Annual Report 2012


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INITIATIVESINTHENEWMEDIUM-TERMMANAGEMENTPLANINITIATIVESINTHENEWMEDIUM-TERMMANAGEMENTPLANAMIDCONCERNSABOUTDEPLETIONOFEXISTINGONSHOREOILWELLSANDGASfiELDS,THEENERGYSECTORISTURNINGTOEXPLORATIONANDPRODUCTIONINULTRA-DEEPANDDISTANTWATERS.INTHEOFFSHOREDEVELOPMENTAREA,STRONGDEMANDISEXPECTEDFOROFFSHORESUPPORTVESSELS,SUCHASPLATFORMSUPPLYVESSELS(PSVS)THATTRANSPORTSUPPLIESTOOFFSHOREPRODUCTIONFACILITIESANDANCHORHANDLINGTUGSUPPLYVESSELS(AHTSS)INVOLVEDINTHEANCHORINGANDTRANSPORTATIONOFFLOATINGSUPPLYFACILITIES.LASTYEAR,OURGROUPCOMPANY“K”LINEOFFSHOREASCOMPLETEDTHEINITIALPHASEOFflEETDEVELOPMENTTOMEETTHISDEMANDBYADDINGFOURNEWPSVSANDTWONEWAHTSS.“K”LINEWILLAIMTOSECURELONG-TERMCONTRACTSFORTHETRANSPORTOFINFRASTRUCTUREFACILITIESANDCARGOFOROFFSHORE-RELATEDPROJECTS.ATATIMEOFACTIVEDEVELOPMENTOFOFFSHOREOILANDNATURALGASDEVELOPMENTFACILITIESANDOFFSHOREWINDPOWERGENERATIONFACILITIES,WEWILLMEETOFFSHORE-RELATEDTRANSPORTDEMANDBYFOCUSINGMAINLYONSTATE-OF-THE-ARTVESSELSEQUIPPEDWITHADYNAMICPOSITIONINGSYSTEM(DPS).OVERVIEWOFFISCAL2011CONSTRUCTIONOFNEWBUILDINGSWASCOMPLETED,ANDAFLEETOFSEVENVESSELSBEGANFULL-CAPACITYOPERATION.FOURVESSELSAREONLONG-TERMCHARTERTOMAJOROILANDGASDEVELOPMENTCOMPANIESINBRAZILANDTHENORTHSEA,ANDTHREEVESSELSAREALLOCATEDINTHENORTHSEA’SSPOTMARKETANDSHOWEDSTABLEPERFORMANCE.FISCAL2012BUSINESSOUTLOOKWEWILLCONTINUETOMAINTAINTHESTABLEOPERATIONOFVESSELSONLONG-TERMCHARTERTOMAJOROILANDGASDEVELOPMENTCOMPANIES.ASFORTHEVESSELSINTHESPOTMARKET,MARKETRATEISEXPECTEDTOEXCEEDTHEPRIOR-YEARLEVELDUETOSTRONGDEMANDFUELEDBYANINCREASEINOFFSHORERESOURCEDEVELOPMENTACTIVITYINNORTHSEAWATERS.WEEXPECTBOTHLONG-TERMANDSPOTMARKETVESSELSTOCONTRIBUTETOSTABLEPROfiTS.“K”LINEWILLCONTINUETOPROVIDEHIGH-QUALITYOFFSHORESUPPORTSERVICE.OVERVIEWOFFISCAL2011ALTHOUGHCARGOMOVEMENTSRECOVEREDANDFREIGHTRATESROSEINTHEfiRSTHALF,THESECONDHALFBROUGHTARETURNOFINTENSEFREIGHTRATECOMPETITIONFORSPOTCARGOANDSOFTENINGOFMARKETCONDITIONS.ALTHOUGHWESTROVETOACHIEVEEFFICIENTSHIPALLOCATIONANDOPERATINGCOSTREDUCTIONS,ANINCREASEINGOODWILLINVOLVEDINMAKINGSALAWHOLLYOWNEDSUBSIDIARYCOUPLEDWITHADECLINEINOPERATINGRATESDUETOTHEBRINGINGFORWARDOFDOCKINGFORREPAIRRESULTEDINAFULL-YEARLOSSROUGHLYATTHEPRIOR-YEARLEVEL.CONSTRUCTIONOFTHENEWBUILDINGLONEWASCOMPLETEDINMARCH2011,BRINGINGTHEflEETTO16VESSELS.THENEWHEAVYLIFTERISSISTERSHIPOFTHESVENJA(DELIVEREDINDECEMBER2010).FISCAL2012BUSINESSOUTLOOKWEFORECASTGRADUALRECOVERYINMARKETCONDITIONSINTHEfiRSTHALFOFfiSCAL2012ANDEXPECTTHETRANSPORTOFCARGOFORMAJORPROJECTSANDTHEDEPLOYMENTOFANEWBUILDINGINOFFSHORE-RELATEDTRANSPORTSERVICESTOSUPPORTPROFITABILITYINTHESECONDHALF.ACCORDINGLY,WEFORECASTIMPROVEMENTINFULL-YEARPROfiTABILITY.INTHEMEDIUMTERM,WEANTICIPATEfiRMCARGOMOVEMENTSASARESULTOFMOVEMENTOFINFRASTRUCTURE-RELATEDCARGO,CENTEREDONTHEMIDDLEEASTANDAUSTRALIA,ASWELLASACTIVEINVESTMENTINOFFSHOREOILANDGASfiELDDEVELOPMENTANDWINDPOWERGENERATIONSYSTEMSINRESPONSETOPERSISTENTLYHIGHCRUDEOILPRICES.“K”LINEWILLMEETWIDE-RANGINGTRANSPORTNEEDS,INCLUDINGOFFSHORE-RELATEDTRANSPORT,BYTAKINGADVANTAGEOFSAL’SADVANCED,SAFETY-ORIENTEDCARGOHANDLINGEXPERTISE.OFFSHORESUPPORTVESSELBUSINESSHEAVYLIFTERBUSINESSMANAGINGEXECUTIVEOFfiCERHIROMICHIAOKIMANAGINGEXECUTIVEOFfiCERTOSHIYUKISUZUKI26ANNUALREPORT2012BUSINESSREVIEWANDOUTLOOK


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