【Forecasts for FY2020 by Segment】
You stated that the impact of COVID-19 will be 30.0 billion yen for the full year. What portion of that impact was in the first half of the fiscal year? Additionally, at the announcement of the first-quarter results, you estimated the impact to be 38.0 billion yen. What factors led to the 8.0 billion yen improvement? Furthermore, in your estimation, to what extent will the COVID-19 impact diminish in the next fiscal year?
We estimate that, of the full-year COVID-19 impact of 30.0 billion yen, about 70% was in the first half and about 30% will be in the second half. Regarding the improvement from the previously announced 38.0 billion yen to 30 billion yen, one of the main factors was that the impact on Containership Business was less than originally expected.
Regarding expected COVID-19 impact from the next fiscal year onwards, we have yet to make any firm estimate at the current time. In terms of topline, we would estimate that liftings, operating revenues, and other figures may decrease by about 10% in Car Carrier Business and the Dry Bulk segment. As an example, if the margin were 10%, then 10% of that would represent a deterioration in profitability.
Please explain how the 30.0 billion yen impact breaks down according to business segment.
By segment, about one-third of the expected impact will be in the Dry Bulk segment, about 40% in Car Carrier Business, and the remaining amount in the Energy Resource Transport segment, Short Sea and Coastal Business, and Logistics Business.
Concerning Containership Business, in regard to your explanation of ONE, other shipping company has announced that they are taking a somewhat conservative view of freight rate trends in the second half of the fiscal year. Specifically, the other company’s forecast that freight rates will decline from late December through March in comparison with the rates in the latter half of the first half. Currently, as of early November, it appears that freight rate market conditions and cargo movements are strong, particularly for Asia-North American routes. What is your analysis of the current market conditions? Are ONE’s recent results exceeding forecasts? How do you see the market conditions trending over the second half?
ONE has made a rather conservative forecast for the second half, taking into consideration various factors in the fourth quarter, such as the Chinese New Year and seasonal factors, as well as a possible resurgence in COVID-19 infections.
In regard to October and November, liftings are firm and freight rates have remained at high levels. Overall, the results are exceeding the forecast. Right now, it is important to monitor how the near-term trends play out, specifically whether these conditions will continue through November and whether freight rates will climb entering December. As for the market conditions from January, under the current circumstances, we can only estimate the overall conditions will be conservative.
Dry Bulk and Energy Resource Transport segments have faced significant challenges this fiscal year due to the COVID-19 impact and other factors. In regard to profitability next fiscal year, what are your forecasts for these segments taking into consideration the initiatives you have taken this fiscal year to improve profitability, primarily the redelivery and disposal of vessels?
In regard to the next fiscal year, Dry Bulk Segment is forecast to return to profitability in the second half. Although we cannot estimate the extent of the continued impact of market conditions, our current forecast is more than twice the profit expected in the second half of the current fiscal year. With regard to Energy Resource Transport, there are some temporary factors weighing down profitability this fiscal year. Excluding those factors, the segment would post more than 4.0 billion yen in ordinary income this fiscal year, consistent with the original forecast. Therefore, our current forecast for the segment is 4.0 billion yen plus something.