Mitsui O.S.K. Lines New

I am Takashi Hashimoto, President of Mitsui OSK Lines. I would like to give a summary at the beginning of this presentation. In our fiscal year 2024 financial results, we achieved a significant profit increase year-on-year, driven by strong performances in the container ship business, the car carrier business, and the energy business. Profit before tax reached 452.7 billion yen. We had set 240 billion yen as our target for fiscal year 2025, the final fiscal year of phase 1 of our management plan, Blue Action 2035, and we far exceeded the target of this phase. As a result, our balance sheet has an appropriate capital structure, by effective use of financial leverages, with total assets exceeding ¥4.9 trillion, shareholders' equity exceeding ¥2.6 trillion, and a shareholders' equity ratio of 43%, including estimated lease liabilities of ¥900 billion. As for progress on the investment plan, set out in Blue Action 2035, we surpassed our initial plan of investing 1.2 trillion yen in total by fiscal year 2025 and have clear outlook for 1.8 trillion yen investments in total. In fiscal year 2024, we made investments for the future and development of our fleets through the acquisition of a tank terminal company, which can be expected to generate synergies with the chemical tanker business and has the potential to become a core non-shipping business, the placement of orders for new FSRUs, ethane carriers, and ammonia dual-fuel bulk carriers, and the purchase of the sister ship of Mitsui Ocean Fuji. In terms of financial KPIs, through total profits earned and total investments made during fiscal year 2023 and fiscal year 2024, we succeeded in achieving our profit projection and investment plan for the three-year period of Phase 1, ahead of schedule. For dividends, we plan to increase 20 yen and pay a year-end dividend of 180 yen per share. This combined with the interim dividend of 180 yen brings the full-year dividend to 360 yen. As for the full-year outlook for fiscal year 2025, we have factored in a downturn based on certain assumptions, however, it is currently extremely difficult to quantify the negative impact that the global economic upheaval caused by US tariffs will have on the shipping market. we forecast income before income taxes of 200 billion yen and net income of 170 billion yen which represents a significant drop in profit year on year this is based on our exchange rate assumption 140 yen to the dollar and that the longer sailing days caused by the red sea tension and the decline in freight volume caused by tariffs will last through to the end of the fiscal year and also factoring in the imbalance between supply and demand, caused by increased supply of container ships and car carriers. In terms of dividends, we will apply the minimum dividend set forth in the Phase 1 shareholder return policy and plan to pay a full-year dividend per share of ¥150 for fiscal year 2025. Given that we achieved our financial KPIs ahead of schedule, we considered enhancing the shareholder returns from fiscal year 2025, but decided to hold off at this timing. If global uncertainties are eliminated and the outlook becomes clearer, we will reconsider enhancing the shareholder returns during fiscal year 2025. Fiscal year 2025 is the final fiscal year of phase one of the management plan and is an important year for designing our action plan, profit plan, cash allocation, and shareholder return policy for phase two. Considering the business environment, which has changed considerably since we established our management plan, we will carefully analyze the results of initiatives in phase one and the issues to be addressed, and we will also consider setting new core KPIs from phase two. It will be a key to realize returns on the investments we decided to make in Phase 1 as quickly as possible and reassess the existing businesses and determining priority business areas with high growth potential and profitability. CFO Hamazaki will now give further details of our business performance in FY2024 and our outlook for FY2025. I am Kinzuya Hamazaki, CFO of Mitsui OSK Lines. Let me start by explaining our fiscal year 2020 for financial results. Please look at page 3 of the slides in the blue-colored presentation materials. Our profits exceeded our previous forecasts, mainly thanks to the profit contributions of the container ship business and the car carrier business. Business profit, which is operating profit plus equity and earnings of affiliated companies, was 413.2 billion yen, increasing 3.2 billion yen from our previous forecast. Ordinary profit was 419.7 billion yen, increasing 9.7 billion yen from our previous forecast. Income before income taxes was 452.7 billion yen, increasing 22.7 billion yen from our previous forecast, and net income was 425.4 billion yen, increasing 25.4 billion yen from our previous forecast. Later, please take a look at page 5 of the slides, which features a waterfall chart showing variance analysis, comparing actual results with previous forecasts. I will now explain the factors behind the year-on-year differences in ordinary profit for each segment. Please look at page 7 of the slides. Dry Bulk Business The dry bulk business posted an ordinary profit of ¥13.9 billion, which represents a year-on-year decline of ¥23.2 billion, reflecting the absence of profit from the reversal of an allowance for doubtful accounts recorded in fiscal year 2023. The Cape size bulker market saw solid iron ore shipments from Western Australia and Brazil, and bauxite shipments from West Africa. Market rates decreased temporarily from December through February, due to seasonal factors, but recovered from March, and this combined with contributions from long-term contracts, led to an increase in profit, year on year. The market rates for Panamax and smaller vessels languished in the second half, due to weak domestic demand in China, resulting in year-on-year profit decline. Openhatch Bulkers operated by GearBulk, which became a consolidated subsidiary in fiscal year 2024, reported a year-on-year decrease in ordinary profit, due to decline in demand for the shipment of paper and pulp to China. On the other hand, we made gear bulk into a consolidated subsidiary during the fiscal year and reported a gain on step acquisitions, which pushed up our extraordinary income. Energy Business The energy business reported ordinary profit of ¥103.6 billion, an increase of ¥36.7 billion year-on-year, mainly reflecting the contributions of the chemical tankers business, and equity method investment profit with the application of the equity method to modec inc i will now explain performance in each sub-segment tankers and offshore business the tankers business saw contributions from long-term contracts by crude oil tankers and product tankers and earnings were further bolstered by firm market rates due to the limited supply of new vessels and the impact of geopolitical risks The chemical tanker market rates remained favorable, reflecting a tight supply-demand situation, due to rerouting through the Cape of Good Hope amid Middle East tensions. In addition, Fairfield Chemical Carriers, which we acquired in March 2024, also helped improve profitability, resulting in a significant increase in profit, year on year. The offshore business posted a significant increase in profit, year-on-year, reflecting profit contributions from long-term charter contracts, for the 11 FPSOs we own, as well as the recording of a gain, on the revaluation of shares and equity method investment profit, associated with application of the equity method to MODEC Inc. Liquified Gas Business In the LNG carriers and LNG infrastructure businesses, the delivery of new carriers contributed to the accumulation of stable profit, in addition to contributions from existing long-term charter contracts. Next, please look at page 8 of the slides. Product Transport Business In the product transport business, the container ships business and the car carriers business achieved significant year-on-year profit increases, resulting in operating profit of ¥302.9 billion and increase of ¥177.3 billion year-on-year. I will now explain the performance of each sub-segment. Container Ships For details of the Container Ships business, please refer to page 3 of Once Magenta Colored Materials. In fiscal year 2024, many new vessel deliveries were planned, leading to concern over the risk of oversupply. However, freight rates remained high as the supply and demand balance for vessels and containers tightened due to continued rerouting via the Cape of Good Hope, port congestion, and a shortage of containers. Liftings also increased due to strong cargo movements and one reported after-tax profit of US$4,244 million, which represents a sharp increase year-on-year. 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 8 of MOL's blue-colored materials. Car Carriers The car carriers' business enjoyed favorable market rates throughout the year thanks to strong shipping demand for completed cars. The effects of avoidance of the Red Sea and port congestion were offset by efforts to improve operating efficiency and profit increased year-on-year. Terminal and Logistics Business In the terminal business, the domestic container terminal business performed strongly. The logistics business reported lower profit than a year earlier due to rising procurement costs despite expansion of handling volume in air and sea transportation on the back of recovery in cargo movements. well-being and lifestyle business the well-being and lifestyle business posted ordinary profit of 8.1 billion yen down 0.9 billion yen year on year due to preparatory expenses for the entry into service of a new cruise ship despite the profit contributions of the real property business with daibaru as the core company and the ferries and coastal rora ships business I will now explain performance in each sub-segment. Real Property Business The real property business achieved a year-on-year increase in profit, thanks to equity method investment profit, in addition to the rental revenue of existing properties. Ferries and Coastal Roro Ships Business The ferries and coastal Roro ships business achieved higher profit than 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 the occurrence of a non-operating period of Mitsui Ocean Fuji, and upfront preparatory expenses. Associated businesses Associated businesses, which include the tugboat business and trading company business, achieved ordinary profit of ¥2.5 billion, a decrease of ¥0.3 billion year-on-year. Dividend We plan to increase 20 yen and pay a year-end dividend of 180 yen per share, reflecting the improvement in net income from our previous forecast and deduction of 13,329,000 shares of Treasury stock acquired since November 2024 from the number of shares. This combined with the interim dividend of 180 yen, brings the full-year dividend to 360 yen. Regarding the share repurchases of up to 100 billion yen, we have been implementing since November last year, we have already implemented repurchases equivalent to 70 billion yen. This concludes the summary of the financial results for fiscal year 2024. Next, I would like to explain our fiscal year 2025 full-year forecast. Please refer to the outline on page 9 in the briefing materials. We forecast business profit of 165 billion yen, ordinary profit of 150 billion yen, income before income taxes of 200 billion yen, and net income of 170 billion yen. In our forecast, we have factored in, to some extent, the direct impact of various factors, mainly decline in freight volume, caused by the introduction of reciprocal tariffs in the US. especially the high tariffs imposed by both the US and China, and the introduction of category-specific tariffs on cars. Our exchange rate assumption is 140 Japanese yen per US dollar, and our bunker price assumption is 525 US dollar per metric ton. In view of the geopolitical situation, we have assumed that Red Sea transits will be halted for the entire year. We expect the decline in freight volume caused by longer sailing days associated with Red Sea tensions and the impact of tariffs to last through to the end of the fiscal year. Please take a look at page 11 afterwards, as it features a waterfall chart showing a variance analysis of our fiscal year 2024 full-year performance and our fiscal year 2025 full-year forecast. I will now explain the factors behind the year-on-year differences in ordinary profit for each segment. Please look at page 12 of the presentation materials. Dry Bulk Business The dry bulk business is expected to post ordinary profit of 7 billion yen, representing year-on-year decline in profit, because cargo movements are likely to slow down under the impact of tariffs in addition to weak domestic demand in China. I will now explain the forecasts for each sub-segment. Cape Size Bulkers The Cape Size Bulker market rates are expected to remain firm on expectations for solid shipments of iron ore and bauxite, in addition to the profit contribution of medium- and long-term contracts. MOL Dry Bulk The market rates for the small and medium-sized bulk carriers operated by MOL Dry Bulk are expected to fall, reflecting slower seaborne cargo movements due to weak domestic demand in China and the impact of tariffs. Other Bulk Carriers The open-hatch bulkers operated by Gear Bulk are expected to be less profitable, mainly due to weak domestic demand in China. Having made GearBulk into a consolidated subsidiary, in fiscal year 2024, we will work to improve profitability through large-scale collaboration, to improve operating efficiency. Energy Business The energy business is expected to report ordinary profit of ¥66 billion, which represents decline year-on-year, mainly due to softening of chemical tanker market rates, as well as the absence of one-time profit in the offshore business. I will now explain the forecasts for each main sub-segment. Tankers and Offshore Business In the tankers business, steady profit contributions from long-term contracts for crude oil tankers are anticipated. However, product tankers, including methanol tankers and LPG tankers, are expected to be less profitable than a year earlier, based on the assumption that new vessel supply pressure will ease the supply-demand balance. Chemical tankers are expected to post-Eurone year decline in profit, partly due to the economic downturn in China and Europe, and the impact of tariffs, despite expectations for the effects of integration, following completion of the integration of Fairfield chemical carriers, at the end of March. The offshore business is expected to report lower profit than a year earlier due to the absence of one-time equity method investment profit associated with the acquisition of MODEC, despite the contribution of the FPSO business to stable profit generation. Liquefied Gas Business The LNG carrier, ethane carrier, and LNG infrastructure businesses will contribute to stable profit through the profit contributions of existing projects and the effective delivery of new vessels.

Next, please look at page 13 of the slides. Product transport business.

The product transport business as a whole is expected to post ordinary profit of 75 billion yen, falling year on year. I will now explain the forecasts for each sub-segment. Container ships business. In the container ships business, a significant decrease in profit is expected, compared to the previous year, due to an imbalance in supply and demand, caused by new vessel supply pressure, and decline in cargo movements between China and the US, mainly a fall in freight rates, on Asia-North America routes, under the impact of tariffs.

Please turn to page 14. Amid the growing uncertainty caused by U.S.

tariffs, one has prepared fiscal year 2025 full-year forecasts based on two scenarios. In both scenarios, it is assumed that geopolitical risks will prevent transit through the Red Sea throughout the entire fiscal year. Please take a look at page 5 of the magenta-colored presentation materials later. Scenario 1 assumes that the business environment will remain comparatively stable and profit after tax will be 1.1 billion US dollars. The forecast under this scenario does not factor in the impact of tariffs. Under scenario 2, the effects of reciprocal tariffs become apparent, China to North America cargo volume decreases, and freight rates on, Asia to North America routes, fall. Assuming that, freight rate assumptions for other routes also fall, profit after tax is, 250 million US dollar. In our view, weaker US consumer spending, as a result of the introduction of reciprocal tariffs, is the most likely scenario, and we have factored decline in China-North America cargo volume, and falling freight rates on asia north america routes into scenario one and our fiscal year 2025 forecast for one is profit after tax of 600 million us dollars we have factored our 31 share of the 600 million us dollars into our forecast please return to page 13.

car carriers.

In the car carrier business, we assume that shipping capacity will increase, due to the delivery of six new vessels from the second half of fiscal year 2024, through the first half of fiscal year 2025, and that tariffs will cause decline in the volume of shipments bound for North America, and slowdown in new car sales and demand in China. Accordingly, we assume that transport volume will decline by approximately 370,000 units from fiscal year 2024. Given that service costs will increase due to new vessel deliveries, while transport volumes decrease, we forecast year-on-year profit decline. Terminal and Logistics Business In the domestic terminal business, we anticipate that handling volume will remain steady. In the logistics business, we expect performance to improve year-on-year, based on the assumption of increased handling volume. In addition, we plan to recognize the cost of acquisition of tank terminal operating company LBC following our acquisition announcement, as well as initial expenses for LBC's integration into the MOL Group. Procedures for completion of acquisition are going smoothly, and we aim to close the deal in June. Wellbeing and Lifestyle Business The wellbeing and lifestyle business as a whole is expected to post ordinary profit of 5 billion yen, falling year on year. I will now explain the forecasts for each sub-segment. Real Property Business Diberu, our core real property subsidiary, is expected to report ordinary profit of 4 billion yen, which represents a decline year on year. This decline reflects increased interest expenses for redevelopment projects in Japan and office building development overseas and the absence of one-time profit associated with new property acquisitions reported in fiscal year 2024, despite expectations for stable rental income from existing properties. Ferries and coastal rural ships In the business of ferries and coastal Roro ships, we anticipate strong cargo and passenger demand as in the previous fiscal year. Cruise Business In the cruise business, performance will improve year on year due to the absence of one-time preparatory expenditures for the entry into service of a vessel in fiscal year 2024 and the commencement of full operation of the two vessels Mitsui Ocean Fuji and Nippon Maru. Associated Businesses In the tugboat business, we anticipate increased costs associated with dry docking, and the associated businesses as a whole are expected to post operating profit of 1 billion yen, down year on year. In terms of dividends in fiscal year 2025, we are planning an interim dividend of 75 yen and a year-end dividend of 75 yen, making the annual total dividend 150 yen. We plan to increase the dividend in line with a 30% dividend payout ratio if our performance is even better than expected and to pay a minimum dividend of 150 yen even if our performance is worse than forecast. We plan to execute share repurchases of 30 billion yen, which is the remaining amount under our share purchase plan, by October 2025. This concludes my explanation of the fiscal year 2025 forecast. Next, we come to a description of progress on the Corporate Management Plan Blue Action 2035. Chief Strategy Officer Shinoda will explain these slides to you. I am Toshinobu Shinoda, CSO of Mitsui OSK Lines. The MOL Group has now completed Year 2 of Phase 1, the three-year period of Fiscal Year 2023 to Fiscal Year 2025, under its Management Plan Blue Action 2035, launched from April 2023. While we earn high returns in market-driven business during favorable shipping market conditions, we are reforming our business portfolio into one that can remain profitable even during downturns in the shipping market by increasing the weight of stable revenue business and non-shipping business with a low correlation to shipping market conditions. I would like to explain the progress we have made on the plan these past two years, focusing on our monitoring of core KPIs.

Please turn to page 16 of the slides.

Looking at our financial KPIs for fiscal year 2024, as explained previously, income before income taxes was 452.7 billion yen, our net gearing ratio, including off-balance sheet liabilities such as future charter fees, was 0.96 and ROE was 16.9%. However, recently, business environment uncertainty has increased rapidly, and in fiscal year 2025, we expect decreased profit. That said, our average results for the three-year period are expected to be mostly in line with our Phase 1 targets, with net income before income taxes of 310 billion yen and ROE of 11.7%. However, we failed to achieve our safety KPI, which is a non-financial KPI, with one fatal accident. As for our human capital and DX KPI targets, we are steadily making progress towards achievement at the end of fiscal year 2025. We are in the middle of aggregating data for the GHG emissions intensity reduction rate, which is our environment KPI, and will report back later. We will continue to implement our business plan, aiming for achievement of our targets for fiscal year 2025, which is the end year of Phase 1.

Please turn to page 17 of the slides.

As also explained at the beginning, Blue Action 2035 sets out goals to reform the business portfolio into one that can remain profitable even during downturns in the shipping industry, and pursue both investment for growth and a yield that meets shareholders' expectations, and under the plan, we will increase the asset ratio of stable revenue business and non-shipping business. In fiscal year 2024, we allocated cash generated in market-driven business to investments in areas such as the energy business, including LNG tankers and FSRUs, the cruise business, and the real estate business. Through this, we steadily increased the asset ratio of stable revenue business and non-shipping business. As a result of aggressive investment, total assets as of the end of fiscal year 2024 amounted to 5.9 trillion yen.

Please turn to page 18 of the slides.

Initially, we set an investment limit of ¥1.2 trillion over the three-year period of Phase 1. Last year, in view of our better-than-expected performance, we added an extra ¥0.14 trillion and set an investment limit of ¥1.34 trillion, however, We have notched up investments for large-scale M&A and the development of an environmentally friendly fleet, and as a result, we have made decisions on 1.88 trillion yen in investments during the first two years of Phase 1. This includes decisions on approximately 959 billion yen in environmental investment. Details of major investment decisions made in fiscal year 2024 are shown on the right side of the table. Please turn to page 19 of the slides. Taking into consideration our profit in fiscal year 2024 and the special dividend planned by 1, total cash flow from operating activities produced over the three-year period is expected to be approximately 250 billion yen more than initially planned. We are also pressing ahead with the replacement of assets, and we assume an investment plan for fiscal year 2025 of approximately 100 billion yen.

Please turn to page 20 of the slides.

There is no change to our phase 1 shareholder return policy, which focuses on expanding profit and enhancing corporate value through proactive investment, and then returning profit to shareholders. For phase 1, we adopted a policy of payout ratio of 30%, and paying a minimum guaranteed dividend of 150 yen per share, even when shipping rates are low, and we will aim to pay stable dividends.

Please turn to page 21 of the slides. Finally, I would like to explain the positioning of Fiscal Year 2025 in Phase 1.

Fiscal Year 2025 is the final fiscal year of Phase 1 of the Group Management Plan and is positioned as an important year for formulating Phase 2. In Phase 1, we steadily implemented an action plan aimed at strengthening sustainability management, aiming to establish ourselves as one of the first movers, focused on decarbonization in the shipping industry. In regard to the core KPIs, we unfortunately failed to achieve our safety KPI, however, we expect to be mostly successful in achieving our Phase 1 targets for other financial and non-financial KPIs. Looking ahead to Phase 2, we are in the process of redefining the MOL Group's social impact and partially revising our materiality, aiming for further linkage between initiatives to address sustainability issues and business growth. We are also considering revising core KPIs and targets where necessary. As for investment, we have continued actively investing in growth thus far. During the Phase 2 period, we will build a business portfolio that will increase the MOL Group's superiority and competitiveness while striking a balance between investment and shareholder returns, and we will consider the optimal resource allocation. Throughout fiscal year 2025, we will consider and discuss such issues in more depth, and we plan to make an announcement about Phase 2 during fiscal year 2025. This concludes my fiscal year 2024 progress report and explanation of the positioning of fiscal year 2025 for Blue Action 2035.