Q1. What are the ratios of annual contracts in Asia-North America and Asia-Europe trades for this year? Please tell us the ratios in comparison to those of  last year.

A1. The ratio of annual contracts in Asia-North America trades was reduced from 50-odd percent in the last year by about 10 points to 40-odd percent this year. The ratio of annual contracts in Asia-Europe trades was also reduced slightly from  last year, to around 20 percent.

Q2. You assume a recovering trend in freight rates for Asia-North America and Asia-Europe trades for the second half of the year. Please let us know the basis for that assumption.

A2. In the last fiscal year, Asia-Europe trades suffered from historically low markets due to an increase in the supply of freight space as well as a reduction in cargo volume associated with inventory adjustment. Because of this, an increasing amount of tonnage was shifted from Asia-Europe trades to Asia-North America trades which were exhibiting a steady cargo movement. As a result the market level at the beginning of this year was substantially low, but the market finally started to recover along with the recovery in cargo volume. We believe the market will recover to a level that allows major containership operators to properly secure profits sometime during the period from the second quarter through the second half of this year.

[Car Carrier]
Q1. On page 6, “A-3” of the explanation by data document, you say approximately half of the negative 6.6 billion yen for “Market Volatility on Bulk Shipping Segment” comes from downward revision for the Car Carrier Business. Please tell us the reason why the profit is being revised downward while there is no major change occurring to the number of vehicles transported throughout the year.

A1. Movement of cargos for Middle East, Africa and South America is slowing down due to deterioration in the purchasing power of these countries associated with cheaper resource prices. That is causing a reduction in the efficiency of ship allocation in our business, and we estimated poorer profits as a result. As measures to counter that, we are currently working on initiatives to improve the efficiency of ship allocation, including review of service frequency and injection of tonnage that suits the demand.

Q1. While the profit margin for the year was set lower by 36.5 billion yen compared to the announcement at the beginning of the year, the net income attributable to owners of parent is adjusted downward by 10.5 billion yen. Where does this difference come from?

A1. We have not disclosed the detailed figures, but the main reason for the difference is the review we did for extraordinary income and losses. The cost was reduced slightly in structural reform, and the effects of all ordinary income totaling 10.0 billion yen for the year are included as planned.

Q2. In the plan announced at the beginning of the year, you assumed securing a positive figure for annual free cash flow. Please let us know your view on the cash flow and financial discipline such as net D/E ratio, if there is any change made associated with the downward revision made this time.

A2. In the announcement made at the beginning of the year, we explained that cash flow from operating activities would mostly even out, and cash flow from investing activities would be cash out of 27.0 billion yen. In our current expectation, while cash flow from investing activities may reduce slightly, free cash flow is likely to remain in the vicinity of the negative figure announced at the beginning of the year.