TOKYO: MOL reported a revenue of ¥1,652.3 billion for the FY 2017 ( April 1 2017 - March 31st 2018 ) with operating profit of ¥22.6 billion and ordinary profit of ¥31.4 billion.
The Company established a joint-venture company to integrate the container shipping business, Ocean Network Express Pte. Ltd. (ONE). In relation to the business integration, losses related to the charter-out of vessels to ONE, losses on liquidation of the Company’s agencies, and others are projected to be incurred from FY2018 and afterwards.
In the global economy during the fiscal year under review, overall, a trend of stable expansion seen in the last year continued to prevail. In the U.S. economy, there was ongoing recovery in personal consumption amid favorable employment and income environments, the corporate sector continued to recover in production and exports and a trend of expansion was maintained.
In the European economy, personal consumption was firm amid improvement in the employment environment and a moderate recovery continued. The Chinese economy continued firmly with personal consumption expanding stably on the back of favorable employment and income environments, and exports also expanding on the tailwind of a recovering global economy. In Japan, economic recovery continued, with ongoing favorable employment and income environments and a continuing moderate recovery of personal consumption, along with a recovery in demand in the corporate sector both in Japan and overseas. Looking at the maritime shipping market conditions, the dry bulker market proceeded firmly at a considerably higher level compared with the previous fiscal year, supported by strong cargo movements of iron ore, grain cargo from the east coast of South America, and coal, which is one of mainstay cargos. The very large crude oil carrier (VLCC) market, without a significant rise over the winter demand season, dropped below the previous fiscal year’s levels even for the entire full year, against a backdrop of a surplus of vessels brought about by factors such as a vessel supply increase, delays in the progress of the retirement of aged vessels, and permeating adverse effects of decisions by OPEC countries to reduce oil production. In the containership freight market, there were observable improvements in the supply and demand environment on Asia-North America, Asia-Europe and Asia-South America routes, which facilitated a recovery in the spot freight rates.
In particular, on the Asia-East Coast of South America routes, cargo volumes recovered sharply as the Brazilian economy showed signs of pickup, and spot freight rates began sharply rising from the beginning of spring and stayed strong throughout the fiscal year.
Outlook for 2018
We anticipate that the World economy will continue its expansionary trend and proceed firmly in the next fiscal year. However, we also recognize the need to closely monitor monetary policies of the U.S. and Europe, trend toward trade friction centered on the U.S., and geopolitical risk in East Asia. In the developed countries, we anticipate that firm economic recovery will continue, particularly in the U.S., where the economy is growing under tax reforms and financial stimulus measures. In the economies of emerging countries, we anticipate stable expansion of the economy, as although the pace of economic growth in China is expected to slowly moderate, the economies of India and ASEAN are expected to maintain firm growth. The level of the dry bulker market is expected to remain higher than the current fiscal year due to a certain level of the vessel demand being supported by an increase in cargo volumes due to firm demand of iron ore from China, and an increase in grain shipments from South America, and other factors. With respect to the very large crude oil carrier (VLCC) market, although crude oil cargo volumes are expected to be flat from the Middle East stemming from prolonged OPEC production reductions, we expect a small increase in the seaborne crude oil cargo volume overall as we anticipate that the increase in exports of crude oil produced in the Atlantic Ocean, such as North-American produced shale oil, will provide growth for crude oil demand. Meanwhile, in terms of vessel supply, while we expect the number of new vessels coming into operation at the same high level as the previous fiscal year, we expect that the VLCC market will remain in an adjustment phase for the medium term, taking into account that the number of aged ships being scrapped is continuing at a high level due to firm scrapping prices.
As for the product tanker market, although we anticipate trade to be invigorated due to a continuing trend of increasing exports of petroleum products from countries such as India and China, and increased demand for petroleum products in emerging countries, we expect the market to remain weak because we don’t expect any sudden growth in the number of vessels getting scrapped despite the continuing delivery of new vessels.
With respect to the containership business, Ocean Network Express Pte. Ltd. (ONE), (Unaudited translation of ‘Kessan Tanshin’, provided for reference only) April 27, 2018 - 8 - a company established through the integration of the containership businesses of MOL, Kawasaki Kisen Kaisha, Ltd. and Nippon Yusen Kabushiki Kaisha, took over MOL’s pre-existing operations and started services in April this year.
ONE’s operations combine the best practices cultivated by the respective containership businesses of MOL, Kawasaki Kisen Kaisha, Ltd., and Nippon Yusen Kabushiki Kaisha, and utilize the merit of scale of the business achieved by the integration in order to strengthen profitability.
In consideration of these prospects, for the full year, we project revenue of ¥1,130.0 billion, operating profit of ¥23.0 billion, ordinary profit of ¥40.0 billion and profit attributable to owners of parent of ¥30.0 billion.