MOL Will Record Extraordinary Loss
Mitsui O.S.K. Lines, Ltd. has confirmed plans to implement measures for business structural
reforms in its dry bulker and containership operations.
The carrier has also decided to record an extraordinary loss of $1.63 billion as a result of those reforms.
The company decided to conduct a drastic review of its business models related to mid- and small-size bulkers, scale down the Capesize bulker fleet in the dry bulker business, and take steps that include recording an impairment loss on business assets and so on in the containership business. It will implement some of the measures starting this month, but will record the loss from business structural reforms in the fourth quarter of this fiscal year’s consolidated financial results.
In fiscal year 2012, the company implemented business structural reforms. As a part of the reforms,
it established MOLBC in Singapore as the key operator of free vessels in the mid- and small-size
bulker markets. However, the company deemed it necessary to conduct an urgent review of its
business models due to the prolonged sluggish dry bulker market, and decided to implement a major
scale-down of the fleet to minimize its market exposure by free vessels, dissolve MOLBC, and
transfer its business operations from Singapore to Tokyo. MOL will assume, as the key fleet,
about half of the mid- and long-term chartered-in vessels currently operated by MOLBC, to meet
expected demand for cargo transport and has decided to return the other vessels.
In a move to reduce the number of surplus vessels in service, the company decided to reduce its
Capesize fleet by about 10 percent by cancelling some charter-in contracts and selling some vessels it
owns. It has already started returning chartered-in vessels based on agreements with business
Effective April 1, MOL restructured its internal dry bulker business divisions and established the new Dry Bulk Business Unit. This aims to strengthen internal ties among different divisions to more swiftly meet diversified customer needs by optimizing its portfolio of ship types. MOLBC is slated to suspend its business operations by the end of September 2016.
Considering the prolonged market stagnation and freight rates on many key routes hovering at
historic lows, the company decided to record an impairment loss on all vessels owned by group companies and write off their book values down to recoverable values based on an examination of the future recoverability of the containership business, and to sell some of its surplus vessels.
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