| Dear Shareholders; |
| |
| |
| Kawasaki Kisen Kaisha, Ltd. ("K" Line) takes pleasure in reporting our 3rd Quarter (April-September) Fiscal Year 2009 consolidated financial status and our revised full-year financial position for Fiscal 2009 (April 2009-March 2010), and giving explanation about outline of our revised mid-term management plan "K" Line Vision 100, which have been disclosed today. |
| |
| yResults for 3Q FY2009z |
| |
| During the 3rd Quarter of consolidated Fiscal 2009 (October 1 through December 31, 2009), U.S. and European economic indicators finally showed a trend towards recovery departing from the past downward phase. However, recovery of the world economy was moderate as reflected in the continuing severe employment environment. |
| |
| Due to the environment surrounding the shipping industry it was unable to escape from the adverse effects of the faltering world economy and therefore the speed of recovery in profit and loss was slower than planned, but our earnings were almost as forecasted. In Containership Business, restoration of freight rates made a certain amount of progress on Asia-Europe service routes and North/South services amid decreased demand for marine transportation. However, cargo movements did not fully recover, and the business environment continued to be harsh. The dry bulk market continued to grow steadily overall, supported by increased cargo movements of grain, as well as strong demand for coal and iron ore from China. While cargo movements for completed cars were on a modest recovery trend, the speed of this recovery was slightly slower than the projection. |
| |
| (Unit: Billion Yen) |
| (Previous prospects) |
| Operating Revenues |
|
212.5 |
|
(318.1) |
| Operating Income |
|
 10.4 |
|
(14.9) |
| Ordinary Income* |
|
14.6 |
|
(6.6) |
| Net Income |
|
18.7 |
|
(10.5) |
|
| |
| |
| *Ordinary Income is income before income taxes and extraordinary items |
| (FY2009 3Q Yen/U.S Dollar average exchange rate 89.49; fuel oil price U.S.$ 447 per KT) |
| |
| |
| (Results for 1Q-3Q FY2009 (April-December 2009)) |
|
Unit: Billion Yen |
|
F09 1-3Q results |
|
F08 1-3Q results |
| Operating Revenues |
613.0 |
|
1,053.6 |
| Operating Income |
52.9 |
|
89.7 |
| Ordinary Income* |
64.5 |
|
81.8 |
| Net Income |
62.0 |
|
40.7 |
|
| |
| |
| * Ordinary Income is Income before income taxes and extraordinary items |
| (FY 2009 1-3Q Yen/U.S. Dollar average exchange rate ¥93.91, fuel oil price U.S. $386 per KT) |
| |
| |
| yEstimate for FY2009z |
| |
| With regard to 4th Quarter of Fiscal 2009, the world economy is expected to maintain a moderate recovery trend. The business environment surrounding the Company has been improving gradually, partly supported by the effect of cost structure reform. |
| |
| In Containership Business, the modest trend towards recovery in cargo movements is expected to continue, despite seasonal adjustments, and the Company expects its earnings to improve continuously through adjustments in the scale of fleet size in response to cargo demand, cost reductions from and including slow steaming navigation and a correction of freight rates. |
| |
| With respect to Other Marine Business, dry bulk division will be supported by an expansion of crude steel production and strong demand for marine transportation of grain and coal from newly-emerging countries, and on the other hand there is an uncertain factor such as excess supply capacity with newly-built ships that has been pointed out. Consequently, market rates are expected to stay at a rather positive level, even though there may be repeated periods of considerable fluctuations. |
| |
| With respect to Car Carrier Business, full-scale recovery of car sales in major countries is considered to take more time. We will work for cargo from new customer sources, as well as continuous rationalization in our fleet, and reduction in ship operating costs. |
| |
| With regard to Energy Transportation segments, tanker business will need more time for full recovery from sluggish market rates accompanied with global economic slowdown, even though cargo movements for both crude oil and petroleum products show signs of a recovery at present. As for LNG carriers, charter market is expected to continue to face a harsh situation for the time being due to an easing of the supply and demand relationship resulting from postponement of the starting up of new projects and decreased demand for long-distance transportation as well as the sluggish demand for LNG carriers. |
| |
| As mentioned above, the business environment surrounding shipping industry is gradually improving, but many aspects are difficult to forecast, including supply and demand balance, foreign exchange rates, and trends in interest rates. Nevertheless, the Company will strive to accomplish structural reform of our Containership Business, and to actualize more efficient ship operations and cost reductions continuously in all of our business segments. |
| |
| (Revised Yearly Prospects for Fiscal 2009) (1 April 2009 - 31 March 2010) |
| (Unit: Billion Yen) |
|
|
Consolidated |
|
(Previous prospects) |
|
(F2008 Results) |
| Operating Revenues |
|
830.0 |
|
(810.0) |
|
(1,244.3) |
| Operating Income |
|
58.0 |
|
(59.0) |
|
(71.6) |
| Ordinary Income |
|
71.0 |
|
(71.0) |
|
(60.0) |
| Net Income |
|
70.0 |
|
(79.0) |
|
(32.4) |
|
| |
| (F2009 4Q Yen/U.S. Dollar average exchange rate ¥90.70; bunker oil price U.S. $485 per KT) |
| (F2009 Yen/U.S. Dollar average exchange rate ¥93.11; bunker oil price U.S. $411 per KT) |
| |
| |
| Preconditions for foreign exchange rate and fuel oil price are as
mentioned above, and sensitivity on our Ordinary Income for 4th Quarter
from each factor is estimated as follows: |
| Exchange rate: 1 yen/US$ => Ordinary Income change approx 0.1 billion yen* |
| Fuel oil price: US$10/MT => Ordinary Income change approx 0.35 billion yen |
| * Yen depreciation is preferable for us. |
| |
| As to dividend for Fiscal 2009 (which ends March 31, 2010), as indicated earlier, I much regret to say that your board feels it will have to forgo any dividend payment since our gain for this year has to be estimated to result in Net Loss. The Company considers reform of our profit earning structure and maintenance of a sound financial structure to be the most urgent management issues and will continue with activities to carry out emergency measures for profit improvement and reform of our business structure, consisting mainly of complete rationalization and cost reductions. |
| |
| |
| Revisions to Medium-term Management Plan "K" LINE Vision 100 KV 2010z |
| |
| In March 2008, "K" Line carried out a mid-term revision of its then medium-term management plan, "K" LINE Vision 2008+ (Plus), to formulate new "K" LINE Vision 100, which has been followed up to now. In addition to the first four years from FY 2008 to 2011, the revision focused on the mid-2010s and even 2019, which marks the 100th Anniversary of the founding of "K" Line. |
| |
| During that period, the "Lehman Brothers collapse" in the autumn of 2008 caused the global economy to fall into a steep decline. In the circumstances, it is expected that our business results for FY2009 will fall substantially below the initial plan. From now on, the business environment is expected to improve but it is forecast that even income and expenditures after FY2010 will diverge from the amounts in the initial plan. Due to these circumstances, it has become necessary to make revisions to our medium-term management plan. |
| |
| In addition to our five fundamental tasks for the future, in the "K" LINE Vision 100 KV 2010 which has now been drawn up, which are; |
| |
| <Five management issues> |
| 1. |
Activities to promote environmental protection |
| 2. |
Stable safety ship operation administration structure |
| 3. |
Borderless management through the best and strongest organization |
| 4. |
Proper allocation of strategic investment and management resources |
| 5. |
Improvement of corporate value and complete risk management |
|
| |
| we will continue working towards "Synergy for all and sustainable growth" through our three new "Missions" for business structural reform as follows: |
| |
| <Three new Missions> |
| 1. |
FY2010 move into the black and early resumption of dividends |
| 2. |
Expansion of stable earnings base and sustainable growth |
| 3. |
Improvement and strengthening of financial makeup |
|
| |
 |
| |
| Forecast for FY2009, main financial numerical value targets in the plan for FY2010-2012 |
| |
 |
| |
| *The figures above include the prospects for future operating results as of the date of publication of the management plan (January 2010). Actual results may differ significantly from the prospects above, due to risks or uncertainties related to the global economy and fluctuations in foreign exchange rates, and other unforeseen factors. |
| |
| |
| For details of the new plan, please refer to other sections of this home page. |
| |
| For Fiscal 2010 (April 2010-March 2011), all directors and employees of "K" LINE and the "K" LINE Group are vigilantly dedicated with one voice to improving profit for each of our business segments as our top priority task, in addition to strengthening structure of Containership Business, our core business, to move into the black and early resumption of dividends, and in all honesty, I can without any doubt or hesitation assure you of that. Your continued support and encouragement will be greatly appreciated. |
| |
| Thanks for your kind attention to the above. |
| |
| 29 January 2010 |
