Summary of Business Briefing on June 3, 2025

Opening Remarks (Representative Executive Officer, President & CEO Takenori Igarashi)

 

Today’s Key Briefing Points (P.2)

• The medium- to long-term supply-demand outlook remains strong for three “K” Line's own businesses serving the role of driving growth, although this fiscal year, the situation continues to require close attention due to factors such as the impact of U.S. trade policies.
• We plan to achieve sustainable growth by further enhancing the three key functions—Safety and Ship Quality Management, Enhancement of Environmental Technologies, and Digital Transformation (DX)—which have been the key strengths driving our business growth, and integrating them into each business.
• We will accelerate growth without relaxing investment discipline by strengthening collaboration with customers and partners, as well as through partnerships and M&A, particularly in areas where our strengths can be fully leveraged.

 

Strengthening Functional Strategies (P.3)

• By sharpening our three key functions: Safety and Ship Quality Management, Enhancement of Environmental Technologies, and DX, and integrating them into each business, we will expand the domains where our strengths can be leveraged and realize sustainable growth.
• For Safety and Ship Quality Management, I believe our maritime and technical expertise are already at a high level. We will further enhance this by strengthening seafarer recruitment and training. By further enhancing our maritime and technical expertise, we aim to expand our business domains of challenging cargo handling such as liquefied gas, reduced iron, and High & Heavy cargo.
• For Enhancement of Environmental Technologies, we are now introducing and deploying LNG-fueled vessels and considering introducing next-generation zero-emission vessels to follow.  As decarbonization needs continue to rise across society and among our customers, we will contribute to building new fuel supply chains, while providing added value that meets customer needs.
• For DX, we aim to create value through maritime-specific data use, such as in vessel operation and cargo stowage, and in advanced CO₂ emissions management.  Moreover, we will promote thorough digitalization and efficiency and rationalization through AI utilization. This results in achieving higher value-added services, improving competitiveness and Data-driven enhancement of management.

 

Business Growth Directions (P.4)

• By honing our three key functional strengths, which serve as the core of our business growth, and expanding in areas where those strengths can be leveraged, we are striving for sustainable business growth with an awareness of capital cost.
• Our growth strategy is centered around three pillars:
  1. Enhancement of “K” Line’s functional strengths
  2. Expansion of business areas by leveraging “K” Lineʼs strengths
  3. Accelerated growth through partnerships and M&A based on “K” Lineʼs strengths
• As I already mentioned, “Enhancement of “K” Line’s functional strengths” involves enhancing Safety and Ship Quality Management, Enhancement of Environmental Technologies, and DX. These will enhance our competitive advantage, expand existing businesses, acquire new businesses, and lead to improved profitability.
• Growth through “Expansion of business areas by leveraging “K” Lineʼs strengths” focuses on three main areas.

　　　▸First: Areas where our accumulated transportation expertise can be utilized, such as specialized cargo transport, including liquefied gas and reduced iron etc.

　　　▸Second: Contributing to build new decarbonization-focused supply chains, including the bunkering new fuels for ships, in areas where our strengths can be leveraged

　　　▸Third: Delivering new transport value through introducing low- and zero-emission vessels

• Furthermore, in order to accelerate growth, we will consider strategic partnerships and M&A in fields where we can leverage our strengths with a view to improving the competitiveness of our vessels and fleet and enhancement of transport capacity and functionality, without relaxing investment discipline.

 

Earnings Targets (P.5)

• Our medium- to long-term target is to achieve 110.0 billion yen ＋ α in ordinary income from “K” Lineʼs own businesses by FY2030.
• As I mentioned earlier, we will pursue this target by combining our three key functional strengths across all businesses—for example:

　　　▸Enhance special cargo transport capabilities by leveraging expertise in safety and ship quality management

　　　▸Introduce new product and service offerings through deployment of low-carbon and zero-emission vessels

　　　▸Improve operational efficiency and CO₂ reduction through data utilization, and strengthen competitiveness of internal operations through complete digitalization

• Also, by combining deeper initiatives within “K” Line’s own businesses with partnerships and M&A strategies that enable accelerated growth, we are aiming to achieve a “+ α”  result.

                     

Today’s Briefing (P.6)

• Now, we will turn to briefings on the three businesses with the role of driving growth, given by the executive officers responsible for each business.
• The Car Carrier Business briefing will be delivered by Managing Corporate Officer Haruhiko Sugimoto, Coal & Iron Ore Carrier Business will be presented by Senior Managing Corporate Officer Masatoshi Taguchi, and LNG Carrier Business will be presented by Senior Managing Corporate Officer Michitomo Iwashita.

Car Carrier Business (Managing Corporate Officer Haruhiko Sugimoto)

 

1. Market Trends

Supply and Demand Balance Outlook (P.9)

• This graph shows the actual and anticipated supply-demand outlook for the entire car carrier market from 2024 to 2035, with 2024 demand set at 100. Light gray represents demand, dark gray represents supply, and the red line indicates the level of retiring vessels each year.
• Demand is expected to grow modestly at about 1% annually through 2030, in line with steady growth in automobile sales.
• Meanwhile, supply is expected to balance with demand around 2026, as newbuild vessel deliveries increase in 2025 and 2026.
• From 2030 onward, we expect a wave of vessel retirements, especially those built around 2010, creating replacement demand. This is also anticipated to be the timing for a transition toward next-generation, eco-friendly vessels.
• We will watch closely to see whether eco-friendly vessels can fully replace retiring vessels capacity and how this switchover will affect the overall supply-demand balance.
• Our assumptions include resumption of the Suez Canal route in FY26. However, U.S. tariff policies and USTR-imposed measures are not reflected in this supply-demand outlook.

 

2. Business Strategy

Overall Strategy for Medium- to Long-Term Growth (P.10)

• To achieve medium- to long-term growth, we will leverage our key functional strengths.
• Creating new transportation value through environmental measures

　　　▸Environmental pressures are transforming the car carrier market and creating new transport needs.

　　　▸By leveraging decades of expertise and one of the industry's leading eco-friendly vessels fleet, securing contracts through customer-oriented proposals and collaboration, thus expanding earnings.

• Reorganizing route networks in response to demand shifts

　　　▸The spread of EVs is altering production and consumption hubs, creating new transport demand.

　　　▸We will leverage our strong organizational sales capabilities and closely collaborate with customers to capture this demand.

　　　▸We plan to redesign and upgrade our route networks based on customer needs.

•  Cargo portfolio optimization (expand ratio of High & Heavy cargo)

　　　▸Demand for highly profitable High & Heavy cargo transport, including construction and agricultural machinery as well as breakbulk, is increasing.

　　　▸We intend to expand this type of cargo transport by leveraging our reliable transport capabilities and advanced maritime skills.

 

Demand Outlook for Environmental Measures and “K” Line Initiatives (P.11)

• This graph shows the anticipated shift in fleet composition by fuel type for entire car carrier market from 2024 to 2035.
• In the mid-2020s, the number of LNG-fueled vessels is expected to start growing, driven by tighter regulations and customers’ decarbonization needs.
• The IMO GHG levy is expected to be introduced in January 2028, likely to give eco-friendly vessels a future cost advantage over heavy oil-fueled vessels.
• Post-2030, regulations are expected to tighten further, and large-scale retirements of heavy oil-fueled vessels (built around 2010) will accelerate the transition to eco-friendly vessels.
• We have been early adopters of eco-friendly vessels and already provide  services that meet customer needs.
• Together with customers, we will co-create the transportation of completed cars using eco-friendly vessels for the future.

 

Creating New Transportation Value Through Environmental Measures (P.12)

• “K” Line’s strengths lie in a stable service foundation, a customer base that shares our commitment to eco-friendly vessels, and relationships with customers that allow for smooth collaboration and proposal development by close coordination.
• We currently operate 9 eco-friendly vessels, which is over 10% of our fleet, thanks to early investment made before actual customer demand materialized.
• Meanwhile, from the perspective of customer needs, the demand for environmental measures is increasing as decarbonization progresses.
• However, completed car transport using eco-friendly vessels remains limited, and such vessels are still rare leading to more opportunities to have detailed/direct discussion with customers.
• As a result, medium- and long-term contracts reflecting the value of eco-friendly vessels are becoming feasible.
• Our early investment in this area is being well received, helping us secure long-term contracts with better terms than for heavy oil-fueled vessels, and we will continue to promote this actively.  

 

KPI Progress and Outlook (P.13)

• The bar graph on the left shows a breakdown of the projected increase in our total transport composition from FY24 to FY30.
• The other three graphs, labeled 1, 2 and 3, show the actual growth rates from FY23 to FY24, with the transport volume in FY24 set as 100. They also show our target values for FY26 and FY30.
• In graph 1 Eco-friendly Vessels,

　　　▸You can see transport volume using eco-friendly vessels rose significantly year on year in FY24 due to fleet expansion.

　　　▸We are aiming for 200% growth by FY26, and 500% by FY30.

• In graph 2 Shipping Network Reorganization,

　　　▸We saw significant growth from FY23 to FY24, driven by new contract acquisitions amid changes and expansion in transportation demand.

　　　▸As an example, strong growth is expected for exports from India. Rather than responding to temporary fluctuations in demand, we will continue to advance initiatives with a view toward long-term growth in transportation demand.

• In graph 3 High & Heavy,

　　　▸You can see that High & Heavy volumes declined slightly from FY23 to FY24. This was due to a softening of overall market transport demand, but tight space availability helped maintain profitability.

　　　▸We are aiming for 10% growth by FY26 and 40% by FY30.

 

3. Earnings Forecast & Investment Plan

Future Earnings Outlook (P.14)

• This graph shows the expected net ordinary income trend (excluding foreign exchange and temporary factors), with FY24 results set as a baseline of 100.
• The anticipated impacts of U.S. tariff policies are factored in for FY25 only. The potential impact of USTR-imposed port fees is not included due to considerable uncertainty.
• By FY30, we hope to achieve 15% growth over FY24, driven by expanded use of eco-friendly vessels, as well as route restructuring, and growth in High & Heavy cargo.

 

Future Investment Outlook (P.15)

• Our 200.0 billion yen investment plan for the current Medium-Term Management Plan period through FY26 is progressing steadily, with approximately 80% to 90% of the total already committed based on orders placed.
• The investments are focused on eco-friendly vessels and vessel upsizing, while enhancing High & Heavy transport capacity and equipment.
• Going forward, we plan to increase the proportion of eco-friendly vessels in our fleet.
• While we already operate 9 LNG-fueled vessels, we aim to begin introducing zero-emission vessels starting in FY29.
• Even beyond the current Medium-Term Management Plan period, we will continue building a competitive fleet that is chosen by customers.

 

Factors Behind FY25 Profit Decline (P.16)

• Compared to FY24, we expect to see a decline in profits for FY25 after considering U.S. tariff impacts.
• This graph shows the factors and extent of changes expected in ordinary income for FY25, with FY24 results set as 100 (excluding exchange rate effects).
• While an increase in total units carried due to the increase in the number of vessels and the eco-friendly vessel introduction effect will improve profitability, ship costs will increase as eco-friendly vessels are introduced in stages, and operating costs will increase as the number of vehicles transported increases.
• Excluding foreign exchange and tariff impacts, we are projecting a modest 5% decline for FY25, with no significant downturn expected.
• Even after considering tariff impacts, the profit decline is expected to be limited to around 25%.

 

Changing Geopolitical Situation (P.17)

• Currently, changes in U.S. tariff policy, USTR-imposed measures, and the return of the Suez Canal route, among other factors amid evolving geopolitical conditions present downside risks to earnings.
• U.S. tariff policy may cause production adjustments by OEM customers and dampen sales due to price increases.
• FY25 earnings could decline by approximately 13.0 billion yen due to reduced cargo levels and falling freight rates, which is unchanged from the outlook at the timing of FY24 results announcement.
• USTR-imposed measures are set to begin in October 2025 and may have significant impacts. However, they are not factored into our FY25 forecast due to the high level of uncertainty.
• As for a potential return to the Suez Canal route, our plan is to prioritize crew and cargo safety and continue detour via Cape of Good Hope for all of FY25.

 

Efforts to stabilize earnings against the risk of reduced earnings (P.18)

• The graph on the left shows how lengthening contract terms helps secure sustainable freight rates for us.
• The graph on the right shows that we will maintain about 10% downward flexibility in capacity to prepare for potential drops in transport demand.
• We will continue measures such as these to minimize any adverse impacts on us.

 

Key Points of Briefing (P.19)

• Supply and demand are expected to balance around 2026. On the other hand, the balance between retiring vessels and newbuilds beyond 2030 requires close attention.
• Aiming for growth by creating new transport value through environmental measures, “K” Line will also work on reorganizing its shipping route network in response to changes in demand and optimizing its cargo portfolio.
• A competitive, eco-friendly fleet has been established, and customer recognition has been gained through close customer engagement.
• Considering M&A to further hone our strengths.
• Ongoing efforts to stabilize earnings will continue. Short-term risks are being minimized.

 

Coal & Iron Ore Carrier Business (Senior Managing Corporate Officer Masatoshi Taguchi)

 

1. Market Trends

Supply and Demand Balance Outlook (P.22)

• We expect the supply-demand balance for ocean transport of coal and iron ore, primarily by Capesize vessels, to tighten going forward.
• The graph on the left shows expected Capesize marine transport volumes by raw material type, while the graph on the right illustrates the number of Capesize vessels, as well as the numbers of new vessel construction and scrapped ships.
• Although the total transport volume of key raw materials is expected to decline slightly, total ton miles are projected to increase modestly. This is due to longer transport distances associated with new iron ore shipments from Guinea beginning around the end of 2025, as well as growing overall demand for marine transport of bauxite.
• On the supply side, a limited backlog of orders over the next several years and reduced shipbuilding capacity compared to the past limit the supply of new vessels. The expected retirement of vessels built during the boom period around 2010 is also helping to bring the market into better balance.

 

Demand Outlook for Major Customers (P.23)

• Regarding demand from our major customers, we expect it to remain roughly flat for Japanese and Korean steel mills as well as major resource companies, while we expect it to expand from India and Middle East customers.
• The left and middle graphs show trends in crude steel production in Japan and Korea as well as in India and the Middle East, respectively, while the graph on the right shows Capesize shipping demand from major resource producers.
• Domestic crude steel production by Japanese and Korean steel mills is projected to decline slightly for the time being compared to 2024 but remain stable overall, leading to similarly stable transport demand.
• Crude steel production in India and the Middle East is expected to expand by 5–6% annually due to economic growth there, and we anticipate steadily increasing demand for raw materials transport through 2030.
• Transport demand from major resource companies, which are exporters, is expected to remain flat.

 

2. Business Strategy

Overview of Business Strategy for Medium- to Long-Term Growth (P.24)

• Our medium- to long-term growth strategy has remained consistent since the start of the Medium-Term Management Plan. It leverages our functional strengths to aim for maintaining and increasing “K” Line share with key customers through high-quality safe operation systems, environmental technologies, and attentive customer service.
• The left side of the slide shows the key points of our functional strategy for Coal & Iron Ore Carriers.
• Let me point out the specific highlights of the strategy pyramid for this business. On the bottom right is high safety and ship quality management levels, in the center is advanced environmental and technological capabilities to support customer decarbonization, and on top is robust organizational sales capabilities enabling detailed responsiveness to customer needs.
• “K” Line already maintains one of the industry’s highest safety standards, and we are committed to securing and training outstanding seafarers to ensure safe operation and high-quality management of eco-friendly vessels.
• Following the launch of our first LNG dual-fuel (DF) Capesize vessel in May 2024, we have steadily accumulated expertise in managing and operating eco-friendly vessels.
• Leveraging these strengths, we aim to maintain and grow our share with Japanese and Korean steel mills, capture growing demand from Indian and Middle Eastern customers, increase share with major resource companies, and realize upside earnings potential through cargo portfolio expansion.

 

Outlook and Response to Demand for Environmental Measures (P.25)

• Although the overall trend toward decarbonization remains unchanged in the industry, the pace of environmental activity in the transport sector has somewhat slowed compared to our initial expectations.
• The graph on the left illustrates the demand trend for eco-friendly vessels. This trend is impacted by factors such as rising ship prices, longer construction periods, and uncertainty over new fuel supply and environmental regulations.
• In response, we are focusing on capturing demand during this extended transition period and securing appropriate vessel capacity.
• Specifically, we aim to capture customer needs for using heavy oil-fueled vessels during the period until eco-friendly vessels are introduced, and ensure we capture those opportunities. Secondly, we aim to maintain a balanced approach to fleet and cargo management—avoiding speculative early orders while securing capacity strategically to an appropriate extent in anticipation of future demand growth.

 

Initiatives and Outcomes for Key Customers (P.26)

• Despite a general deceleration in environmental initiatives, we continue to make progress in initiatives with major customers by maintaining high-quality safe operation systems, environmental technologies, and attentive customer service.
• For Japanese and Korean steel mills, we have launched LNG DF Capesize vessels and are seeing a gradual increase in business negotiations for additional eco-friendly vessels, based on our accumulated experience and performance. Our efforts to ensure stable operations and deliver high-quality, outstanding service have been recognized by customers through awards and other feedback, further strengthening their trust in us.
• We have raised our personnel levels in India and the Middle East, including locally recruited staff. This has resulted in stronger sales activities and increased identification of latent demand, leading to many business negotiations. We are also accelerating discussions on introducing eco-friendly vessels and vessels upsizing to support decarbonization.
• We are promoting joint research with major resource companies, leveraging our advanced environmental technologies to support decarbonization efforts. In addition to research, we have also launched collaborative efforts on the operational front, further strengthening our relationships.
• Going forward, we will continue to implement a range of initiatives with the goal of continuing to be selected as a partner for customers' challenges. We aim to grow together with them and further strengthen our position as a main carrier.

 

Realize the upside earnings potential through cargo portfolio expansion (P.27)

• We target the upside earnings potential by expanding into cargoes that align with our strengths, such as reduced iron as well as bauxite, which requires high levels of safety and transport technology.
• As the steelmaking process moves toward decarbonization, transport demand for reduced iron is becoming more concrete, increasing the need for enhanced safety management and transport technologies. Transport of this material is projected to grow at around 8% annually onward.
• “K” Line has taken on the challenge ahead of the reduced iron transport, successfully increasing our transportation experience without any troubles. We plan to continue leading the industry in this technically challenging area.
• In FY24, we continued to steadily build our track record, and the expansion of personnel in India and the Middle East has led to increased approaches to new business opportunities.
• Bauxite demand, supported by growth in the automotive and aerospace sectors, primarily in China, is projected to grow at about 4% annually.
• We are working to capture increased demand from existing customers while also targeting new customer acquisitions.
• Currently, most contracts are short- to medium-term, but we are working to earn customer trust through our safe navigation and other strengths, aiming to secure longer-term agreements.
• In FY24, we steadily accumulated short- to medium-term contracts and will continue pursuing further expansion.

 

KPI Progress and Outlook (P.28)

• We are making steady progress on the KPIs that track the progress of our business strategies under the Medium-Term Management Plan.
• Maintaining and expanding stable earnings is being measured by KPIs for fleet size and ballast voyage ratio. The fleet size expanded by 2 points year-on-year, while the ballast voyage ratio improved by 1.2 points compared to FY22. The slight deterioration from last year was due to the ongoing need to bypass the Suez Canal.
• We strengthened our organizational sales capabilities by expanding personnel in India and Singapore in FY23, followed by further increases in India, the Middle East, and Singapore last year.
• Exposure and fleet portfolio control improved by 4 points year on year to 14%. We plan to make further improvements in order to achieve our FY26 targets.

 

3. Earnings Forecast & Investment Plan

Future Earnings Outlook (P.29)

• Under our plan for FY30, we aim to expand our earnings by enhancing profitability and stability, while also developing new demand.
• Excluding factors like exchange effects, this graph illustrates net ordinary income and number of vessels, with FY24 results as a base indicator 100. It shows forecasted trends for net ordinary income (red bars) and the number of vessels (gray bars).
• To stabilize earnings, we are working to optimize the balance between cargo contracts and fleet composition. To increase net ordinary income by 25% by FY30, we will maintain and increase “K” Line share with key customers, focusing on environmental measures.

 

Future Investment Outlook (P.30)

• This graph illustrates our latest fleet development plan by fuel type and charter length.
• Due to rising ship prices, longer construction periods, and uncertainty over new fuel supplies and environmental regulations, the shift to eco-friendly vessels has been slower than initially anticipated. As a result, expansion of eco-friendly vessels will be delayed more than previously expected, and the investment of 20.0 billion yen, out of 70.0 billion yen which was previously planned for the current Medium-Term Management Plan period ending in FY26, is now expected to be delayed.
• However, the need for eco-friendly services is growing, as evidenced by the IMO’s approval of new GHG reduction measures in April 2025. Accordingly, demand for eco-friendly transport remains fundamentally solid.
• We will flexibly procure vessels, in line with changes in demand, timing and accuracy.

 

Changing Geopolitical Situation (P.31)

• Three major geopolitical changes could impact our business: U.S. tariff policy, USTR-imposed measures, and the potential recovery of the Suez Canal route.
• Although the outlook for U.S. tariffs remains uncertain, current impacts on our business are limited. We will continue to monitor the global economic effects closely. For FY25 earnings, we expect the impact of both cargo volume and market conditions to be limited, but we have factored in a certain degree of impact through cargo volume and market conditions and reflected this in our plan.
• The impact of USTR-imposed measures is expected to be limited, as our Capesize vessels only carry limited applicable cargo and only a small portion of our Capesize fleet consists of vessels built in China.
• We continue to avoid using the Suez Canal route as sufficient safety has not yet been confirmed and we expect detouring to remain in place until the end of FY25. Even if the canal route becomes feasible again, the impact on market capacity will be minimal—about 1–2%.

 

Key Points of Briefing (P.32)

• By leveraging our functional strengths and aiming for sustainable medium- to long-term growth, we remain committed to a strategy centered on environmental measures and close customer engagement to maintain and grow “K” Line share with key customers.
• Although industry-wide progress on environmental measures is slower than initially expected, we are continuing careful engagement with customers and steadily securing vessel capacity with demand in mind, including transitional period needs.
• We are also aiming to realize the upside earnings potential by portfolio expansion to cargo that leverages “K” Lineʼs strengths while exploring partnerships and M&A to accelerate growth.
• There have been no major changes in the supply-demand outlook compared to last year, and a tightening of supply and demand is expected in the medium to long term.
• Short-term impacts from U.S. tariff policies, USTR-imposed measures, and the return of the Suez Canal safety are expected to be limited.

LNG Carrier Business (Senior Managing Corporate Officer Michitomo Iwashita)

1. Market Trends

Global LNG Supply-Demand Outlook (P.35)

• The graph shows anticipated trends for global LNG trading volume, with the lighter gray area indicating last year’s outlook and the darker gray representing the latest outlook.
• Compared to last year’s outlook, the timing of the anticipated volume growth is now expected to be slightly later.
• This is primarily due to political trends in the U.S. and rising construction-related costs delaying the start-up of some LNG projects.
• However, LNG remains a practical solution for the transition to a carbon-neutral society. Demand is expected to remain unchanged over the medium to long term, supporting a steady increase in demand for LNG carriers through 2040.
   

LNG Supply-Demand Outlook by Region (P.36)

• The graph on the left depicts the LNG supply forecast by region.
• Multiple new projects in North America and Large-scale projects in Qatar are expected to significantly drive market growth.
• The graph on the right shows LNG demand forecast by region.
• With economic development driving increased energy demand and the need to comply with environmental regulations, demand is rising in South & Southeast Asia, and China through 2040. These regions will be key growth drivers.

 

2. Business Strategy

Overall Strategy for Medium- to Long-Term Growth (P.37)

• As President Igarashi explained in the functional strategy overview, we will continue refining “K” Line's functional strengths in LNG Carrier Business as well, in order to remain the partner of choice for our customers and partners and achieve sustainable, long-term growth.
• The left side of this slide outlines key points for our functional strategy in LNG Carrier Business.
• Our three functional strengths are DX, Enhancement of Environmental Technologies, and Safety and Ship Quality Management. Among these, maintaining and enhancing industry-leading safety and ship quality management has long underpinned our LNG shipping business since the very beginning of LNG transportation as our business base.
• The right side of the slide outlines “K” Line’s business strategy employing its functional strengths. Leveraging the expertise LNG Carrier Business has developed in liquefied gas transport, we aim to advance our environmental technologies, promote digital transformation (DX), and reinforce the human resources and organization that support these efforts.
• As we will explain in more detail later, we aim to leverage our functional strengths in this growing market by expanding contracts with existing customers, securing new business, and realizing the upside earnings potential through the effective utilization of LNG carriers after contract expiration, as well as through liquefied gas transport.

 

Business Strategy Progress and Outlook (P.38)

• The graph on the left shows the trend in the number of LNG carriers in fleet and the market size.
• We plan to expand our fleet from the current 46 vessels to 65 vessels in FY26 and 75 vessels or more in FY30. As a medium- to long-term plan, we are aiming for a fleet of 100 vessels.
• According to the LNG carrier company ranking shown top right, we are currently fourth in terms of number of vessels in fleet. We aim to enhance our industry presence by focusing on both maintaining and increasing our “K” Line shares with existing customers and gaining new customer share.
• Specifically, we are working to capture target projects related to fleet replacement with next-generation vessels and expansion plans by existing customers such as Qatar, Petronas, Equinor, as well as customers in Japan. We are also focusing on demand for transport to emerging regions like South & Southeast Asia, and China, where demand is projected to grow, as well as on cargo originating from North America, which is set to become the world’s largest export region.
   

Major Contract Acquisition Results (P.39)

• This slide highlights a major contract acquisition for us in India, one of our focus regions.
• We initially entered the Indian LNG market as a consortium member, later improving our local structure and organization. These efforts culminated in signing a contract with India’s major energy company, GAIL, in December last year.
• Key success factors included our high-level ship quality management, joint sales activities with the “K” Line office in India, and proposals aligned with customer needs.
• We are steadily making progress toward future liquefied gas shipping projects.
• While we are highlighting our efforts in India as an example of a major contract win last year, we are pursuing similar efforts across other parts of Asia, aiming to increase the number of vessels in our fleet and steadily build stable earnings.

 

Realizing the upside earnings potential (P.40)

• As previously stated, “K” Line’s LNG Carrier Business emphasizes long-term stability, by accumulating long-term contracts to provide a stable earnings base within the business portfolio.
• On top of this foundation, we are planning two initiatives for further earnings growth.
• One is the effective utilization of LNG carriers after the expiration of long-term contracts, while the other is the further enhancement of liquefied gas transport by leveraging “K” Line’s functional strengths.

 

Utilization of Vessels After Contract Expiration (P.41)

• Let’s start here with the first initiative, namely, utilization strategy for LNG carriers after long-term contract expiry.
• While nearly all vessels in our LNG fleet are currently operating under long-term contracts, these contracts will eventually expire. At that point, “K” Line, just like other vessel owners, will need to determine what to do with the carriers.
• In response to this situation, we aim to maximize lifetime earnings for these carriers by expanding options and flexibility in vessel utilization.
• Specifically, in addition to sale or scrapping vessels, there are options to continue using them as LNG carriers, with an eye toward extending existing contracts and considering short- to medium-term contracts or converting vessels into FSUs or FSRUs through modification work. We will determine the optimal utilization method for each vessel from among these options.

 

Expanding Liquified CO₂ Transport (P.42)

• Let me now explain our initiatives in liquefied gas transport, an area where we can fully leverage “K” Line’s functional strengths.
• First, we will talk about liquefied CO₂ transport, which is especially important as one of the practical solutions for achieving net zero.
• The graph on the left shows estimated annual CO₂ storage volume for CCS.
• Steady growth is expected through 2050, with corresponding increases in demand for liquefied CO₂ carriers.
• The graph on the right side shows business strategy progress and outlook for “K” Line’s liquefied CO₂ projects like Northern Lights, which we shared at last year’s briefing.
• The Northern Lights project has been progressing steadily. Of the three vessels we are involving for the project, two have already been completed, and the remaining one is scheduled for completion within the year.
• We have been fully prepared for delivery, including the development of liquefied CO₂ carrier operation manuals and ship-shore compatibility checks.
• Building know-how and a proven track record through this Northern Lights project, we aim to secure follow-on projects in Europe and the Asia-Pacific region.
   

Strengthening Other Liquefied Gas Transport (P.43)

• In addition to liquefied CO₂, we will focus on further enhancing transport of other liquefied gases, such as LPG, ethane, and ammonia, which are expected to see market growth and contribute to decarbonization of society.
• The graphs on the left show anticipated marine transport volumes for LPG, ethane, and ammonia.
• LPG and ethane are by-products of natural gas production, while ammonia, produced from natural gas, is gaining attention as a hydrogen carrier. These markets are expected to experience medium- to long-term growth alongside increasing natural gas demand.
• Although these cargoes are hazardous and difficult to handle, we will leverage our well-established ship quality management to maintain and expand our market share in mature markets like LPG, while aiming to expand our business in high-growth markets such as ethane and clean ammonia.
   

KPI Progress in LNG Carrier Business (P.44)

• At last year’s briefing, we explained our efforts to manage business plan progress toward achievement by setting five KPIs across the phases of project acquisition, construction, and operation.
• For the KPI of number of vessels in the fleet, we are on track to reach the FY30 goal of 75 vessels.
• With the other four KPIs, we are also exceeding respective targets, indicating steady progress.
• We will continue to monitor these KPIs closely, maintain high performance levels, and achieve the business plan while driving medium- to long-term growth.

 

3. Earnings Forecast & Investment Plan

Future Earnings Outlook (P.45)

• The earnings outlook for LNG Carrier Business remains unchanged from last year. We aim to outpace overall market growth by FY30 through ongoing contract acquisitions and efforts to realize upside earnings potential.
• This graph shows the market fleet size as a gray line, the number of vessels in fleet operated by “K” Line as gray bars, and LNG transport business net ordinary income as red bars. Each value is indexed with the FY23 results set at 100.
• Between FY23 and FY30, the market is forecast to expand by 40%. We are aiming to expand our fleet by more than 70% and our earnings by more than 150% in the same period.
• In addition to this base net ordinary income scenario, we will also pursue the upside earnings potential by increasing contract acquisitions and expanding in areas where “K” Line strengths can be leveraged.

 

Future Investment Outlook (P.46)

• This graph shows cumulative investment in LNG Carrier Business during the Medium-Term Management Plan period. The latest estimate has been revised to 200.0 billion yen, down 50.0 billion yen from the 250.0 billion yen announced in May 2024.
• The primary factor for the decrease is a timing shift, with the investment now scheduled for after the Medium-Term Management Plan period.
• Specifically, this includes delays in some of the projects mentioned in the first slide on global LNG supply-demand outlook, as well as changes to payment terms with shipyards.
• As we explained earlier, this has no impact on vessel deliveries scheduled during the Medium-Term Management Plan period or outlook of the number of vessels in our fleet in FY30.
• We will continue to pursue investment opportunities to meet our targets.
   

Changing Geopolitical Situation (P.47)

• LNG Carrier Business is primarily based on medium- to long-term contracts, which we believe short-term downside risk from geopolitical developments is limited.
• The short-term situation remains uncertain with various developments such as U.S. tariff policy impacts, USTR-imposed measures, and potential recovery of the Suez Canal route. Therefore, we will continue to monitor conditions closely and take appropriate measures to minimize any such impacts on our business.
   

Key Points of Briefing (P.48)

• Looking at the business environment, solid medium- to long-term growth is expected for LNG transport demand.
• Based on “K” Line’s business strategy, we will continue to leverage our functional strengths to enhance our technical capabilities and expertise. Through coordinated, organizational sales capabilities, we aim to secure additional contracts with existing customers and attract new business.
• In terms of earnings outlook, we are currently securing contracts and expanding earnings at a pace that exceeds overall market growth. To further realize upside earnings potential, we will continue efforts to maximize the utilization of LNG carriers after contract expiration and to strengthen and expand our liquefied gas transport business by leveraging “K” Line’s functional strengths.
• We also plan to explore partnerships and M&A opportunities to help accelerate LNG Carrier Business growth.
• Finally, we face a range of potential geopolitical developments, including U.S. tariff policy impacts, USTR-imposed measures, and possible recovery of the Suez Canal route, but most of our LNG carrier operations are based on long-term contracts, so we believe short-term downside risk is limited.

Closing Remarks（Senior Managing Representative Executive Officer　Yutaka Akutagawa）

 

Key Points of Briefing（P.50）

• In order to achieve the goal of "ordinary income of 110.0 billion yen + α by 2030" in “K” Line’s own businesses, we will promote investment centered on the three businesses set out as serving the role of driving growth in the current Medium-Term Management Plan. We recognize that ensuring stable expansion of free cash flow through profit growth in our own businesses is our top priority and indispensable for the sustainable growth of the company as a whole.
• Regarding the business growth directions, we aim to expand business areas by combining the three functional strengths we recognize as key, Safety and Ship Quality Management, Enhancement of Environmental Technologies, and Strengthening of Digital Transformation (DX), with the strengths we possess in each business. These areas represent fields where our strengths can be fully leveraged, and we believe they are the domains where concentrating management resources will allow us to achieve the fruits of growth. Specifically, we aim to expand our business in the following areas:

　　　▸Transport areas where our technological expertise can be utilized, such as liquefied gas transport, including LNG and liquefied CO₂, and transport of specialized cargoes like reduced iron.

　　　▸Contributions to building new decarbonization-focused supply chains in areas where our strengths can be leveraged.

　　　▸Offering new added value in transportation through the introduction of low-carbon and zero-emission vessels.

• We also aim to achieve additional upside earnings potential by utilizing partnerships and M&A with customers and partners in the three businesses serving the role of driving growth and areas where our strengths can be leveraged. In order to accelerate growth, we aim to actively engage in partnerships and M&A with customers and partners to enhance the competitiveness of our vessels and fleet and strengthen transport capabilities and functions. We are committed to undertaking these measures actively while maintaining our fundamental stance—adopting a restrained approach during favorable market conditions and a strategic approach during market downturns. We intend to firmly enforce investment discipline while decisively pursuing areas where we need to take initiatives, when the time is right.