Mitsui O.S.K. Lines New

This is Mitsui OSK Lines Fiscal Year 2024, Third Quarter Business Performance Briefing. I am Kanzuya Hamazaki, Chief Financial Officer of Mitsui OSK Lines. Let me start with a general overview. In the third quarter of fiscal year 2024, we achieved ordinary profit of 374.8 billion yen and net income of 368.1 billion yen. The containership business and the energy business performed strongly and profits exceeded the previous forecasts and levels for the same period a year earlier. As a result, our balance sheet showed total assets exceeding 4,620 billion yen and shareholders' equity exceeding 2,580 billion yen. With a shareholders' equity ratio of 47%, including estimated lease obligations of 900 billion yen, our balance sheet shows a strong financial position. As for progress on the investment plan set out in Blue Action 2035, we invested in logistics infrastructure projects in the Southeast Asia, entered into a long-term time charter agreement for six LNG carriers for Qatar, and also signed a long-term charter agreement for three liquefied ethane carriers for Thailand, accumulating long-term stable profit. In our full-year outlook for fiscal year 2024, we forecast ordinary profit of 410.0 billion yen, which represents an upward revision of 45.0 billion yen, and net income of 400.0 billion yen, which represents an upward revision of 50.0 billion yen from our previous forecast, given our strong performance in the third quarter. In view of recent exchange rates, we changed our exchange rate assumption to 155 yen to the dollar. Despite the recent developments in the Middle East, we are not at the stage to confirm the safety of transit via the Red Sea, and our forecast is based on the assumption that Red Sea transit disruptions will last through to the end of the fiscal year, as previously forecast. Due to the upward revision of our full-year forecast, we plan to pay an annual total dividend of 340 yen per share, which is an increase of 40 yen per share, in accordance with our shareholder return policy, which sets the dividend payout ratio at 30%. Regarding the repurchase up to 100 billion yen of our own shares, announced at the end of October 2024, the repurchase of around 8.3 million shares was completed as of the end of December 2024. We will determine the year-end dividend based on the total number of issued shares excluding treasury shares at the end of the fiscal year and according to a 30% dividend payout ratio. Our Corporate Communication Officer, Sanai Sonoda, will now give an overview of the financial results based on the financial results presentation materials. We achieved a year-on-year increase in ordinary profit of 177.6 billion yen and a year-on-year increase in net income of 164.5 billion yen. The containership business, the energy business, and the car carrier business all performed strongly, significantly contributing to increased profitability. Dry Bulk Business The dry bulk business posted ordinary profit of ¥14.7 billion, a decrease of ¥22.4 billion from the same period of the previous year. Looking at the rates for each type of vessel, the Cape size bulk or market rates remained firm, due to steady iron or shipments from Western Australia and Brazil, and bauxite shipments from West Africa, resulting in a year-on-year increase in profit. However, market rates for Panamax and smaller vessels weakened, as vessel supply and demand balance tended to ease, due to lackluster domestic consumption in China, resulting in a year-on-year profit decrease. The dry bulk business posted lower profit than a year earlier, largely due to the absence of profit, from the reversal of an allowance, for doubtful accounts, recorded in the previous fiscal year. Energy Business The energy business posted ordinary profit of 81.4 billion yen, rising 22.6 billion yen, year on year and helping to push up overall profit. Tankers and Offshore Business The profitability of very large crude oil carriers, product tankers, and methanol tankers was bolstered by tight vessel 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 lackluster domestic demand in China, and profit was unchanged year on year. Chemical tankers performed strongly, with market rates remaining high, in addition to the boost from the acquisition of Fairfield chemical carriers. Profit in the FPSO business increased year-on-year, due to the stable profit contribution of 11 FPSOs and the recording of equity method investment profit from MODEC, Inc., following application of the equity method in August this year. Liquified gas business. The LNG carrier business and LNG infrastructure business contributed to stable earnings through the delivery of new vessels and the profit contribution of existing charter contracts. Product transport business. The product transport business, which includes the container ship business, posted ordinary profit of ¥272.3 billion, rising ¥187.0 billion year-on-year, and significantly contributing to our business performance, due to robust container freight rates. Container Ships Business ocean network express commonly called one achieved a substantial increase in profit year on year as spot freight rates remained firm due to the continued rerouting of vessels round the cape of good hope and high demand for cargo shipments from asia to europe and north america In the third quarter of fiscal year 2024, one reported after-tax profit of US$3,935 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. Due to these earnings at 1, our container ship business reported ordinary profit of 203.7 billion yen, which represents an increase of 173.6 billion yen year-on-year. Car Carrier Business Profit increased year-on-year, partly due to favorable exchange rates and improved operating efficiency, even though transport volumes declined year-on-year, due to delays caused by strikes at certain ports. Terminal and Logistics Business The domestic container terminal business performed strongly. However, the logistics business reported lower profit than a year earlier, due to rising freight procurement costs, despite expansion of handling volume in air and sea transportation. Wellbeing and Lifestyle Business The wellbeing and lifestyle business achieved ordinary profit of 9.6 billion yen, an increase of 1.4 billion yen year-on-year, mainly reflecting the revenue and profit contribution of the real property business. Real Property Business The real property business achieved a year-on-year increase in profit, due to the profits recorded at equity method affiliates, in addition to the profit contribution of existing properties. Ferries and Coastal Roroships Business The ferries and coastal Roro ships business achieved higher profit than in the same period a year earlier, reflecting strong performances in the cargo transportation business and the passenger transportation business. Cruise business The cruise business reported a year-on-year decrease in profit, reflecting upfront expenditures, for the entry into service of Mitsui Ocean Fuji, MOL Cruises' second ship. Associated businesses. The associated businesses posted profit, mostly unchanged year-on-year, due to the contribution 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 fiscal year 2024 full-year forecast. Assuming the fiscal year-end exchange rate of 155 yen and assuming that the disruption of transit through the Red Sea will last through to the end of the fiscal year, we forecast ordinary profit of 410.0 billion yen and net income of 400.0 billion yen. Dry Bulk Business The dry bulk business is expected to post ordinary profit of ¥14.0 billion, which represents a downward revision of ¥4.0 billion from the previous forecast. The market rates for Cape-sized bulkers are expected to weaken, reflecting decline in Brazilian iron or shipments, due to seasonal factors, during Brazil's rainy season, and decline in shipping demand, due to bad weather in Australia. 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 soften vessel supply and demand balance. Energy business The energy business is expected to record ordinary profit of 104.0 billion yen, which represents an upward revision of 4.0 billion yen from the previous forecast. This equates to a year-on-year profit increase of 37.0 billion yen. Bolstered by our investments in Fairfield Chemical Carriers and MODEC, and with ordinary profit exceeding 100.0 billion yen, the energy business is contributing to our performance. 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 continued geopolitical tensions since the previous fiscal year. The chemical tanker business is likely to continue performing strongly, due to the profit contribution of newly acquired Fairfield chemical carriers, as explained earlier. In the offshore business, our FPSO forecast reflects the contribution of the existing long-term charter contracts and the reporting of equity method investment profit from MODEC. Liquefied Gas Business In the liquefied gas business, the delivery of new vessels and existing long-term charter contracts are likely to make a stable profit contribution. Product Transport Business In the product transport business overall, we forecast ordinary profit of 290.0 billion yen, which represents an upward revision of 46.0 billion yen from our previous forecast, due to the upward revision of the container ship business in the third quarter. Containerships Business One has raised its previous forecast for after-tax profit by US$939 million to US$4,034 million. While, docile supply and demand has weakened recently, one expects to see gradual recovery from Chinese New Year. Please refer to, Once Response to Recent Changes, in the Business Environment, later on page 6, for further details. Taking once forecast into consideration, we raised our previous full-year forecast for our container ship business by 50.0 billion yen to 207.0 billion yen. Car Carrier Business Shipping demand for completed cars is expected to remain firm, however, we lowered our previous forecast on expectations for decline in shipping volume due to longer delays caused by strikes at certain ports and port congestion in the Persian Gulf. Terminal and Logistics Business The terminal and logistics business is expected to fall short of the previous forecast, due to increased expenditure, associated with rising freight procurement cost in the logistics business. Wellbeing and Lifestyle Business The wellbeing and lifestyle business is expected to record ordinary profit of 7.0 billion yen, which represents an upward revision of 1.0 billion yen from the previous forecast. Real Property Business Diberu, our core real property subsidiary, is expected to generate stable profit, in line with the previous forecast, due to high occupancy at existing properties, despite the concentration of maintenance and repair costs on the fourth quarter. Ferries and Coastal Roroships Business In the business of ferries and coastal rural ships, the logistics business and the passenger transportation business are both expected to continue performing strongly. Cruise Business The cruise business is expected to perform in line with the previous forecast, with steady growth in operating revenue, including revenue from Mitsui Ocean Fuji, delivered in December. Associated Businesses Performance, in line with the previous forecast, is expected. Dividend Finally, I will explain the dividend forecast. We plan to pay an annual total dividend of ¥340 per share, which is an increase of ¥40, to reflect the ¥50.0 billion upward revision of our net income forecasts. We are planning a year-end dividend of 160 yen per share, which is an increase of 40 yen, in addition to an interim dividend of 180 yen per share. This concludes my explanation of the fiscal year 2024 forecast.