Major Q&A during Analyst Meeting for 2nd Quarter Fiscal Year 2008
(Containership Business)

Q1:     Please let us know the breakdown of 18.9 billion yen loss from your Containership Business estimated for this full financial year (April 2008-Mar 2009) between Asia-North America trade and Asia-Europe trade.
A1:     It is forecasted that the biggest portion of our loss will be in Asia-Europe routes. More than half of the 18.9 billion yen is generated in those routes, and around half of that is in Asia-North America routes.
Q2:     Do you see any signs for freight rates ceasing to fall for Asia-Europe trade?
A2:     Vessel space has now been reduced by around 10% through individual shipping companies or alliances, and further reduction is expected in the future. With these effects after next spring the supply-demand relationship should be almost balanced.
Even though loading factor has recently still been 90% and so supply-demand relationship is nearly balanced, due to psychological factors that giant ships will be delivered one after another from now on, also that FEFC (Far East Freight Conference) was abolished in this October, the market seems to be almost in panic mode.
Present market situation will calm down and supply-demand balance will somewhat tighten so that freight rates will at least hit the bottom before too long. I expect we can raise freight rates by next spring or later.
Q3:     As you lowered your projection of average freight rate for Asia-North America trade during this Fiscal 2008 from your last estimation, did you see freight rates going down in this 2nd Half?
A3:     We succeeded to introduce floating fuel surcharge to some extent in our freight rate system in this 1st Half. Because fuel oil price has recently been falling quite significantly, the surcharge is also decreasing in conjunction with the oil price. So externally freight rates may look like they are decreasing, but the base freight remains unchanged.
(Other Marine Business)
Dry Bulk Business
Q.     When we would like to make our own forecasts for next Fiscal 2009 (April 2009-March 2010), if your presently assumed market level, which is, for example, 20,000 U.S. dollars a day in case of Cape-size, continues throughout the next year, could we simply double your 2nd Half profit estimation, or should we take any other factors into consideration?
A:     As indicated in our Slide B-3-2, our assumption for Cape-size market is 10,000 U.S. dollars a day for this 3rd Quarter and then 30,000 dollars for 4th Quarter.
Under this condition, many vessels are reducing navigation speed, and a few are even drifting to await cargo, still not lying up. Ship demolition will also be promoted.
Furthermore, problem of negotiation between Chinese steel mills and Vale, in Brazil, will be resolved in the near future, which has been one of the major sources for present market downturn.
As present the market level is below the break-even point, but it should not be long before the present lowest freight level will blow over.
However, we believe we are not prepared to forecast concrete projections as to profit level for next fiscal year at this moment because nobody knows probable future market level, and we cannot yet count the number of free vessels in our fleet which are affected by short-range market volatility.
Car Carrier Business
Q.     How do you respond to the declining trend of completed car transportation by sea from now? Would you please also comment on any countermeasures against the cargo decrease, including efficient fleet deployment?
A:     First, among our fleet, we have some aged ships over 20 years old that we will scrap.
Next, in case they incur losses when operated, what we can do is simply stop using the vessels, which is just the same even in the case of containerships or dry bulk carriers.
However, talking about transportation of products, whether car carriers or containerships, we believe this will continue to grow in the long range since economies of various countries, not only so-called emerging countries like 'BRICs', are activated through world globalization.
Of course there could be short-term or regional changes, so we will therefore gather strength to endure such storms.
Q1:     As for ship investment after next year, on assumption that operating cash flow at yearend is 50 billion yen, interest-bearing liabilities/cash flow ratio will be 8 times on the basis of debt with interest 400 billion yen.
      Despite the fact that financial disciplines are applied in mid-long term, is there any limitation under such circumstances?
A1:     Although we do not think operation cash flow decrease will be anything like 50 billion yen, we expect that it will be difficult to make operating cash flow achieve the figure that we planned.
There is not so much chance of ship investment in the future because availability at shipyard is very tight between 2010 and 2013, but even though there's chance of new shipbuilding, we will at first have to forego the business.
With regard to ongoing plans, we think that there's possibility of reviewing ownership pattern related with finance.
The background we introduce for financial disciplines is that competitiveness may weaken if we cannot keep A grade in future financial markets. So we would like to maintain A grade in the upcoming year.
Our company is not the largest company in the world although business scale is ranked in top group; however, we want to make sure our company earns due respect in view of financial strength.
From above reason we want to be serious when it comes to our financial strength.
Q2:     Referring to graph in Slides No. 6 and 14 for Key Points, please tell us what are the contents of "cost increase/decrease"?
      Also please advise what further cost decrease factor is planned in the future.
A2:     Cost increase factors are mainly ship management cost such as crew cost, repair cost and insurance cost which are outside our control in a sense.
Cost decrease factors are saving of bunker quantity, which is the biggest factor of cost decrease and is achieved by effective operation of vessels like slow steaming and reduction in service routes.
For further cost reduction it is most effective to continuously save bunker quantity; next is to decrease inland transportation portion which represents high cost.
Moreover we are planning to decrease general administration costs.