【Containership】
Q1: Please give us your container freight rate assumptions for Asia-North America and Asia-Europe trades in fiscal year 2017.
A1: Regarding Asia-North America trade, freight index for first quarter is below 81, our assumption for the full year 2017 because we still had some contracts left over from the previous year. However, we expect the freight index to exceed 81 from the second quarter. As for Asia-Europe trade, the freight index is below our full-year assumption of 57, but we expect it to exceed 57 after the second quarter.
Q2: Please tell us how much you expect Asia-North America trade long-term contracts will increase from the previous year level based on the Company’s fiscal year 2017 targets. Also, what is the spot exposure ratio of the Asia-North America trade?
A2: We would like to refrain from disclosing a specific rate of increase with respect to freight rate negotiations with our clients for Asia-North America trade. Nevertheless, we have been able to assume a freight rate hike to some degree that can compensate for the previous year’s considerably low level. We assume that the exposure of long-term contracts is about 50%. But it may fall below 50% in view of the stagnant short-term market conditions from March.
Q3: Please tell us about the background of how the 50.9 billion yen relating to impairments, and allowances for loss related to expenditure for business restructuring in Containership Business, leads to a positive impact worth 20.3 billion yen in Fiscal Year 2017.
A3: We booked a loss related to the investment of assets, charter contract expenses and expenditure for business restructuring in Containership Business following a discussion with our auditors on whether we could recover these expenditures and investments. The move was prompted by the planned Containership Business integration that is to take place amid the stagnant market conditions.
【Heavy Lifter】
Q1: How do you expect to improve going forward?
A1: Unfortunately, We think it will take a considerable amount of time for the market to improve given the continued slump in crude oil and resource prices. We booked an impairment loss this term taking into account the recoverability of investments based on earnings going forward. Therefore, we believe that we can avert a major loss in and after this term. That said, this segment requires drastic measures, which are currently under consideration.
【General】
Q1: Please tell us why the extraordinary loss from business restructuring in fiscal year 2016 rose to 84.9 billion yen from the 35.0 billion yen in your previous announcement?
A1: The increase was the result of an approximately 50.9 billion yen of impairment loss and provision of allowance for loss related to Containership Business integration as well as an impairment loss from Offshore Energy E&P Support and Heavy Lifter Businesses.
Q2: The ROA target in the Medium-term Management Plan is 6%. If this target is reached, net income should total roughly 60.0 billion yen assuming the Company has consolidated assets of 1.0 trillion yen. Excluding the stable income of 30.0 billion yen, how will the Company earn the other income?
A2: The ROA target in the Medium-term Management Plan is based on having stable business. Currently, the referenced business assets are 500.0 billion yen and ROA is 5%. The objective is to raise that by 1%. We have not included earnings in Containership Business following its integration because no specific figures are available at this moment.
