Earnings Call: Q3 2026

Jan 30, 2026

Summary

Q3 FY2025 ordinary profit and net income declined YoY, largely on weaker containership earnings, while energy and vehicle transport remained supportive. FY2025 forecasts were raised, with the JPY 200 per-share dividend maintained.

I am Kazuya Hamazaki, Chief Financial Officer of Mitsui O.S.K. Lines. Let me start with a general overview. In the third quarter of fiscal year 2025, we achieved income before income taxes of JPY 219.1 billion and net income of JPY 180.5 billion, reflecting strong performances in the energy business and the vehicle transport business. Our year-on-year performance was impacted by significantly lower profit in the containerships business. As a result, our balance sheet showed total assets exceeding JPY 5.6 trillion and shareholders' equity exceeding JPY 2.7 trillion. Our shareholders' equity ratio was 48.1%. Our shareholders' equity ratio, including estimated lease obligations of JPY 900.0 billion, is 40%. As for progress on the investment plan set out in Blue Action 2035, we accumulated long-term stable agreements, securing long-term charters for two ethane carriers and one LNG carrier for India, and signing a charter agreement for two liquefied CO2 carriers with Northern Lights. In our full-year outlook for fiscal year 2025, we forecast income before income taxes of JPY 240.0 billion, which represents an upward revision of JPY 25.0 billion from our previous forecast in light of the third quarter results, and net income of JPY 200.0 billion, which represents an upward revision of JPY 20.0 billion. In view of recent exchange rates, we changed our exchange rate assumption to 150 yen to the dollar. Despite the recent changes in the situation in the Middle East, we are still unable to confirm the safety of transit via the Red Sea, and our forecast is based on the assumption that Red Sea transit restrictions will last through to the end of the fiscal year, as previously forecast. As for the dividend amount, we will maintain our shareholder return policy of paying a fixed dividend of JPY 200 for fiscal year 2025, announced at the time of our first-half results. After deducting the interim dividend of JPY 85 per share already paid, we plan to pay a year-end dividend of JPY 115 per share. We plan to announce our shareholder return policy from fiscal year 2026 onwards in March 2026, when we will announce Phase 2 of our corporate management plan, taking into consideration the effects of investments made in Phase 1, especially cash flow generated by non-containership businesses. Our Chief Communication Officer, Sanae Sonoda, will now give an overview of the financial results based on the financial results presentation materials. For details of our business performance in the third quarter of fiscal year 2025, please refer to the outline on page six and page seven in the briefing materials. Compared with the same period a year earlier, ordinary profit fell JPY 215.2 billion to JPY 161.4 billion, and net income decreased JPY 189.4 billion to JPY 180.5 billion. Dry bulk business. The dry bulk business posted ordinary profit of JPY 1.8 billion, a decrease of JPY 14.5 billion from the same period of the previous fiscal year. Looking at the market rates for each type of vessel, the Capesize bulker market rates remained firm due to steady iron ore shipments from Western Australia and Brazil, and bauxite shipments from West Africa. However, market rates for Panamax and smaller vessels weakened as the supply-demand balance tended to ease due to stagnating domestic demand in China, resulting in a year-on-year profit decrease. Open hatch bulkers saw improved profitability due to increased shipping demand for South American pulp and the Kapsura project cargo, but profit decreased year-on-year due to increased depreciation expenses associated with the consolidation of Gearbulk Holding AG as a subsidiary. Energy business. The energy business reported ordinary profit of JPY 65.9 billion, a decrease of JPY 15.7 billion year-on-year, reflecting the absence of one-time gains recorded in FY 2024 in connection with the application of the equity method to MODEC Inc. Tankers and offshore business. The profitability of very large crude oil carriers, VLCCs, product tankers, and methanol tankers was bolstered by tight supply and demand due to the prolonged Red Sea disruption, in addition to the contribution of long-term contracts. However, the market softened at times due to weakened domestic demand in China, and profit was unchanged year-on-year. Chemical tankers saw weak shipping demand and softening market rates due to the effect of U.S. tariff policy and economic stagnation in China and Europe, and profit fell year-on-year. The FPSO business secured solid profit due to stable profit from existing long-term contracts and MODEC's profit contribution. Liquefied gas business. The LNG carrier, ethane carrier, and gas infrastructure businesses contributed to stable profits through the profit contribution of long-term charter contracts. Product transport business. The product transport business posted an ordinary profit of JPY 80.4 billion, down JPY 191.8 billion year-on-year due to a decline in container ship freight rates. Container ships business. Please refer to page 3 of ONE's magenta-colored materials. ONE reported a sharp decrease in profit year-on-year due to a decline in spot freight rates caused by pressure from new vessel supply and slowing cargo movements from Asia to North America. In the third quarter of FY 2025, ONE reported after-tax profit of $283 million, and MOL integrated its 31% share of these earnings into segment profit as equity in earnings of affiliated companies. Please look at page 4 of the slides for details of changes in liftings, capacity utilization rates, and freight index. Please return to page 7 of MOL's blue-colored materials. Due to these earnings at ONE, our containership's business reported ordinary profit of JPY 21.7 billion, which represents a decrease of JPY 182.0 billion year-on-year. Vehicle transport business. While shipping demand for completed cars remained firm, the decline in spot freight rates due to pressure from new vessel supply and deterioration in vessel allocation efficiency resulted in a year-on-year decrease in profit. Terminal and logistics business. The domestic container terminal business performed strongly. However, in the logistics business, cargo movement to the U.S. slowed due to the impact of U.S. tariff policies, resulting in a year-on-year decrease in profit. Wellbeing and lifestyle business. The wellbeing and lifestyle business posted ordinary profit of JPY 0.9 billion, a decrease of JPY 8.7 billion from the same period the previous fiscal year. Real property business. In the real property business, profit fell JPY 4.2 billion year-on-year due to building reconstruction expenses and the absence of one-time gains recorded last fiscal year, despite the profit contributions of existing properties and newly acquired overseas properties. Ferries and coastal ro-ro ships business. In the ferries and coastal ro-ro ships business, profit was mostly unchanged year-on-year, reflecting a strong performance in the passenger transportation business. Cruise business. In the cruise business, profit fell year-on-year due to reduced revenue from the non-operation of Mitsui Ocean Fuji and delayed recovery in passenger numbers after the vessel resumed operations. Associated businesses. The associated businesses posted higher profit than in the same period a year earlier due to the contributions of the tugboat business and the trading business. This concludes the summary of the financial results for the third quarter. Next, I would like to explain our FY 2025 full year forecast. Page 9 of the financial results presentation materials shows our consolidated ordinary profit forecasts by segment. Please refer to the key points for each segment on page 11 and page 12. Assuming the fiscal year-end exchange rate of 150 yen to the dollar, we forecast ordinary profit of JPY 180.0 billion, income before income taxes of JPY 240.0 billion, and net income of JPY 200.0 billion, which represents upward revisions from our previous forecasts. I will now explain the forecasts for each segment. Dry bulk business. The dry bulk business is expected to record ordinary profit of JPY 4.0 billion, which represents an upward revision of JPY 3.0 billion from the previous forecast. In the Capesize bulker market, we expect shipments to weaken given the impact of the rainy season in Brazil and cyclones in Australia. However, market rates will likely be supported by firm shipments of bauxite from West Africa and the start of shipments of iron ore. We lowered our forecast for market rates for Panamax and smaller vessels on expectations of a slowdown in shipments due to the economic downturn in China, which will create slack in the supply-demand balance. In the open hatch bulker business, profit was revised upward from the previous forecast, reflecting a recovery in pulp cargo movements and the capture of project cargo. Energy business. The energy business is expected to record ordinary profit of JPY 74.0 billion, which represents an upward revision of JPY 9.0 billion from the previous forecast. Tankers and offshore business. In the tanker business, long-term contracts will contribute to profit, and market rates are likely to hold firm, reflecting tighter vessel supply and demand as a result of demand for floating storage, driven by lower crude oil prices as well as geopolitical risks. The chemical tanker business is expected to secure profit in line with the previous forecast, despite being impacted by soft market rates reflecting economic slowdown in China and U.S. tariff policy. In the offshore business, we upwardly revised our previous forecast on the basis of the contribution of existing long-term charter contracts in the FPSO business and a strong performance at MODEC. In the liquefied gas business, we expect a stable profit contribution from existing long-term charter contracts. However, we anticipate that some vessels will be out of operation and that we will incur impairment losses on the expiration of long-term charter contracts. Product transport business. In the product transport business, overall, we forecast ordinary profit of JPY 97.0 billion, which represents an upward revision of JPY 9.0 billion from our previous forecast due to the upward revision of the vehicle transport business. Containership business. Please refer to page 5 of ONE's magenta-colored materials. ONE has left its previous forecast for after-tax profit unchanged at $310 million. In the third quarter, freight rates softened more than anticipated, but ONE expects to see gradual improvement from Chinese New Year. Please refer to ONE's response to recent changes in the business environment later on page 6 for further details. Please return to page 12 of MOL's blue-colored materials. Taking ONE's forecast into consideration, our full year forecast for our containership business is JPY 25.0 billion as previously forecast. Vehicle transport business. The forecasts have been revised upward on the basis that the vehicle transport business will benefit from solid shipping demand for completed cars and a reduction in operating costs due to the postponement of U.S. trade policy measures. Terminal and logistics business. The forecast for the terminal and logistics business has been revised downward in view of the slowdown in cargo movements to the U.S. due to the impact of U.S. tariff policies in the logistics business. In the LBC tank terminal business, while stable income is expected from long-term contracts, the contribution to profit will be limited due to one-time expenses and goodwill amortization associated with the acquisition of LBC. Wellbeing and lifestyle business. The wellbeing and lifestyle business is expected to record an ordinary loss of JPY 3.0 billion, which represents a downward revision of JPY 1.0 billion from the previous forecast. Real property business. The forecast for Daibiru, our core real property subsidiary, has been revised upward by JPY 1.0 billion from the previous forecast on expectations of high occupancy at existing properties and the contribution to profit of newly acquired properties, despite the concentration of maintenance and repair costs on the fourth quarter. Ferries and coastal ro-ro ships business. In the ferries and coastal ro-ro ships business, the passenger transportation business is expected to continue performing strongly. Cruise business. The previous forecast has been revised downward as it is taking time for the sales promotion activities for Mitsui Ocean Fuji to result in higher passenger numbers. Associated businesses. We upwardly revised our previous forecast by JPY 1.0 billion in view of the strong performance of the tugboat business and trading business. Dividend. Finally, I will explain the dividend forecast. We have not changed our returns policy of paying a fixed dividend for fiscal year 2025 of JPY 200 per share, which we announced with our second quarter results, and after deduction of the interim dividend of JPY 85 already paid, we plan to pay a year-end dividend of JPY 115 per share. This concludes my explanation of the fiscal year 2025 forecast.