Top > Investor Relations > Management Policy > Message to Our Shareholders

Message to Our Shareholders

Dear Shareholders:

Eizo Murakami
President & CEO

  Your Board of Directors always appreciates your continuing support.


  We would like to herewith report our 2nd Quarter Fiscal Year 2016 consolidated financial results and our estimates for full-year financial position for Fiscal 2016 that ends March 31, 2017.

1) Summary of Consolidated Operating Results for 2nd Quarter FY2016

Results for 2nd Quarter FY2016 Six months ended
September 30, 2016
Six months ended
September 30, 2015
Change
Operating revenues 491.2 668.3 (177.2)
Operating income(loss) (26.4) 18.8 (45.2)
Ordinary income(loss) (36.1) 16.0 (52.1)
Profit(loss) attributable to
owners of parent
(50.5) 11.7 (62.1)
Exchange Rate (¥/US$)
(6-months average)
¥107.31/US$ ¥121.76/US$
Fuel oil price (US$/MT)
(6-months average)
US$226/MT US$352/MT

(Billion Yen; rounded to the nearest 100 million yen)

  During the first six months of the fiscal year ending March 31, 2017 (from April 1, 2016 to September 30, 2016; hereinafter “the six-month period”), the global economy continued along a gradual recovery trend after a temporary turmoil in the international financial markets settled; however, economies outside the U.S. have lost some strength from rising uncertainties in both the political and economic realms. The U.S. economic continued to expand gradually, with the employment and income environments improving, despite weakness in capital investment and so forth. The outlook for the European economy is becoming increasingly uncertain due to a persisting sense of uncertainty over the political and economic situation, partly reflecting a succession of terrorist attacks and the U.K. decision to exit the E.U. In Brazil and other emerging countries, there were signs of a slight economic recovery as falling resource prices appeared to have hit bottom; however, in China economic growth continued its slowing trend, weighed down by oversupply of the companies’ facilities in that country due to a slump in demand.
  As for the Japanese economy, although the employment and income environments have improved, business confidence has been unstable due to languishing consumer spending combined with the yen continuing to appreciate.
In the business environment for the shipping industry, the containership business continued to face adverse market conditions, partly reflecting weaker supply-demand balance due to supply increasing more than the gradual recovery in demand, while a major competitor in this market was experiencing operational problems. In the dry bulk business, freight rates also remained at low levels given that gradual recovery with respect to marine cargo movements has not helped to improve the balance of vessel supply and demand. The Group made efforts to improve profitability, such as reducing the number of vessels through the business structural reform. Nevertheless, business performance declined year on year.

  As a result, operating revenues for the six-month period were ¥491.152 billion (down ¥177.185 billion year on year), operating loss was ¥26.423 billion (compared to operating income of ¥18.774 billion for the previous fiscal year), ordinary loss was ¥36.125 billion (compared to ordinary income of ¥15.970 billion for the previous fiscal year), and loss attributable to owners of the parent was ¥50.457 billion (compared to profit attributable to owners of the parent of ¥11.678 billion for the previous fiscal year).


2) Prospects for Fiscal 2016

Prospects for FY2016 Current Forecast
(at the time of
announcement of
the 2nd Quarter result)
Prior Forecast
(at the time of
announcement
dated July 29, 2016)
Change
Operating revenues 970.0 1,030.0 (60.0)
Operating income(loss) (44.0) (13.0) (31.0)
Ordinary income(loss) (54.0) (21.5) (32.5)
Profit(loss) attributable to
owners of parent
(94.0) (45.5) (48.5)
Exchange Rate (¥/US$)
(12-months average)
¥103.66/US$ ¥106.02/US$
Fuel oil price (US$/MT)
(12-months average)
US$268/MT US$267/MT

(Billion Yen; rounded to the nearest 100 million yen)

  Looking at the global economy from the third quarter onward, there are concerns that the pace of growth may slacken with the risk of economic downturn in China and other emerging Asian countries and resource-rich countries, as well as a growing cautiousness in the stance of advanced countries due to the persistent uncertainty in the outlook following the U.K.’s decision to exit the E.U. and geopolitical risks in Europe.
  In this business environment, the containership business is expecting steady demand expansion on the Asia-North America service while observing a firm price bottom for some Asia-Europe service routes, but overall, adverse market conditions are expected to continue due to the ongoing imbalance between tonnage supply and demand. The Company will strive to improve profitability by adjusting vessel allocation through its alliance scale in line with fluctuations in supply and demand, strengthening its acquisition of highly profitable cargo, such as reefer cargo, as well as taking even more meticulous cost cutting measures such as optimizing the cost burden of storing and returning empty containers.
  In the dry bulk business, although demand for marine transport continues to increase slightly, adjusting the global tonnage surplus is expected to take more time. In this situation, the Group will continue to take steps to improve operating efficiency, as well as ensuring competitiveness through implementing structural reforms, such as reducing the number of medium and small-sized vessels, and strengthening an income structure that is resilient against market fluctuations.
  In the car carrier business, the Group will continue to reinforce its business platform to reflect the change in the trade structure such as pursuing cargoes from South-East Asian countries and trade within the Atlantic basin. At the same time, the Group will strive to enhance its revenue base by making maximum use of its successively completed fleet of large-sized and new-generation vessels, featuring larger loading capacity for heavy construction machinery and rail cars as well as improved fuel efficiency.
  In the LNG carrier business and Tanker business, the Group will work to secure stable revenues for LNG carriers, VLCCs and LPG carriers supported by medium- and long-term charter contracts.
  In the offshore energy E&P support business and the heavy lifter business, although it is expected to take some time for the market to recover due to the continuous effect of crude oil prices, the Group will work to improve its profitability through efficient vessel allocation and other means.
In the logistics business and the coastal business, the Group will continue to aggressively expand its business operations.

  As noted above, a full-fledged recovery is expected to take some time. Therefore, the Group will strive to improve profitability through further cost cutting and rationalization while implementing structural reforms as planned. The Group expects its full-year results for operating income (loss), ordinary income (loss), and profit (loss) attributable to owners of the parent to be amounts that are lower than the previous announcement.

  Our important task is to maximize returns to our shareholders while maintaining necessary internal reserves to fund our capital investment and strengthen our financial position for the sake of sustainable growth, which is a priority of our management plan. However we consider it an urgent management priority to improve our financial strength in light of the current fiscal year’s forecast of a loss attributable to owners of parent. Accordingly, it is with sincere regret that the Company announces it has decided to pay no interim dividend and has forecasted no year-end dividend for the current fiscal year.
  Our sincerest apologizes to shareholders but we would greatly appreciate your understanding.

  All directors and employees of "K" LINE and the "K" LINE Group are vigilantly dedicated to the accomplishment of our goals with one voice, and we appreciate your continued support and encouragement.

  Thank you very much for your kind attention.

  October 31, 2016

  Eizo Murakami
  President & CEO
  Kawasaki Kisen Kaisha, Ltd

The content on this website is provided as a convenience for our investors for informational purpose only. This is not intended to solicit investors to buy our company's stock. This information may include forecasts, projections and strategies that are based on the assumptions. Number of risks and uncertainties may cause actual results to differ from the description in this website. The final decision and responsibility for investments rests solely with the user of this site.

pagetop