Our Vision, Our Value MITSUI O.S.K. LINES MOL REPORT 2020 History of the MOL Group’s Value Creation

Throughout its more than 130 years of history, MOL has grown into one of the world’s largest full-line marine transport The Rising BRICs Economies, Centered on groups by constantly anticipating the needs of its customers and the demands of the future, while overcoming various China, and a Boom in Marine Transport challenges along the way. What has enabled this is MOL’s “spirit of challenge and innovation.” MOL will continue to nur- SPIRIT OF MOL, a training vessel Delivered in 2007 as a Company vessel for ture this spirit as it heads into the next 130 years. training officers and senior crew mem- Becoming a Top Global Player Following Remarkable bers, by the time it was retired in 2013 the Growth in the Resource and Energy Transport SPIRIT OF MOL had helped to produce more than 2,200 senior sailor candidates.

IWATESAN, a VLCC After the 1999 merger with Navix Line, which was particularly Prewar Office building at the time of O.S.K. Line’s founding This 300,000-ton class VLCC was delivered strong in transporting natural resources and energy, MOL in 2003. It had the maximum crude oil aggressively invested in these fields, predicting China’s eco- Expanding the Sea Routes Crucial to the carrying capacity of any ship capable of navigating through the Malacca Straits. nomic development and increased demand for natural Development of Japan’s Foreign Trade resources. The Company continued a significant scale-up of its fleet, centering on dry bulkers and tankers, and became The founding of MOL can be traced back to Osaka Shosen one of the world’s largest corporate groups in terms of fleet Kaisha (O.S.K. Line), which was established in 1884 by ship size in service. Reaping the benefits of these upfront invest- owners in the Seto Inland Sea area. At that time, the sakoku ments, profit in fiscal 2007 reached a record high, led by the (closed-country policy) era of Japan had come to an end. unprecedented boom in marine transport that was driven by Accordingly, the need for international marine transport rose the rapid expansion of imports in China. dramatically. From the 1890s to the 1910s, the Company vigorously expanded into international shipping, beginning with short-sea and then expanding into deep-sea shipping. In the 1930s, the Company’s cargo-passenger ships, repre- senting the state of the art in Japanese shipbuilding at the time entered service on the South America route. In these ways, the Company has grown as a foundation underpinning the development of foreign trade in Japan. BRASIL MARU, an iron ore carrier This vessel was delivered in 2007. As one of the world’s largest iron ore carriers at that time, it helped reduce NIPPON MARU (third generation), a cruise ship unit transportation costs while reducing Delivered in 1990, the vessel gained its present color as part of a large-scale refurbishment in environmental impact. 2010. The NIPPON MARU continues to be loved as one of Japan’s most quintessential cruise ships.

ARGENTINA MARU, a cargo-passenger ship KINAI MARU, a high-speed cargo ship Entered service in 1939, representing the state of the art in Japanese ship- At Present Entered service in 1930, greatly reducing sailing time between Yokohama and New York building at the time Leveraging the Strengths MOL Has Accumulated over the Years and Expanding into New Business Fields to Meet the Needs of the New Era

Against the backdrop of a global economic slowdown and the KINKASAN MARU, the world’s Japan’s Postwar Rapid Economic Growth Period first automated vessel oversupply of vessels, the shipping market stumbled and has Entered service in 1961, with automation helping to reduce Growing into a World-Leading Full-Line Marine continued to struggle with lasting stagnation. To respond to the the required number of crew increasingly difficult business environment, MOL implemented The Tokyo International Container Terminal (TICT) members from 52 to 38 Transport Group Amid the Postwar Recovery and Rapid the Business Structural Reforms, which targeted the dry bulker Containers of Ocean Network Express Pte. Ltd. (ONE), Economic Expansion of Japan which entered business in April 2018 are loaded. business and carried out the integration of the containership businesses of three Japanese shipping companies. Additionally, A large portion of Japanese merchant fleets suffered cata- the Company invested preferentially in its areas of strength, strophic damage during World War II. Amid Japan’s successful including the LNG carrier business, while working to expand recovery from the devastation of war, MOL became an integral into the new fields in offshore businesses and environmental part of the development of the Japanese economy through its and emission-free businesses to meet the needs of the new SEAJACKS SCYLLA, marine transport services. While doing so, the Company grew an SEP vessel era. MOL continues to pursue challenge and innovation as a This SEP vessel*2, one into a full-line marine transport group that possesses a wide global leader in marine transport. of the world’s largest in range of vessels. The Company worked to promptly respond to operation, is owned by Seajacks International the need for specialized and large-sized vessels and repeatedly Limited, in which the took on challenges from a technological standpoint, including A service operation vessel (SOV)*1 Company owns a stake. scheduled for completion in 2022 launching the world’s first automated vessel that maneuvers *2 Self-elevating platform (SEP) vessels are used for the OPPAMA MARU, a specialized the main engine from the bridge and centrally controls the installation of offshore wind power generation systems. car carrier Entered service in 1965, as machineries from the engine control room and Japan’s first VLADIMIR VIZE (left), Japan’s first specialized car specialized car carrier. This approach enabled MOL to create an ice-breaking LNG carrier carrier Delivered in 2019, MOL plays a key new value and opened up the opportunities for business field role in pioneering the Northern expansion. Sea Route by providing marine transport for the Yamal project, which is the world’s first project to use an Arc7-class ice-breaking LNG carrier.

*1 Specialized vessels that support maintenance operations for offshore wind farms

10 11 Our Vision, Our Value MITSUI O.S.K. LINES MOL REPORT 2020 Value-Creation Model

By reinforcing our business foundation through a repeated cycle of value creation combined with reinvestment and the accumulation of knowledge, Input Our Business we aim to realize our management vision to “Become a Group of Outcome Business Units with No. 1 Competitiveness in Respective Areas.”

Resources Supporting MOL Group Value we provide Dry Bulk Business Unit Manufactured Capital Revenues: ¥277.1 billion A wide array of around 800 vessels Ordinary profit: ¥12.0 billion Sales and ship management Vessels: 263 Economic Value Small and medium-sized offices in 43 countries and regions P22 Iron ore and coal carriers Wood chip carriers bulkers, short sea ships

Energy Transport Profit Generation Business Unit Projected Medium-Term Revenues: ¥289.3 billion Fiscal 2019 Results Levels Intellectual Capital The MOL Ordinary profit: ¥25.4 billion Vessels: 363 Sophisticated knowledge and Group’s ¥80.0 billion– LNG carriers, Ordinary profit ¥55.0 billion expertise in seamanship and Strengths The MOL P24 Tankers Coal carriers ¥100.0 billion offshore businesses nautical phenomena Group’s Business ROE 6.3% 8–12% The technological capability to enable Infrastructure Product Transport completion of high-quality ships and Business Unit Gearing ratio 2.14 times 2.0 times or less maintain them in good condition for A Diverse Fleet an extended period of time Lineup Revenues: ¥475.4 billion Ordinary profit: ¥6.7 billion Return to Shareholders Project-development capabilities We meet customers’ Vessels: 186 based on an understanding of needs flexibly with a highly diverse fleet P26 Containerships, terminal and customers and markets Car carriers Coastal RoRo ships Dividend payout ratio 20% policy for the time being that is also one of logistics business the world’s largest in scale. Associated Technology Innovation Unit Safety Operations Headquarters Human Capital Businesses Highly diverse land-based person- History and Revenues: ¥96.5 billion nel and crew members numbering Experience Ordinary profit: ¥12.3 billion around 15,000 We provide highly P28 Real estate, tugboat, cruise ship, Human capital who share the P43 P50 reliable transport trading, and other businesses Aim to create both “MOL CHART” spirit services backed by economic value and extensive experience Note: “Revenues” and “Ordinary profit” figures are for fiscal 2019. “Vessels” is the number of vessels at the end of March 2020.) and a long social value track record. sustainably Progress on Management Plan, Our Approach to “Rolling Plan 2020” Sustainability Issues Social and Relationship Capital Global-Scale P18 P40 Networks A history and track record extend- Enhancement of We develop our busi- Three Core Strategies to Realize Organizational Strength ing across more than 130 years ness by leveraging the Management Vision (Organization Refresh) world-spanning sales Value-Added Transport Services Customer networks and partner- and ship management Social Value ships in Japan and overseas networks in combina- Portfolio Strategies tion with partnerships Concentrated investment of management resources in Project promotion A presence in maritime affairs Marine and Global Environmental in various regions. 1 the business fields where MOL has strengths, which through cross- clusters around the world Strategies for Conservation will mainly be offshore businesses organizational Sustainable Contribution to customers’ value-creation Growth collaboration Innovation for Development in by linking supply chains worldwide, Business Strategies Marine Technology spanning from raw materials to products 2 Provision of “stress-free services,” which Natural Capital MOL will offer from the customer’s perspective Human Resource Cultivation and Production of technological innovations that help A natural environment that Groupwide Community Development resolve social issues sustains business continuity Environmental Strategies improvement in Promotion of environmental strategies and productivity Governance and Compliance to 3 development of the emission-free business into Contribution to reduction of a core business Support Businesses environmental impact Financial Capital A financial base that underpins reliable performance with long-term Provision of high-quality employment and contracts extending over 20 years skill-development opportunities Stable cash flow generated from a diverse portfolio of vessel types and businesses Reinvestment and the accumulation of knowledge

12 13 Our Vision, Our Value MITSUI O.S.K. LINES MOL REPORT 2020 The Outcomes of Value Creation

Economic Value

Net Income (Loss)* per Share / Gearing Ratio / Revenues / Ordinary Profit Cash Dividends per Share / Cash Flows ROA (Based on Ordinary Profit) / ROE Credit Ratings Net Gearing Ratio / Equity Ratio Dividend Payout Ratio

Fiscal 2019 End of fiscal 2019 Fiscal 2019 Fiscal 2019 Fiscal 2019 As of August 2020

Ordinary Profit ¥55.0 billion Equity Ratio 24.5% Cash Dividends per Share ¥65.00 Free Cash Flow ¥(6.5) billion ROE 6.3% JCR A–

Type of Rating Rating (¥ billion) (¥ billion) (Times) (%) (¥) (%) (¥ billion) (%) (%) Short-term debt rating 2,000 200 2.50 50 500 50 300 10 5 JCR J–1 2.14 (CP) 6.3 272 200 2.00 40 2.6 Long-term senior debt A– 1,500 150 250 23.8 25 100.7 1.94 100 0 0 (issuer) rating (Stable) 1,155.4 1.50 65 30 –6.5 1,000 100 0 0 0 Long-term debt rating A– 1.00 24.5 20 55.0 –100 –10 BBB R&I Issuer rating 500 50 –250 –107.2 (Stable) 0.50 10 –200 –1,425 -396 –25.8 Short-term debt rating 0 0 0 0 –1,500 –300 –30 a–2 16/3 17/3 18/3 19/3 20/3 16/3 17/3 18/3 19/3 20/3 16/3 17/3 18/3 19/3 20/3 16/3 17/3 18/3 19/3 20/3 16/3 17/3 18/3 19/3 20/3 (CP)

Revenues (left) Gearing ratio (left) Net income (loss) per share (left) Cash flows from operating activities ROA (right) Long-term debt rating BBB Ordinary profit (right) Net gearing ratio (left) Cash dividends applicable to the year (left) Cash flows from investing activities ROE (left) Ba3 Equity ratio (right) Dividend payout ratio (right) Free cash flow Moody’s Corporate family rating (Stable)

Revenues were down ¥78.6 billion year on year, mainly In an effort to streamline our balance sheet, we Growth in net income was limited to ¥5.7 billion year While continuing to invest aggressively in LNG carriers Total assets were down from the previous fiscal The operating environment is expected to remain due to a decline in revenues from the containership reduced interest-bearing debt ¥9.1 billion from the on year despite a larger rise in operating profit, and offshore businesses, we maintained free cash year-end, while ordinary profit improved, resulting in opaque due to the COVID-19 pandemic. However, we business. However, ordinary profit increased ¥16.5 previous fiscal year-end and lightened total assets by because the extraordinary income/losses deteriorated flow to equilibrium at fiscal 2019 through disposing of 0.8 percentage point higher ROA year on year, to 2.6%. will continue working to bolster our profitability and billion year on year due to stable earnings from ¥35.7 billion. Shareholders’ equity was down ¥11.7 due to an allowance recorded for doubtful accounts assets and so forth. Going forward, taking into account Increase in profit attributable to owners of parent also improve our financial standing in an effort to further medium- to long-term contracts in the Dry Bulk and billion year on year despite a ¥21.7 billion rise in related to equity-method affiliates under the Dry Bulk business downturn caused by the COVID-19 pandemic, prompted a 1.1 percentage points rise in ROE, to 6.3%. enhance our credit ratings. Energy Transport businesses; the accumulation of retained earnings, owing to lower accumulated other Business and a loss related to business restructuring we plan to reduce our cash flow budget for new profits stemming from favorable market rates for comprehensive income. As a result, the net gearing in the containership business. In line with our policy of investment (excluding projects on which decisions tankers in the second half; and in the Product ratio worsened 0.06 point, and the equity ratio was maintaining a consolidated dividend payout ratio of have already been made) to ¥100.0 billion over the Transport Business, Ocean Network Express Pte. Ltd. down 0.1 percentage point. 20%, we distributed an interim dividend of ¥30 per next three years as well as generate further cash by (ONE), a containership business affiliated company, share and a year-end dividend of ¥35, in association selling off assets, businesses, and projects so as to becoming profitable in the second year of its integration. with the rise in net profit. improve our free cash flow.

* Profit (loss) Attributable to Owners of Parent

Social Value

LTIF*1 Average Downtime*2 / Number of Environmental and Number and Percentage of Women Continuous Days of Achieving 4ZEROES Greenhouse Gas Emissions (Lost Time Injury Frequency) Downtime Frequency Rate*3 Emission-Free Business-Related Ships*4 in Managerial Positions*5

As of June 2020 Fiscal 2019 Fiscal 2019 End of fiscal 2023 Fiscal 2019 End of fiscal 2019 Downtime CO2 Emissions Percentage of Women in Frequency Rate (Scope 1) Managerial Positions LTIF 0.38 1.00 per ship Expected Number of Ships 18 15,304 thousand tons 6.5 % Zero serious Zero marine incidents oil pollution (Hours per ship (Number of accidents per year) per ship per year) (Number of ships) (Thousand tons) (People) (%)

2.0 40 MOL’s target for average 2.0 20 20,000 18,676 50 10 days 18 18,203 17,774 548 days 2,571 Average among all industries in 2019 (1.80) downtime per ship 17 2 16,369 1.6 (24 hours or less) 2 15,304 40 8 30 1.5 15 15,000 13 6.5 1.2 Average among marine transport industry 1 8 30 6 in 2019 (1.35) 7 25 20 1.0 10 4 10,000 0.8 7 20 4 MOL’s target since fiscal 2015 (0.7 or below) 3 Zero fatal Zero serious 10 MOL’s target for downtime frequency rate 0.5 5 4 5,000 0.4 8 8 10 2 accidents cargo damage (1.00 or below) 8 3 4 0 0 0 0 1 0 0 0 16/3 17/3 18/3 19/3 20/3 16/3 17/3 18/3 19/3 20/3 20/3 21/3 22/3 23/3 24/3 16/3 17/3 18/3 19/3 20/3 20/3 21/3 22/3 23/3 24/3 228 days 548 days (Expected) (Expected) (Expected) (Expected) (Expected) (Expected) (Expected) (Expected) Source of reference values: Overview of Results of Average downtime per ship (left) Ships related to LNG supply Number of women in managerial positions (left) the 2019 Survey on Industrial Accidents,” Ministry Downtime frequency rate (right) Ships related to alternative fuels Percentage of women in managerial positions (right) of Health, Labour and Welfare Ships related to renewable energy

We have set KPIs for continuous days of zero accidents MOL has consistently remained below the target value In fiscal 2019, our downtime frequency rate was 1.00 Following the strategies formulated in our Rolling Our CO2 emissions in Scope 1 have declined steadily, We have set 8% as our target for the percentage of in the four categories indicated above. We share these of 0.7 or less for LTIF since fiscal 2015. Our figure was per ship, meeting our target of 1.00 or less. However, Plans, we focus on environmental and emission-free due in part to the transfer of our containership women in managerial positions, as we believe that KPIs internally in an effort to heighten awareness particularly low in fiscal 2019, at 0.38. This number is average downtime in fiscal 2019 was 39.58 hours per businesses. In the next few years, we expect to begin business to ONE, the newly established integrated promoting participation and advancement of women toward operational safety. However, regretfully we substantially lower than the figures gathered by the ship, significantly above our target of 24.00 hours per reaping the fruits of the seeds we have sown over the company, in fiscal 2018. As is stated in MOL Group helps enhance corporate value. We expect to reach will have to turn the count back to the beginning in Ministry of Health, Labour and Welfare on the average ship, due to equipment malfunctions on newly built past years. By the end of fiscal 2023, we are expecting Environmental Vision 2.0, by 2050 we aim to reduce this goal by the end of fiscal 2023, reflecting an two categories, “zero serious marine incidents” and across all industries (1.80 in 2019) and the average for ships, etc. to have 18 environmental and emission-free business- GHG emissions from ships by 50%, compared with increase in the total number of women we hire. “zero oil pollution,” due to a grounding and oil spill the marine transport business (1.35 in 2019). related ships, which include ships in areas of LNG 2008 levels. incident of the WAKASHIO, a Capesize bulker supply, alternative fuels, and renewable energy. chartered by MOL, in August 2020.

*1 The number of work-related accidents per one million hours worked. Includes any workplace illness or injury that prevents a worker from resuming even a reduced workload on that day. *4 Includes only ships with a certain ownership share *2 The amount of downtime due to mechanical malfunction or accident per ship per year *5 Unconsolidated basis excluding loaned employees, contract employees, part-timers, etc., but including expatriate employees *3 The number of mechanical malfunctions or accidents that result in downtime per ship per year

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