Q.1 Please provide a detailed breakdown of the items in “K” LINE own Containership Business -3.3 billion yen, a key factor in the waterfall graph of factors affecting ordinary income on page 6 of the materials.


A.1 Many miscellaneous facilities are installed on containerships—for instance, reefer container plugs—and we had capitalized 2.5 billion yen in expenditure for such facilities as assets. Beginning in the current fiscal year, in light of the chartering of vessels to ONE and the accompanying negative spread on charter rates, we decided to expense the entire amount. This is a temporary expense. The other difference consists of various small amounts.


Q.2 What impact is the trade friction between the U.S. and China having on liftings as of the fourth quarter?


A.2 Since the Chinese New Year holidays begin on February 5 this year, it will take about two weeks for the situation to come into focus. However, for now, liftings on both North American and European routes in January are in line with assumptions.


Q.3 In the waterfall chart on page 19 of the materials, which of the two elements in the second bar from the left, labeled “Increase in Freight Rates/Enhancement of D&D Collection,” is larger?


A.3 Increase in freight rates accounts for a higher proportion of the 55 million dollar improvement than enhancement of detention and demurrage collection.


[Dry Bulk]

Q.1 Given the magnitude of the decline in spot freight rates, especially for Panamax and smaller size vessels, please explain whether or not the figures in the Dry Bulk market condition assumptions can really be maintained in the fourth quarter.


A.1 Although current dry bulk freight rates have declined more than we had assumed, we have considerably reduced exposure to market conditions for Capesize.

Also, although market conditions for Panamax and smaller size vessels have substantially deteriorated, we think this is partly attributable to temporary factors. As currently reported in the media, the news of the collapse of the dam at an iron ore mine in Brazil has dramatically cooled current sentiment, and we think there has been an overreaction.

Another factor contributing to the deterioration in market conditions is that cargo movements of grain bound for China have stagnated since last year. Since we anticipate that cargo movements will recover and return to normal after the Chinese New Year, we do not think there will be a major impact.



Q.1 The management structure will change beginning in the next fiscal year, and Senior Managing Executive Officer Myochin will become the next president&CEO. Mr. Myochin, could you please comment on your views at this time on management policy and strategy?


A.1 Basically, the policy will be to advance the structural reforms we have steadily implemented under President&CEO Murakami; to further strengthen the profit structure consisting of the four business pillars that remain as “K” Line, namely, Dry Bulk, Car Carrier, Energy Resource Transport, and Logistics/Related Businesses; and to strengthen governance of ONE. I do not anticipate any major change from what we have done to date.