Mitsui O.S.K Lines Ltd - Company Strategy & Performance Analysis
Mitsui O.S.K. Lines, Ltd. (MOL) is a leading Japanese transportation company engaged in shipping services. The group offers its services through tankers and containers and provides ship management and leisure cruise services.
The group primarily operates its business through four business divisions: bulkships, containerships, associated businesses, and ferry and domestic transport. In addition, MOL operates other businesses. With regard to geographic location, MOL classifies its operations into five segments, namely Japan, Asia (excluding Japan), Europe, North America, and others. It primarily operates in Japan and other parts of Asia, with headquarters in Tokyo.
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Economic slowdown affected revenue of the bulkships segment
The bulkships segment consists of dry bulkers, tankers, LNG carriers/offshore businesses, and car carriers. Revenue of the segment decreased at 1.3% from US$6,930.5m in FY2015 to US$6,838.1m in FY2016. In actual currency, it declined at 11.3%. This was primarily due to poor supply and demand, attributed to the completion of new vessels. Moreover, the product tanker market declined due to sluggish freight movements for products such as vegetable oil. The car carriers division was weakened as the transportation of finished cars to resource-producing and emerging countries reduced due to economic slowdown amid low resource prices.
Lower freight rates led revenue of the containerships segment to decline
The containerships segment’s business line includes owning and operating containerships, air and sea forwarding, land transport, warehousing services, container terminals, and total logistics solution services for the transport of heavy goods. Revenue of the containerships segment declined at 4.0%, from US$5,940.9m in FY2015 to US$5,702.8m in FY2016. In actual currency, revenue declined at 13.7%. The decline was primarily attributed to low freight rates. In Q1 2017, the spot freight market on Asian-North American routes declined to record low price levels due to the impact of stagnation in the spot freight rate in FY2015.
Natural disasters affected the ferries & coastal RoRo ships segment’s revenue
The revenue of ferries & coastal RoRo ships segment declined at 5.8% from US$409.9m in FY2015 to US$386.2m in FY2016. However, in actual currency, revenue declined at 15.3%. This is due to the impact of the Kumamoto earthquakes on passenger services, along with sailing cancellations due to typhoons, mainly in Hokkaido.