNG offshore with the capability to regasify LNG onboard and send vaporized natural gas to shore through a pipeline. FSRUs 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 time and lower costs compared to conventional onshore receiving terminals.

(*2) FPSO (Floating Production, Storage and Offloading System): An FPSO is a floating facility for producing oil and gas offshore. The oil is stored in tanks in the facility and directly offloaded to shuttle tankers for transport to the onshore facility.

How do external factors such as exchange rates and bunker prices affect MOL's business performance?

Freight rates for ocean shipping are very susceptible to economic conditions around the world, because they are determined by free, open competition in a single worldwide market. We take various measures to minimize these risks, such as concluding long-term contracts that ensure stable revenue, and building specialized ships that meet customers' particular needs. However, we still face risks from declining trade volume, freight rate markets, exchange rates, bunker prices, and so on.

Our view on the impact of change in exchange rates and bunker prices, the two major risks we face, is as follows.

[Exchange rates]
Most freight rates?the major source of income we receive from ocean shipping ?are denominated in U.S. dollars while a portion of expenses is in Japanese yen, so we are heavily influenced by the dollar-yen exchange rate. The sensitivity of our consolidated ordinary income/loss to the appreciation of yen to dollar by one yen is about 0.9 billion yen for FY2019.

[Bunker prices]
Bunker (fuel for our ships) prices are generally in a correlation with crude oil prices, and an increase in the prices gives a negative impact on our group's performance. In FY2019, we project buying 4.1 million tons of bunker on a standalone and consolidated subsidiary basis, of which the Company is able to pass on about 80% of the risk to customers. 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 ¥0.19 billion (net of hedging) at the maximum.

How does MOL differ from other shipping companies?

Many overseas shipping companies are highly specialized to transport specific cargoes, offering only containership service, for example. On the other hand, the advantage of major Japanese shipping companies, including MOL, is providing various types of shipping services with world-class fleet. Among those services, MOL is especially strong in the transport of raw materials and energy, which is a major source of stable profits, giving the company a solid financial base. To further develop such strength, we are focusing our efforts on the offshore businesses, LNG carriers, chemical tankers, and ferries.

It's said that ocean shipping is an industry which has higher market risks and business performance that fluctuates widely. How does the MOL Group address market risks?

Freight rates and charter markets differ by ship type, and each of them can fluctuate significantly, reflecting the supply/demand environment. Our group mitigates such risks through diversified portfolio management and accumulation of highly stable profits and securement of variable profits to ensure stable and sustainable growth in profits.

[Risk diversification through portfolio management]
The markets for different ship types fluctuate separately, but the correlation between the markets varies and they often negate each other. As such, the impact on business performance becomes relatively moderate because we have a diversified portfolio. MOL operates various ocean shipping businesses as a way of risk diversification.

[Accumulation of "highly stable profits" and securing "other variable profits"]
We break down our ordinary profit into two classifications, "highly stable profits" and "other variable profits," according to the differences in profit structure. "Highly stable profits" is defined as profits which are generated by contracts lasting two years or more, including medium- to long- term contracts (two years or longer) for dry bulkers, tankers, LNG carriers, offshore businesses, and associated businesses. We are projecting ¥55.5 billion of highly stable profits in FY 2019.
The remaining part of the profit picture is the "other variable profits." To improve this part, we have reorganized the fleet into a more competitive one that is resistant to market fluctuations by implementing the Business Structural Reforms that involved sweeping actions to eliminate unprofitable vessels, primarily in the Dry Bulk Business Unit. In addition, we spun off the containership business and integrated it with that of the other two major Japanese shipping companies in October 2016. The new integrated company Ocean Network Express started operation in April 2018. Although the "other variable profits" in FY 2019 is still negative, we anticipate a quick turnaround.
We will strive to achieve our medium- to long-term profit and financial targets by accumulating "highly stable profits" by investing in projects where we have competitive advantages, while making sure to secure "other variable profits."

Please explain the current status of MOL's corporate governance.

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Stock Information

What is the trend in MOL's share price?

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Who are the securities analysts who cover MOL?

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How much does MOL pay out in dividends?

MOL recognizes that increasing corporate value through proactive investments in business and directly returning profits to shareholders by dividends are key management policies. For the time being, we set a 20% dividend payout ratio as a guideline in the near term and work to improve this ratio over the medium- to long-term.
Our basic policy is to pay out dividends on an interim and year-end basis. The dividend payments are set at the annual general meeting of shareholders for the year-end dividend, and at the board of directors meeting for the interim dividend.
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Sustainability

Please explain MOL's approach to sustainability issues.

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How does MOL deal with compliance issues?

On March 18, 2014, the Japan Fair Trade Commission ruled that MOL violated Article 3 of the Antimonopoly Act (Unreasonable Restraint of Trade) regarding certain car carrier shipping trades. The MOL Group has stepped up its efforts on compliance to reform its corporate culture and make sure that everyone takes to heart the lesson that compliance is at the foundation of corporate activities.
To develop and enhance the compliance system, our Compliance Committee, chaired by the Chief Compliance Officer, convenes every three months and continually monitors compliance on a group-wide scale.
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How does MOL deal with environmental issues?

MOL has identified five important themes for the Sustainability Issue of "Marine and global environmental conservation," which are "prevention of marine pollution," "promotion of measures to mitigate climate change," "reduction of air pollution," "response to environmental regulations," and "realization of transport means with low environmental burden." We are taking specific measures to address these important themes, such as reducing CO2, SOx, and NOx emissions, thoroughly managing ballast water in order to preserve biodiversity, and selecting vessel demolition yards from a standpoint of their impact on the environment. At the same time, we are examining new initiatives for reducing marine plastics.
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Group companies

Please explain MOL Group companies.

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There are links to websites of major MOL Group companies including ferries, logistics, etc.