| 1. Beginning |
Since launching management’s 3-year
"KV-PLAN" in April 2002, we have been seriously addressing each of the
fundamental assignments such as a) expansion of scale in every business sector; b) cost
curtailment; and c) safety in navigation and cargo operations.
The major part of our mission related to that Plan has been accomplished with all final
goals having been attained including numerical targets. With a view to this achievement,
we have concluded to terminate the Plan at the end of Fiscal 2003, one year ahead of
schedule and launch "K" LINE Vision 2008, a new intermediate term
management plan that will guide our course until the 90th anniversary of the
Company’s foundation, following the fundamental direction of the previous plan.
In "K"LINE Vision 2008," the forthcoming 5-year period from now to our
90th anniversary will be regarded as a runway for making large strides and
remarkable leaps that will ensure the future of both our business foundation and
infrastructure.
In the New Plan, we are concisely defining and envisaging the basic ground of
existence and the image of the "K" LINE Group in 2008 as a shipping entity in
corporate principles, vision and numerical targets. We are committed to coming to grips
with the three assignments, giving top-priority to "sustainable growth and establishment
of a stable profitability structure." More substantially, we will continue with the cost
restructuring campaign at an all-group level and will seek every opportunity for profit,
looking for new business and developing fields in the world’s remarkably developing
markets. |
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|
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| 2. Principles of Management |
| The basic principles of "K"
LINE Group as shipping business group centering on shipping lie in: |
| a. |
|
Diligent efforts for safety in navigation and cargo
operations as well as for environmental preservation |
| b. |
|
Sincere response to customer needs through applying every
possible effort |
| c. |
|
Contributing to the world’s economic growth and stability
through continual upgrading of service quality |
|
| |
|
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| 3. Vision |
| In envisaging how and what
the "K" LINE Group should be in 2009 when we celebrate our 90th
anniversary, our image includes the followings: |
| 1. To be trusted and supported by
customers as a globally developing group |
| 2. To ensure our business base is able to
respond to any and all changes in circumstances, and be a constantly innovating business
group with proper capability for surviving perpetually in any major global market |
| 3. To provide a workplace where each and
every employee will be able to display creativity and a challenging spirit with bright
hopes and passionate aspirations |
| |
|
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| 4. Achievement Goals |
| - In the new plan we will try our best
for not only an increase of profit in the existing business domain but also positive
investments into new areas under the theme of "sustainable growth and establishment of a
stable profitability structure," advancing towards a new goal of consolidated operating
revenues totaling ¥1 trillion in 2010 after the celebration of our 90th
anniversary. |
| - Fleet is to number 460 ships by Fiscal
2008 |
| - Total investment in vessels during the
term of the New Plan is to reach ¥730 billion (181 vessels), out of which ¥215
billion is to be spent chartering 46 ships. |
| - Numerical goals include shareholders’
equity of ¥300 billion or more; ratio of shareholders’ equity over capital 40% or more;
ROE 16% or more; and ratio between debt and equity of less than 80%. |
| |
| (primary finance-related numerical goals
in Fiscal 2004, 2005 and Fiscal 2008, |
| "K" LINE Vision 2008 final
year) |
| |
| (unit: billion Yen) |
Actual
results in
Fiscal
2003 |
Targeted
figures in
Fiscal
2004 |
Targeted
figures in
Fiscal 2005 |
| operating revenues |
724.7 |
760.0 |
790.0 |
| operating income |
70.5 |
76.0 |
77.0 |
income before
income taxes and
extraordinary items |
62.6 |
74.0 |
75.0 |
| net income |
33.2 |
46.0 |
47.0 |
| ROE |
32.7% |
33% |
26% |
liabilities bearing
interest |
281.8 |
260.0 |
240.0 |
| shareholders’ equity |
121.0 |
160.0 |
200.0 |
ratio of shareholders’
equity |
21.6% |
27% |
33% |
Debt Equity Ratio
(on the basis of fair
market value) |
233%
(88%) |
162% |
118% |
investment in plant
and equipment |
53.8 |
73.0 |
88.0 |
| scale of fleet |
361 |
368 |
395 |
|
 |
Targeted
figures in
Fiscal
2008 |
870.0 |
88.0 |
87.0
|
55.0 |
17% |
260.0
|
340.0 |
43%
|
77%
|
135.0
|
461 |
|
| |
| Preconditions for achievement |
|
|
| |
Fiscal
2003 |
Fiscal
2004 |
Fiscal
2005 |
| Exchange rate |
¥114 |
¥108 |
¥110 |
| Fuel oil price (M/T) |
$170 |
$170 |
$170 |
|
|
|
|
| To materialize this vision and goals, we
will pursue the following fundamental assignments and business strategy. |
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|
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| 5. Fundamental Assignments |
| Fundamental assignments consist of three
items: |
| a. To ensure stable profitability
structure through reinforcing business base |
| b. To create a high-level, refined and
more matured culture of the group companies with materialization of dreams and upgrading
of the "K" LINE Brand |
| c. To strengthen corporate governance and
response to risk management |
| |
| Ensuring a stable
profitability structure through reinforcing our business base |
| |
| - Positive efforts for addressing
strategic domain/areas and optimal allocation of management resources through selection
and concentration |
| In tackling strategic domains/areas of
mainly marine transportation as well as its related areas, we will take advantage of our
global network and strengthen our inter-business-sector synergy to the maximum extent
centering on shipping. For execution of our business strategy for the remarkably growing
China market and other emerging regions, all business sector will individually come to
grips with appropriate development of their respective business. We will also attempt to
focus our management resources upon the sectors in those fields where our strong points
may be best utilized. |
| Every possible measure deemed important
is to be taken for promptly entering new markets, acquiring management resources or
strengthening of our competitiveness through expansion of business in a flexible response
to whatever the change in circumstances may dictate. We are firmly determined to execute
various strategies such as M&A and/or partnerships with other companies, thereby
investing our management resources into fields showing potential and where high
profitability and growth can also be prospected. All these measures are expected to lead
us to maximization of group corporate value. |
| - Ensuring a trans-national management
system for integration of corporate strategy under multi-polarization of business
management |
| Domestic and overseas companies of the
"K" LINE Group have tended to move towards globalization in which they are
required to have close relationship with regional societies and be independent. It can be
said, however, that we have finished a period with globalized business practices
demonstrated by "K"Line America, Inc., "K"Line Pte Ltd and
"K"Line (Europe) Ltd. (Bulk/LNG) and start of our own short sea car carrier
service under "K" Line European Sea Highway Services GmbH. From now on, looking
to multi-polarization of management progressing in the global market, we are required to
empower subsidiaries, in other words, to grant more independence to them in an attempt to
adapt to local markets. A management system must be built where the head office with a
small number of management and staff but having knowledge and capabilities can perform
with strong and flexible synergistic power, give more independence to regional
subsidiaries and execute prompt decision-making in global strategy matters. |
| - Efforts for spreading and rooting a
cost curtailment campaign to the "K" LINE Group as a gene of corporate |
| Efforts should be made for spreading and
instilling every cost cut campaign according to sector and functionality as a corporate
gene. We will thereby even further upgrade our cost competitiveness, with targets set
every year for achieving and maintaining cost competitiveness. |
- Development of transport technology
and upgrading navigation technology
With an eye on customer needs, ceaseless endeavors will be executed for technological
advance to assure construction of newbuildings that are trustworthy and competitive. More
specifically, we will target developing transport technology for new shipments, i.e. DME
and NGH, etc, new sources for energy and putting CNG carrier into practice.
Simultaneously, we will secure and bring technical staff up for that purpose. Further to
say, we will tackle a variety of education and training for success of ship operation
technology while this should also contribute to expansion of business activities in
collaboration with respective business sectors. |
| - Strengthening of financial
constitution and establishment of a stable dividend payment structure |
| Financially, we are targeting an increase
in consolidated shareholders’ equity that will reach ¥300 billion and its ratio being
40%. Increase in investments is being prospected for expanding scale of business. We will
carry out replacement of ships under the support of an increase in cash flow from
operating activities and control liabilities bearing interest within an appropriate scope,
also secure "A" rating for long-term bonds. For future capital policy and
advantageous financing, we will practice continuous efforts to elevate our reputation in
capital markets by establishing a stable dividend payment of ¥10 per share. |
| |
| Creation of a
high-level, refined and more matured culture of the "K" LINE Group with
materialization of dreams and upgrading of the "K" LINE Brand |
| |
- Creation of a high-level, refined
and more matured culture of the "K" LINE Group with materialization of dreams
In a world where globalization is being accelerated and deepened, organizations and people
of the "K" LINE Group are required to work in a corporate culture* in which they
all share with each other. For that purpose, we will create a high-level, refined and more
matured culture of the "K" LINE Group that encourages each and every employee to
have aspirations and become aware of their reasons for working with vigor, one that will
see materialization of their dreams for future generations. We will continue doing our
best for strengthening and growing such a culture. |
| * "K" LINE Spirit |
| /spirit of working for customer service
as a top-priority |
| /innovative and challenging
decision-making with fair and vigorous character for assessing activities |
| /liberal and open-minded spirit |
| - Upgrade of "K" LINE Brand |
| The "K" LINE Group’s values
should be recognized equally by our stakeholders (customers, employees and shareholders)
throughout the world, We will address upgrading of the "K" LINE Brand as a proof
of how genuine our values are, which should also help strengthen the synergistic effect
among all parties concerned. In this way, we will position "K" LINE as corporate brand
of the "K" LINE Group, endeavoring to elevate its value as a comprehensive
brand. Such a strengthened brand is expected to perform various functions: to customers as
a proof of confidence of quality service; to employees as a value uniting the group on the
whole; and to shareholders as a proof of supporting corporate values. With this
understanding, we will clarify what should be strengthened with respective stakeholders,
who should then be able to understand them better than now. |
| |
| Reinforcement of
corporate governance and response to risk management |
| |
| - Reinforcement of corporate
governance |
| We will further strengthen corporate
governance and make every effort for executing transparent management and assuring its
penetration into all group companies. |
| - Reinforcement of risk management |
| As our corporate social responsibility
(CSR), we will continue to seriously address environmental issues, risk management and
compliance. Constant endeavors will be carried out for establishing a comprehensive risk
management system against operational and navigational risks, disaster and other
management risks, which we will also actively and energetically introduce and promote
within each group company. Simultaneously, we will review and rearrange our internal
supervising functionality. We will never fail to build a risk management system against
business risk incurred by worsening of market, etc and will build a stable payment of
dividends. |
| - Approach to safety in navigation and
environmental preservation |
| With perfection in safety of navigation
and environmental preservation posted as top-priority assignments, we will practice
response drills against simulated emergencies as well as maintain and strengthen our risk
management system. |
| Efforts will continue for increasing
number of ships being operated and at the same time for maintaining "K" LINE’s
criteria for safe navigation; also reinforcing quality control sector to assure customer
confidence. |
| Efforts for safety of navigation are
exemplified by training "K" LINE’s engineers as Super Intendants (SI) by
in-house ship management companies; training global human resources as SI; use of
third-party ship management companies; upgrading technology of in-house ship management
companies through SI training class at a level of the "K" LINE Group;
direction/supervising/management of ships by "K" LINE’s technical specialists.
All these efforts will lead to reinforcement of our safe navigation system. |
| Through steady operation of "K"
LINE’s Environmental Management System, we will endeavor to reduce environmental loads,
pursue energy saving and expand the certification scope of ISO 14001. Environmental
friendliness will also be considered in relationship with designing newbuildings. |
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|
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| 6. Business Strategy |
| -Containership/Terminal Business |
| In parallel with development of IT
supporting transportation service and supply chain management, it is anticipated that the
shift of manufacturing will be further accelerated from Europe/the U.S. to
China and other Asian regions. Growing consumers’ market
in North America/Europe/Asia, and on-going technical innovations stimulating consumers’
purchasing and also shorten demand cycle for replacement, all of which are expected to
assist increase in demand on main service routes. With expectation of such steady and
continuous growth in trade volume, as one of our core business, we shall continue to
commit our investment in containership business to maintain fleets within the Top 10
carriers in terms of both size and quality and make further efforts even to be more cost
competitive, while aiming at a No.1 carrier in customer satisfaction. |
| Simultaneously, we will make every effort
to stabilize profitability, through building of a long-term trust and partnership with
customers by taking advantage of KLTL-led campaign, Promotion of Multiple-year
contracts further expansion of service network and enlargement of terminal business. |
| * Further explanation upon KLTL-led
campaign is being given: |
| KLTL ("K"Line Total Logistics)
is flying the banner for "K" LINE Group’s total logistics business. Under the
coordination of KLTL, each group company will conduct logistics business on its own and at
the same time, Containership Sales is to establish firm partnership with customers in
cooperation with logistics-related group companies in pursuit of creation of synergetic
effects. In such manner, we will establish transport/logistics service by the
"K" LINE Group with a higher grade of customer satisfaction. |
| |
| - Car Carrier Business |
| Global seaborne trade of complete cars is
anticipated to keep increasing with a view to expansion of global markets against the
backdrop of an increasing population, diversification of production sites and enhancement
of regional mutual supply systems promoted under FTA (Free Trade Agreement). We are
keeping up with increasing marine transport of complete cars and diversification of
production sites. We have a strong intention to expand business scale for the transport of
complete cars and also carry those non self-propelled cargoes, utilizing every kind of
equipment for transportation. |
| Simultaneously, we are addressing stable
transport and upgrading of transport service quality as well as developing our IT-based
transport services. In this way, we will make every effort for "K" LINE Brand to
be widely recognized as a Global RORO Carrier. For this purpose, we will propel expansion
of global business bases and increase the proportion of independent regional businesses.
Furthermore, we will establish long and trusted relationships with valued customers in all
areas of the shipping domain as well as in shipping itself by better understanding each
region. We will promote differentiation of our services through the comprehensive
capabilities of the "K" LINE Group. |
| |
| - Bulk Carrier Business |
| Coal & Iron Ore Carrier: |
| It is prospected that the growth of
global production of iron & steel will be continued with steadiness centering on
China. We will expand our business in this field through positive investment, recognizing
transport of raw material of Iron & steel as a business field where the sustainable
growth in seaborne trade will be expected. |
| Our Capesize fleet has been ranked as
No.3 among the global operators. Further efforts will be carried out to maintain the
present position as the leading carrier through the development of fleet and upgrading
service quality. We will continue strengthening domestic business. In the meantime, we
will also do our best to ensure our "K" LINE Brand reflects our know-how, human
resources, development of technology and achievement of safe navigation that we have
successfully cultivated in Japan, by means of which we are determined to tackle business
expansion in off-Japan developing markets such as Asia, Europe and the U.S. |
| General Bulk Carrier: |
| We will endeavor to enlarge business
scale to such extent that our risk management is workable. We will have respective core
business for each ship type be further strengthened and developed. At the same time, we
will never fail to exploit as many new areas surrounding core business as possible. In
this steady process we will materialize expansion in business scale and enhance a stable
profitability structure. |
| |
| - Energy Resource Transportation
Business |
| LNG Carrier: We will make further
effort in participation into ownership and ship management of new project for LNG
carriers. In addition to responding to domestic customers, we will select and concentrate
on our targets elsewhere such as Europe and the U.S. where demand is developing. We can
firmly say that we will cope with new customer needs flexibly and dynamically whenever new
transport services can be provided by us. We recognize the importance of strengthening our
business system by making the best of our network among Japan, Europe and the U.S., and we
will also put our ship management system into practice in Europe to maintain safety and
cost competitiveness. |
| Thermal Coal Carrier: It is
prospected that the Japanese thermal coal transport market that has been developing during
the past 20 years is likely to see a slowdown in its growth rate for some 5 years to come,
but will proceed with a stable quantity of 70 million tons. We have been successful in
gaining favorable assessment and confidence from power companies as a result of responding
flexibly to changing ratio of thermal power generation. We will reinforce and rearrange
our transport system based on our Corona-series carriers, including complementary fleet,
from the standpoint of both software and hardware. In this manner, we will ensure
supremacy of our service in the market. |
| Tankers: Our objective is to be an
excellent tanker operator with fleet size of 40 tankers carrying some 40million tons and
also servicing customers with quality service based on safe and efficient navigation and
cargo operation. We are also trying to level up our presence more as a global and highly
sophisticated tanker operator with aggregate of high standard of navigation and cargo
handling know-how. |
| |
| - Logistics business |
| We recognize logistics business sector as
prosperous business field where we can expect continuous growth together with our core
ocean transportation domain in the global markets. Our group companies networking all over
the world are providing various kind of valued-added and distinguish logistics services
with appropriate functionality. Under this new management plan, we will promote our
logistics business by positioning ourselves as a comprehensive logistics business group to
pursue customers reliance and satisfaction through aggressive expansion and new
development of logistics companies businesses with their own accountability, being fully
supported and appropriately coordinated by Logistics Division of "K" Line Head
Quarters. |
| We will also promote our sales activity
comprehensively with combination of further development of business relationship with
existing customers, participation into new customers’ logistics operation and our
sophisticated IT capability. |
| In close cooperation with Container
Business and Car Carrier Business, we will pursue to securely increase total profitability
as logistics business unit among "K" Line group companies, through the business
expansion in logistics fields with not only our existing customers but also our current
supporters in ocean transportation services. |
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|
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| 7. Assignment on Organization and
Human Resources |
| We are going to tackle the following
assignments in this subject in order to accomplish the three Fundamental Assignments
mentioned in item 5. above. |
| < Human Resources assignment> |
| - Diversification of recruiting and
employment that secures the Company’s pool of human resources (including deployment of
contracted employees and temporary dispatched staff from outside and effective utilization
of especially skilled senior staff, etc.) |
| - Establishment and enhancement of
training scheme on a global basis for group companies staff to train as professionals who
will promote businesses and exploit new business (expansion of educational training system
applicable to employees working for subsidiaries around the world, opening of "K" Line
University in Richmond and Tokyo, obligatory system of sending employees hired at the Head
Office to overseas subsidiaries for training purposes, opening of onboard training to
employees of group companies all over the world, etc.) |
| - Further implementation of Human
Resources management scheme based on common performance appraisal system for personnel
working in global business in line with future staff exchange program among group
companies across the globe. |
| - Securing of skillful seafarers and
effective training through utilization of training facilities in Japan and overseas and
providing attractive "cadet" training scheme, and continuous securing of international
high level seafarers by protecting proper job security, providing promotion opportunity
and further enhancement in welfare benefits program. |
| |
| <Organization assignment> |
| - In order to further improve
organizational transparency, social responsibility and corporate stability and to
strengthen corporate governance we will execute the following items: |
| |
a. |
|
Continuous efforts to make shareholders’ meeting more open
and easier to access and continue to evaluate for possible improvement of management
organizations |
|
b. |
|
Risk management to be promoted and managed by five
committees (Crisis Management Committee, Ship Safety Promotion Committee, Disaster
Response Committee, Compliance Committee and Management Risk Committee) |
|
c. |
|
Promotion of risk management and CSR (Corporate Social
Responsibility) including corporate governance to group companies |
|
d. |
|
Establishment of internal auditing system |
|
| - We will promote of the shared service
system wherever possible and effective within "K" LINE Group companies to
improve organizational efficiency. |
| - Vision 2008 Management Committees and
existing task forces will be reorganized as follows: |
| [Ship Management Committee] |
| Investigating and finding best solution
in a long-run for the issues of better seafares allocation, ship management methodology
and better management control over chartered ships and ships managed by third party
companies along with business expansion and operating fleet increase: |
| [Cost Structure Reform Committee] |
| Addressing the restructuring of over all
cost structure such as operational costs in all business sectors, ship procurement cost,
administration cost, etc.: |
| [China & Other Emerging Business
Areas Committee] |
| Cross-exchange of information amongst
organizations, evaluation of business direction as well as exploitation and suggestions
for new business concerning China and other emerging areas: |
|
| The Environment Committee and IT
Committee will continue to perform as a standing committee. |
| |
