MOL President Koichi Muto informs in a letter addressed to company shareholders of a year-on-year decline in profits during the first quarter of fiscal year (FY) 2014, excerpted as follows:
"I would like to report our business results for the first quarter of fiscal year (FY) 2014 (April 1, 2014 to June 30, 2014).
1. Business Performance for First Quarter of FY2014
During the first three months of FY2014, while geopolitical risks such as political strife in Ukraine and Iraq raised concerns of a spike in crude oil prices, moderate recoveries in the United States and Europe drove global economic growth.
Looking at maritime shipping markets, a continuing surplus of dry bulk vessels kept that sector weak overall. The very large crude oil carrier (VLCC) market slumped mainly as a result of a decline in demand for crude oil shipments due to scheduled periodic maintenance at East Asian refineries. On the other hand, the LPG carrier market was strong. In the containership business, the gap between supply and demand remained substantial, reflecting deliveries of large containerships, and freight rate levels remained weak as a result.
We responded to this environment with continued efforts toward rationalization, such as improvement of operating efficiency and reduction of fuel expenditures by slow steaming. However, our business performance showed a decline year on year, with revenue of ¥443.9 billion, operating income of ¥3.9 billion, ordinary income of ¥7.5 billion, and net income of ¥8.5 billion.
2. Forecasts for FY2014 and Dividends
For the second quarter and after, we assume that the exchange rate and bunker price will both be in line with our initial outlook. In the dry bulker market, cargo volumes are recovering due to seasonal factors, and the imbalance between supply and demand is showing signs of improvement. As for containerships, although we expect the introduction of large vessels to help realize cost reductions, we are still cautious about the business environments as the market remains soft.
For the full year, we project revenue of ¥1,830.0 billion, operating income of ¥36.0 billion, ordinary income of ¥50.0 billion, and net income of ¥40.0 billion.
At present, we plan to pay an annual dividend of ¥6 per share (including an interim dividend of ¥3 per share) for FY2014."