MOL: Financial Highlights: The Third Quarter Ended December 31, 2023

The average exchange rate against the dollar for cumulative Q3 of the current fiscal year decreased by ¥6.71/US$ to ¥142.19/US$ from the same period of the previous fiscal year. The average bunker price for cumulative Q3 of the current fiscal year decreased by US$168/MT to US$619/MT from the same period of the previous fiscal year

We recorded revenue of ¥1,218.6 billion, an operating profit of ¥80.1 billion, an ordinary profit of ¥197.2 billion and profit attributable to owners of parent of ¥203.6 billion.

The following is a summary of business conditions including revenue and ordinary profit/loss per business segment.

(A)Dry Bulk Business

The Capesize bulker market rates remained in an upward trend, reflecting improved vessel supply and demand, especially in the Atlantic, due to the recovery of bauxite shipments from West Africa with the end of the rainy season, amid steady growth in iron ore shipments from Brazil. In addition, mounting vessel delays at Chinese ports amid bad weather led to a tighter vessel supply and demand situation in the Pacific Ocean, maintaining favorable market conditions.

Meanwhile, the market rates for Panamax, Handymax, and smaller vessels remained lackluster during the first half, dampened by pessimism on China’s economy, despite firm coal and grain shipments; however, in the second half, the drought in the Panama Canal and heightened geopolitical risk in the Middle East tightened the vessel supply and demand balance, sparking a recovery.

The dry bulk business posted a year-on-year decline in profit, with lower market rates than a year earlier despite the effect of the reversal of an allowance for doubtful accounts recorded in the past at one of our consolidated subsidiaries, in relation to a loan to GEARBULK HOLDING AG, an equity-method affiliate, as a result of improvement in this company’s financial standing.

(B)Energy Business

The very large crude carrier (VLCC) market rates remained steady, despite the OPEC Plus oil output cuts hampering an upturn in shipments during the winter demand period, the VLCC transportation demand from the US was stable due to a relatively low crude oil price.

The product tanker market rates remained high, reflecting brisk cargo movements with both the US and China increasing exports of petroleum products, as well as tight vessel supply and demand caused by the congestion due to the drought in the Panama Canal and other factors. The Chemical tanker market rates also remained steady.

In this market environment, by consistently fulfilling long-term contracts, the tanker business as a whole posted a year-on-year increase in profits.

The FPSO business, which has been securing stable profit through existing long-term charter contracts, reported a year-on-year increase in profit, thanks to the start of a new charter contract.

In the LNG carrier business, some long-term contracts expired, and profit remained at the same level year- on-year, despite acquiring new contracts. The FSRU business posted a year-on-year decrease in profit due to termination of a previous contract and commencement of a new project.

(C)Product Transport Business

At OCEAN NETWORK EXPRESS PTE. LTD. (ONE), the Company’s equity-method affiliate, spot freight rates remained low due to increased new vessel deliveries and slow consumption growth in the face of persistent inflation. As a result, ONE reported a sharp drop in profit year-on-year.

Shipping demand for completed cars generally held firm in response to the automotive supply chain recovery.

Shipping demand on each shipping route changed from one minute to the next depending on the car sales in each country, and we achieved a year-on-year increase in profit by flexibly revising vessel allocation plans.

Container handling volumes in the terminal business decreased due to sluggish cargo movements at overseas terminals, despite firm cargo movements at domestic terminals. In the logistics business, profit levels declined due to weak air and sea freight rates and, as a result, the terminal and logistics business posted lower profits year-on-year.

(D)Wellbeing & Lifestyle Business

The real property business maintained around the same profit level year-on-year thanks to higher property occupancy rates, despite the increased costs associated with new property acquisitions by DAIBIRU, the core company in the Group’s real property business.

Ferries and Coastal RoRo Ships>

Cargo transportation decreased, as the RoRo ships operated by MOL Sunflower Ltd. However, passenger transportation increased sharply, mainly thanks to the entry into service of new LNG-fueled ferries, and as a result, the ferries and coastal RoRo ships business as a whole achieved higher profit than a year earlier.

The cruise business achieved improved profitability year-on-year due to continued recovery in travelling demand following the easing of COVID-19 restrictions.

(E)Associated Businesses

In the tugboat business, operation frequency tended to be down year-on-year but posted a year-on-year increase in profit with the effects of a tugboat service fee revision. The trading company business posted lower profits year-on-year due to the deterioration of the business environment.

(F)Others

Other businesses include ship operations, ship management, ship chartering and financing. This segment posted higher profits year-on-year.

Full Report

Source: Mitsui O.S.K. Lines