Top > News Releases > Let's Challenge even the World's Loftiest Peaks with "K" LINE Vision 2008

January 4, 2005
Kawasaki Kisen Kaisha, Ltd.
(New Year Message from President Sakinaga in 2005)

Let's Challenge even the World's Loftiest Peaks with "K" LINE Vision 2008

To all "K" LINE and Group Company colleagues, Happy New Year to each and every one of you!

During the 1st half of Fiscal 2004, we were able to achieve record highs since the founding of "K" LINE in 1919, both in consolidated and non-consolidated financial positions; and if things proceed as projected for the remaining three months to come, we expect to realize a total annual dividend of ¥15, adding ¥5 to the ¥10 level that we are targeting in our stable dividend payment policy.

It has become more certain that we will be able to attain every target for the 1st year of "K" LINE Vision 2008 thanks to everyone's forward-looking and inexhaustible efforts while enjoying the present booming business circumstances.

We have been reviewing the painstaking period of more than ten years that passed without paying dividends before we could once again restart dividend payments. We perceive very strongly and sharply how critical and necessary it is to sustain our present favorable business achievements for the future by all means. We will respond to shareholders by means of sustainable growth and stable payment of dividends, as well as being grateful to customers and business connections for their support and cooperation. At the same time, all directors and employees of the "K" LINE Group should be rewarded for their dedicated efforts.

"K" LINE Vision 2008 is composed of a host of extremely common themes as our behavioral plan: at what we should aim; for whom we should do; and how we should be. The goal is to elevate the "K" LINE Group to the highest position possible, considering the recent booming circumstances and in full recognition of the great hardships we endured in the past.

We Will Keep Growing in the Global Market

The world is in the middle of various regional turbulence; fluctuations in exchange rates, interest rates and fuel prices; as well as a rise in protectionism, etc. In fact, a large number of factors are likely to give considerable impact to the "K" LINE Group with its main line of business being shipping, which means we are situated in the midst of the global market. With a view to this fact, we cannot help but realize how impossible it is to avoid economic ups and downs. We have to be prepared for that!

We have never before in our history experienced the present situation in which all business sectors are in a favorable condition, indicating we have already stepped into an inexperienced domain.
An old Japanese expression says, " The higher the mountain, the deeper the valley." We should be prepared at any time for the case where we fall into a deep valley in spite of our efforts.

On the other hand, global maritime transportation business will doubtlessly continue to grow in view of developments in Asia, expansion of the EU and accelerated advance of FTAs (Free Trade Agreements). When and if we are able to successfully ride this prevailing wave of development, we will attain "sustainable growth and establishment of a stable profitability structure," an initial theme of "K" LINE Vision 2008.

Our activities are being clearly pictured as follows:
"K" Line Europe and "K" Line America, as well as independent "K" Line PTE Ltd, are making positive strides to engage in the new bulk/energy business field as our overseas shipping business centers, in addition to their traditional business practices. All group companies, including the above, are also achieving steady and substantial accomplishments by practicing business operations deeply rooted in their respective regions.
As can be seen from the objectives of China & Other Emerging Business Areas Committee, we are sure that we will be able to realize sustainable growth centering on shipping if we are successful in investing funds and human resources efficiently into the main developing markets including "*BRICs."
A great chance has come when we must solidly ensure that "K" LINE Group's business model of shipping comprehensively covers the multiple sectors of business. We are confident we can do this in view of the Group having a strong body and characteristics in every sector in which it is engaged.

*BRICs are initials of Brazil, Russia, India and China whose economies are growing at a significantly high pace.

We Will Further Strengthen Organizational Structure and Human Resources for Global Business

The Japanese shipping industry has experienced a variety of difficulties. At "K" LINE, we joined forces and staged multiple campaigns that were regarded as necessary and appropriate: "Staff rationalization measures" in 1987/88, "KR Plan" from 1993 to 1998 and "KV Plan" in 2002.

Without allowing ourselves any degree of self-complacency, let's keep on with further enhancement of present group-based movements for revamping the entire cost structure, recognizing the need to continuously challenge the theme. In fact, the genes we inherited from earlier generations should ceaselessly drive us to greater cost-consciousness. Let's endeavor further to establish one of the most cost-competitive business groups in the world centering on our Cost Structure Reform Committee.
In the meantime, we should recognize that we still have more to do in powering up our activities for finance and organization. We have not yet done enough in that direction.
Financially, it is an impending assignment to diversify and carry out efficient methods of funding for procurement of business assets consisting mainly of ships, in addition to our on-going efforts for issuance of convertible bonds (CBs), increase of shareholders' equity and reduction of liabilities bearing interest.
Regarding organization, it can be said that we have almost laid the groundwork for unifying organizations built in various areas around the globe under the "K" LINE flag. What is needed is to assure appropriate development of our human resources who are expected to come into play in each step going from local to regional to global.

We Will Never Cease being More and More Customer-oriented

The next subject is how to create and sustain a high-level, refined and more matured culture of the "K" LINE Group with materialization of dreams and upgrading of the "K" LINE Brand.
It can be interpreted that we must build a corporation with an innovative atmosphere, giving priority to customer service that is pervasively and deeply rooted.

Let's consider something very essential and practical. Our income is mainly sourced from ocean freight that customers pay to us in reward for our providing satisfactory transportation service.
Satisfaction of our customers and acquisition of an innumerable amount of trust and confidence from them through our services can enhance "K" LINE Brand. To fully realize this concept, we must successfully grapple with pertinent and timely adoption of IT and other forms of technical innovations to meet changing customer needs. Such everyday innovative efforts will also make it possible to differentiate us from our competitors.

Practical efforts enhancing the image of our Brand are exemplified by our having conceived and constructed the 1st Pure Car Carrier in the world; our Reefer Bridge Service in the U.S. lasting over 15 years; and more recently our development of bulk carriers with wider breadths and shallower drafts, i.e. carriers in the Corona series. These examples were not born from any sudden idea at all. They were produced from customer-oriented conceptions constantly cultivated through everyday work on the frontline.

A corporate brand of genuine value will be created under the following circumstances: being trusted as a partner by customers and business connections; contributing to society in general in the form of CSR (Corporate Social Responsibility) and tax payments; all "K" LINE Group staff around the globe studying and raising their effectiveness with an organization being established where all their efforts will be properly assessed and rewarded, thereby motivating them to work with greater pride and higher morale.

On this occasion, let's be committed to both grow and engrain the above corporate culture throughout the "K" LINE Group.

We Will Challenge the Loftiest Peaks Fairly and Squarely

An ethical culture is becoming more important than ever for all companies in view of various recent cases such as manufacturers' recall issues and misinformation on Financial Statement Reports legally required by the Securities and Exchange Law of Japan (Article 24).
It can be affirmed that any breach of ethics could give rise to serious risks that might have a vital impact on our business activities. Arrangements are underway for the Company to realize perfection in corporate governance through our Compliance Committee, Compliance Office and Internal Audit Office. We are requesting that all directors and employees of the "K" LINE Group execute their jobs being highly conscious of "compliance."

Safety in navigation and cargo operations plays a key role in corporate existence and development, performing as the business base of shipping and also making us aware of the importance of assuming corporate risk to a significant extent. We expect a great deal from our Ship Safety Promotion Committee and Ship Management Committee in the sense of maintaining marine technical staff and managing ships on a global scale.

It is said that profit cannot be made without risk. There is no way to totally avert risk if we want to develop. Various countermeasures are being carried out: anti-disaster measures for company houses and IT-systems; timely response to accidents such as oil-spillage by tankers; etc. Efforts are being executed that will prepare us to respond to every type of risk, enabling us to minimize as well as also be ready anytime that our management is faced with risks, no matter how hard they may be to control.

Gathering all units concerned under our Crisis Management Committee, we are planning to build an infrastructure in which we can respond promptly and maintain business activities regardless of the situation.

When we welcomed the 21st century four years ago, we stated in the New Year Message that "K" LINE will become a Global Shipping & Logistics Group with a command of the entire landscape of the 21st century. Entering the 2nd year of "K" LINE Vision 2008, we understand that this is a very important year to envisage and shape the future of the "K" LINE Group to ensure that it is elevated and recognized as a member of the top group in the global shipping market.

We earnestly desire that all directors and employees of the Group firmly perform their individual roles with a full understanding that all themes posted in "K" LINE Vision 2008 are both realizable dreams and assignments requiring individual responsibility.

In conclusion, I heartily pray that all employees of "K" LINE Group on sea and shore, at home and abroad, as well as their families, may be blessed with good health, abundant happiness and increased prosperity in this New Year 2005.

Many thanks for your attention and warmest regards to each of you.

Yasuhide Sakinaga
President
Kawasaki Kisen Kaisha, Ltd.

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