| Financial Highlights for F 1998(Non-Consolidated) |
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Published by the Board of Directors of Kawasaki Kisen Kaisha, Ltd., on May 21, 1999. Contents
1.Two Year Summary
The U.S. dollar amounts present a translation from the yen amount at ¥120.55 = U.S.$1.00, the exchange rate prevailing on March 31,1999. 2.Message from the Management of business results (General Review) During the current fiscal term, the global economy was under the serious impact of Asian economic and financial crises which continued dragging on, except for the U.S. economy. The U.S. economy could sustain economic development at a relatively high level centering on favorable domestic demand despite overseas demand being sluggish. In Europe, a fall in exports, particularly to Asia, began to cast a shadow over its business conditions, mainly in export-related industries. In Asia, personal consumption dropped due to an increase in unemployment as a result of worsening economic conditions, but meanwhile serious and desperate efforts were being successfully redoubled for improvement of financial systems and stabilization of foreign exchange. An environment for recovery of these economies was thereby gradually being favorably re-arranged. In Japan, private-sector plant/equipment investment and personal consumption continued to be on the decline. It did become clearer, however, that the drop in production had possibly but gradually come to a halt due to significant increase in investment in public works towards the close of the current fiscal term against the backdrop of urgent economic measures promoted by the government.
(Container Business) In North America service, cargo movement to the U.S. from Asia proceeded to be extremely steady, resulting in a significant increase in cargo loadings and some restoration of freight rates. Cargo movement to Asia from the U.S., however, did not get back on track with a large fall in freight rates. The difference in cargo volume between Asia-USA and USA-Asia widened, increasing necessity for return of large numbers of empty containers which incurred extra costs. In Europe service, cargo movement from Asia to Europe proceeded in a steady condition, with some restoration in freight rates. Taking this opportunity, the Company placed larger containerships into service and began making a new call at an Egyptian port. Such operational efforts could make an increase in cargo loadings become a reality. On the other hand in the service route from Europe to Asia, cargo loadings declined and freight rates also dropped to a significant extent as in the case of USA to Asia. In the North Atlantic Service linking Europe & North America, we succeeded in increasing cargo loadings in volume by token of re-arrangement of the service, but freight rate levels fell due to the extra number of competitors in the trade. In Intra-Asia Service, cargo movements could not recover due to the lingering economic crises in the Asian nations and the continuing stagnancy in Japan’s economy. Exposed to such harsh and adverse situations, the Company took pre-emptive measures such as unification of two services, i.e., Japan/Philippines Service and Japan/West Australia Service, which enabled us to minimize minus results. Under such circumstances, despite efforts for rationalization on each service route as well as entrance into new markets and reduction in costs and expenses being carried out, the bottom line of Container Business this year fell short of the same period last year because of the declines in Asia-bound cargo volumes and freight rate levels in both North America and Europe Services, caused mainly by the stall in the Asian economies.
(Bulk Carrier and Car Carrier Services) In Bulk Carrier Services, current market for general dry bulk carriers proceeded in a somewhat repressed state regardless of type of ships. The market for large bulk carriers stayed in low-key condition due to a fall in import of raw materials for steel because the Asian countries, mainly Japan, and European countries carried out reductions in crude steel production. The market for medium bulk ships also continued to be depressed under the influence of the economic turmoil and fall in consumer and industrial demand in Asian nations and also due to pressure from tonnage supply by new buildings. The market for small carriers stayed in a sluggish condition since last year and there were no prospects for recovery. Under such difficult market situations, the Company made efforts to secure profitable contracts of affreightment and practiced competitively-sophisticated alignment of its fleet with improved efficiency in ship operation. The bottom line, however, fell this year under that of last year. In Car Carrier Services, car exportation from Japan continued to be favorable. We concentrated on efficient operation of available fleet and successfully coped with an increase in space demand through timely chartering on short-term basis. The Company went on to make business efforts in the fields of cross-trade and importation into Japan. As a consequence we could attain the same level of bottom line this year as enjoyed in the corresponding previous period.
(Tanker and Energy Transportation Services) In Steaming Coal Carrier Services for electric power companies, we completed a seven-carrier line-up composed of two dedicated carriers with long-term cargo guarantees, three carriers of the Corona Ace type invented and developed by the Company on its own specially for steam coal, and two long-term chartered PANAMAX carriers. With the above seven players in place, we could enlarge our overall business scale, transporting approximately 5 million tons. In Liquefied Natural Gas Carrier Services, the fleet was grown to a significant extent under the backdrop of three newcomers for the Qatargas LNG Project added during the current term. The entire fleet in operation worked well as planned in advance under long-term contracts, earning profit in a stable way. The markets for oil tankers stayed brisk favored with buoyant cargo movement during the first half. During the second half, however, the tempo fell to a stall due to the long-dragging economic depression and influence from production reductions by oil companies. Markets for oil-product carriers were generally low-key due to a stagnation in product demand. In terms of Oil Tankers, we fell short of last year despite efforts being made to secure advantageous shipments and carrying out greater efficiency in operations. Under the above circumstances in general, we redoubled efforts throughout the Company for rationalization and business creation. We could attain an increase in revenues, summing up less ordinary profit but more net income this year as compared with last year. In terms of the next fiscal year, although the Asian economy is expected to be able to overcome the worst of its problems, it will take us a little more time to completely get back on track. The European economy is likely to slow down and Japan’s economy will also continue to be mired its efforts toward recovery. We would like to better aim our focus on strengthening synergy of the Group which is expected to be a steady and forward-looking business group with a customer-oriented mind-set, globally providing logistics services centering on the shipping business. We will promote globalization of management concept, growth and strength of subsidiaries with priority given to consolidated management, contraction of interesting-bearing debt, vitalization of group organizations and readiness for safety in navigation under “New “K”LINE Spirit for 21” (New K-21), a 5-year strategic management plan launched in April 1998. Regarding the Year 2000 Compliance issue, we are pleased to advise that the System Committee was formed on a full-company basis. Under directorship of the committee, all factors are being tackled. In 1995, a project was launched to entirely review conventional information and communication systems with the Year 2000 issue in sight. In April 1997, the new systems started working when the main systems had been thoroughly checked and modified according to the issue. Regarding vessels where various kinds of equipment are placed, check-ups were made on our own and also through precise confirmation with respective makers. Recognizing the high priority importance of the Compliance matter, the Company will continue to be ready to take action at any time with proper contingency plans in hand should any type of emergency occur.
(Dividend Policy) Regarding dividends, our basic thinking is payment of a dividend subject to conditions of profitability. Following this policy, the Company’s direction will be to comprehensively decide on a dividend from an intermediate and long-term viewpoint after deep, careful consideration for reinforcement of a fundamental structure of management that will be endurable against intensifying competition in the shipping industry, evaluation of the proper increase in interior reserves for development of future business and necessity for continuation of stable dividend payments. Under this direction, we have decided to propose a dividend of ¥3.00 per share this year (same amount as paid last year) at the Ordinary General Meeting of Shareholders. In terms of a dividend for the next fiscal year, there is an outlook for a dividend of ¥4.00 per share when and if the Company is able to attain the bottom line in prospect at the present time. Emphasis is being placed on doubling our efforts to improve achievements in consideration of the continuation of stable dividend payment being a top-priority assignment for management. 3.Non-Consolidated Balance Sheets Kawasaki Kisen Kaisha,Ltd. March 31,1999 and 1998
4.Non-Consolidated Statements of Income Kawasaki Kisen Kaisha,Ltd. Years ended March 31,1999 and 1998
5.Non-Consolidated Proposed Appropriation of Retained Earnings Kawasaki Kisen Kaisha,Ltd. Years ended March 31,1999 and 1998
(New assignment subject to approval at the Ordinary General Meeting of Shareholders on June 29, 1999.)
New Board of Directors and Corporate Auditors
( New assignment subject to approval at the Ordinary General Meeting of Shareholders on June 29, 1999 .) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||