Mitsui O.S.K. Lines, Ltd. Announces Reversal of Deferred Tax Assets, Revision of FY2012 Outlook, Costs of Business Structural Reforms, and Year-End Dividend Forecast

January 31, 2013

TOKYO - Mitsui O.S.K. Lines, Ltd. (the Company; President: Koichi Muto) today announced a reversal of deferred tax assets, a revision of its consolidated business outlook for FY2012 ending March 31, 2013, costs of business structural reforms, and a revision of the forecast for its year-end dividend, as follows:

• Reversal of deferred tax assets
  As a result of considerable deliberations about the realizability of deferred tax assets, reflecting unprecedented downturn in the dry bulker and tanker markets due to historically high numbers of newly built vessels coming into service, and the severe business environment surrounding the company, the company reversed some of its deferred tax assets and allocated ¥28.6 billion to deferred income taxes in the third quarter of FY2012 ended December 31, 2012. The reversal of deferred tax assets has no impact on the company's cash flow.

• Revisions to the consolidated business outlook for FY2012 (April 1, 2012, to March 31, 2013)

  	Revenue	Operating Loss	Ordinary Loss	Net Loss	Net Loss per Share
  Previous outlook (A)	¥mil. 1,500,000	¥mil. -13,000	¥mil. -22,000	¥mil. -24,000	¥ -20.07
  Revised outlook (B)	1,510,000	-18,000	-28,000	-177,000	-148.03
  Change (B)-(A)	10,000	-5,000	-6,000	-153,000
  Change (%)	0.7	-	-	-
  (Ref)  FY2011 (ended in March 2012) results	1,435,220	-24,459	-24,320	-26,009	-21.76

  Reasons for revision of outlook
  The company anticipates an operating loss of ¥18 billion, a ¥5 billion increase over the previous outlook, and a ¥28 billion ordinary loss, a ¥6 billion increase over the previous outlook, due to the slowdown in the dry bulker and tanker markets, a delay in improvement of profits in the containership market, and other factors, compared to the business climate assumed at the time the previous outlook was announced. The company anticipates a net loss of ¥177 billion, which is significantly greater than the previous loss outlook because some of its deferred tax assets were reversed as mentioned above, and the costs of business structural reforms during the fourth quarter of the year will be allocated even though the loss on write-down of investment securities decreased as a result of an improvement in stock market prices for the third quarter of FY 2012.

• Costs of business structural reforms
  • (1) Details
    Particularly, the dry bulker and tanker markets have been in a severe downturn because the vessel supply-demand balance has worsened due to deliveries of many newly built vessels, which continued at a historically high level. Under this difficult market climate, the company will formulate a FY2013 management plan and initiate business structural reforms aimed at restoring its performance. Prior to these reforms, as the highest priority task, the company will carry out advanced initiatives to reform the dry bulker and tanker businesses during the fourth quarter of this fiscal year.
  • (2) Outline of business structural reforms
    • Accelerate business expansion in Singapore
      The company will accelerate expansion of its dry bulker business in Singapore, which is the trade center for emerging markets and Asia's shipping center.
    • Scale down risk exposure in the dry bulker and tanker businesses
      The company will restructure its existing fleets, seeking to restore cost competitiveness.
    • Further cost reduction at different stages
      The company will take further steps to reduce costs in addition to conventional cost reduction items.
  • (3) Future outlook
    The company anticipates generation of about ¥101.0 billion mainly in extraordinary loss during the fourth quarter of this fiscal year due to the sale of vessels and assignment of the time charter contracts as it implements reforms in the dry bulker and tanker businesses. Through these reforms, the company anticipates an improvement of about ¥40 billion in profits for FY2013, ending March 31, 2014.

• Year-end dividend forecast

  	Annual dividend
  Record Date	Interim(2Q end)	Year End	Total
  Previous Dividend Forecast (issued on October 31, 2012)		To be decided	To be decided
  Revised Dividend Forecast		¥0	¥0
  Paid for FY2012	¥0
  Paid for FY2011 (Ended March 31, 2012)	¥2.50	¥2.50	¥5.00

  Reasons for revision
  The company regrettably has revised its forecast for year-end dividend for the fiscal year ending March 31, 2013 from undetermined to none, reflecting a revision of the outlook as explained above, and in consideration of the company's financial condition.

  Note: The above future outlook is issued by the company on the basis of currently available information as of the announcement date. Please note that the actual results may differ from this outlook due to various factors in the future.