Ladies and Gentlemen,


Thank you for joining us today. I will explain according to the Power Point slides in front of you.


1. Financial Highlights for 3rd Quarter Fiscal 2005

I will start off by talking about accumulated results during the 9-month period from April 1 to December 31, 2005.


Operating Revenues were 689 billion yen, 10% rise for year-on-year basis. 40 billion yen of this increase came from Containership Business, and about 15 billion yen from Car Carrier service.


Ordinary Income was 69.5 billion yen, a significant 19% fall from the previous year. However, compared to our projection, which was announced on November 11, 2005 at the time of our 1st Half 2005 financial close, it is almost flat or up rather slightly.


Then, Net Income was 50.6 billion yen, slightly on the plus side from last year, and also from our previous forecast in November 2005.


Yen-U.S. Dollar exchange rate and bunker oil price have been at almost the same levels as prospected.


Although Ordinary Income decreased sharply in comparison with results for Fiscal 2004, even this was in line with our expectations. So we see Fiscal 2005 performance being fairly good overall in as much as Operating Revenues have grown rather positively, and Net Income has reached our planned level.


Other than these, it is notable that the ratio of Consolidated to Non-Consolidated continues to show the same tendency of expanding as in recent years, which we can say indicates that fruits of our group management are being realized.


2. Key Points for 3rd Quarter Fiscal 2005

This table shows factor-wise comparison at the level of Ordinary Income between the results for the first 9 months of Fiscal 2005 and our previous prediction for the same period in Fiscal 2004. First, Exchange Rate has not fluctuated so much. In year-on-year comparison, having brought about a plus 2.7 billion yen.


There is little doubt that the biggest factor among these points, compared to last year, is the Bunker Oil Price change. Ordinary Income decreased by 17.6 billion yen due to the jump of about 87 U.S. dollars per metric ton in fuel oil price. For your guidance, our bunker oil consumption is roughly about 4 million tons a year. As I may have mentioned before, I have always wondered how big the consumption must be for those shipping companies that are operating much larger size fleets than us. Who knows, but possibly analyzing that point would reveal some fundamental difference in business style between them and us.


We believe our style is quite common in the shipping world; however, I suppose another may also exist.
I would really appreciate if you can provide me any suggestions!!


Then, Market Volatility caused negative effect of over 3 billion yen from the same period last year. Major cause for this item was the drop in dry bulk market of around 30-40%. Other than this, the average Containership freight rate increased only slightly.


As regards Business Expansion, loaded cargo volume increased in Containership Business, and also grew in Bulker sector, and in some trades in Car Carrier service. Therefore, I can safely say our operations have been continuing quite favorably. I will talk about Cost Reduction later. Overall, however, we can count plus 1.4 billion yen from our last estimation, and minus 16.3 billion yen from previous year results.


3. Outline of Division-wise Results in 3rd Quarter Fiscal 2005 for Containership Business

As to Containership service, which is the major part of our core business, Operating Revenue for the segment was 337.2 billion yen, and Ordinary Income was 28.3 billion yen; in other words, increase in revenue and decrease in profit for year-on-year basis, as publicized in our "Financial Highlights." Loaded cargo volume contributed to sales growth, which amounted to over 6% up from the results of the same term in the previous year.


We were also able to achieve some freight restoration in intra-Asia trades and trans-Atlantic trades.
Among major loops, freight levels in Asia-North America trades remained almost the same as last year, but in Asia-Europe trades a slight fall was observed.


As a measure to reduce operating costs, we have accordingly tried to save bunker oil consumption, of course within a scope that does not affect our customers, and which was most successful in the Asia-North America trades. Counted as negative factors are charterage increase and also the bunker oil "price-up" as mentioned before.


4. Outline of Division-wise Results in 3rd Quarter Fiscal 2005 for Bulker Services

In the Bulker sector, operating tonnage increased nearly 5% from Fiscal 2004 because of operation scale expansion with delivery of newbuildings. However, because market freight level went downward, profit decreased, but was still almost the same as forecasted in November 2005.


As you can see in this table, looking at cape-size bulker (170 Type), average market rate between 1st and 3rd Quarters this fiscal year fell under 40 thousand U.S. dollars per day while it was about 64 thousand in the same Fiscal 2004 period. I admit that this market condition was somewhat tough for us, but generally we do not seriously worry about the bulker business situation as cargo movement has been considerably strong whereas freight market itself has been in a downward trend.


5. Outline of Division-wise Results in 3rd Quarter Fiscal 2005 for Car Carrier Services

As for Car Carrier sector, total number of cars carried rose overall. This was especially true in off-shore trades such as trans-Atlantic trades or Thailand-Australia trade where completed car movements are really strong. In fact, so strong that we ran short of vessel capacity at same time there was a hike in charterage. As a result of this inflated charterage, together with high bunker oil price, our profit was somewhat reduced. In this division, however, and just the same as with dry bulk business, we also do not feel overly concerned about business conditions because of aggressive cargo demand.


6. Outline of Division-wise Results in 3rd Quarter Fiscal 2005 for Energy Transportation

In the sector for LNG carriers, each project we have joined either by ourselves or as part of a consortium has proceeded smoothly, and at the end of this 3rd Quarter, the number of our fleet being engaged increased to 29. Although profit earned here is relatively small now, we expect the portion will rise and become one of the main cores among our business sectors after a few years, or later. We would like to grow this business step-by-step with a view toward its long-term potential.


As to the Thermal Coal Carrier sector, loaded cargo volume increased around 4% from the previous 3rd Quarter, partly because our vessels have enjoyed more efficient operation due to ease of congestion at loading ports, also because demand for thermal coal has increased as a result of growing electrical power needs. We see this business as continuing to be very stable.


Regarding Tanker sector, energy demand will become tight in long range so the tanker market is expected to see further hikes in the future. Taking a look at this table in the case of VLCC, our last forecast as of November 2005 for the market level in this 2nd Half was 70 in 'World Scale' so results almost doubled in reality, although we do not presently have any 'free' portion in our VLCC fleet and so profit is not affected by market volatility.


I do not mean to sound like I'm bragging, but we have tried to steadily expand our business overseas, not only in Containership Business but also in non-Container Business during these past few years. For example, AFRA-Max tankers operated through our Singapore subsidiary "K" Line Pte Ltd. are considered as doing especially well in today's positive market trend.
We will continue to enhance our position based on involvement in more business based on overseas countries.


7. Prospects for Fiscal 2005

This 3rd Quarter finished almost as we expected. Based on the results, we have not changed projections for full-year Fiscal 2005 that show Operating Revenues of 925 billion yen, Ordinary Income of 91 billion yen, Net profit of 64 billion yen, which we believe we can manage to achieve. I will explain segment-wise rises and falls later.


As an assumption for those figures, exchange rate was changed to 118 yen per U.S. dollar, and bunker oil price to 308 dollars per metric ton for the 4th Quarter. As revised, average exchange rate throughout 2nd Half is calculated at 117 yen and bunker oil 305 dollars. With these prospects, we will hold our dividend payment at 18 yen per share annually, including 9 yen as interim dividend, as we announced in May last year at the start of this fiscal year.


8. Key Points for Fiscal 2005 Prospects

Aggregated total of these various factors for full-year prediction is as mentioned in this table. Compared to last year's results, bunker oil price wili again have the most severe impact on yearly profit.


9. Key Points for Division-wise Prospects

As for Containership Business, though we have to watch cargo volume to be picked up after Chinese New Year holidays before making a reasonable prediction, profit level for this 4th Quarter is expected to be in line with our prospects as we have not seen any serious negative factors at least before the holidays.


Though the yearly income from this section is expected to decline slightly, some additional earnings are counted in non-Container Business, especially in Tanker sector, so, as a whole, we have not changed our yearly forecast.


Bulker and Tanker market premises are as indicated here, but we hope dry bulk market will show a little more positive tone.


For "K" Line overall, business environment for Containership trades is the most important variation factor, so we have been examining the situation at every corner of the world very cautiously. A slight imbalance between supply and demand is now being prospected. Both supply and demand growth are estimated at over 10%, and gap tends to become wider. However, we still do not expect any strong market weakening in the long-term range because of various factors such as terminal capacity problem, inland transportation cost-up, etc.
Even after saying that, however, there still could be some temporary fluctuation.


10. Major Financial Indices

Major items for full-year financial statements are indicated here. As to Cash Flows, profit level is expected to become lower than previous-year's results so Cash Flows from Operating Activities will decrease; but on the other hand, Cash Flows for Investment Activities will increase because investment amount should be growing due to deposits for new buildings in the foreseeable future.


In a sense, this aspect is within our plan. When we can achieve those income targets for this full year, Major Financial Indices here will be realized. Shareholder's Equity, which exceeded 220 billion yen at the end of the 1st Half of this fiscal year, will become closer to 250 billion yen.


As I might have commented before, rating agencies have given us only B-class-grade for a long time, although our profit-earning level has actually been considerably high.
During the investigation, they said
"The reason is that absolute amount of your Shareholders' Equity is small." I asked them
"What approximate level will you approve of as sufficient?"
Their answer then was around 200 billion yen.


So, in my mind, our immediate task nowadays has been to consistently build up Shareholders' Equity to over 200 billion yen. And as we will be able to achieve 250 billion yen at the end of this fiscal year, I am feeling extremely happy. And considering both our earning profit power and thickness of Shareholders' Equity, I believe we may possibly be evaluated some notches higher.


11. Cost Curtailing Campaign

Regarding Cost Curtailing Campaign, as I have touched before, we have targeted 5 billion yen from the beginning of this fiscal year. We have now become quite confident of accomplishing the total 5 billion yen by diligently succeeding with our so-called "leaf picking."


Though it may be a bit brief, this completes my explanation about the settlement of accounts for the 3rd Quarter and prospects for the full fiscal year.


Thank you very much for joining us today.