Dear Shareholders:

Your Board of Directors always appreciates your continuing support.


We would like to herewith report the first six months of the fiscal year ending March 31, 2020 (from April 1, 2019 to September 30, 2019; hereinafter “the six-month period”), consolidated financial results and our forecasts for Fiscal Year 2019 that ends March 31, 2020.

Operating revenues for the six-month period was ¥372.396 billion (down ¥43.733 billion year-on-year), operating income was ¥11.065 billion (compared to operating loss of ¥12.321 billion in the same period of the previous fiscal year), and ordinary income was ¥13.373 billion (compared to ordinary loss of ¥21.329 billion in the same period of the previous fiscal year). Profit attributable to owners of the parent was ¥16.312 billion (compared to loss attributable to owners of the parent of ¥24.581 billion in the same period of the previous fiscal year).


1) Summary of Consolidated Operating Results for the first six months of FY2019

Results for the first six months of FY2019 Six months ended
September 30,
Six months ended
September 30,
Operating revenues 372.4 416.1 (43.7)
Operating income (loss) 11.1 (12.3) 23.4
Ordinary income(loss) 13.4 (21.3) 34.7
Profit (loss) attributable to
owners of parent
16.3 (24.6) 40.9
Exchange Rate (¥/US$)
(6-month average)
¥109.18 ¥109.48 (¥0.3)
Fuel oil price (US$/MT)
(6-month average)
US$440 US$437 US$3

(Billion Yen; rounded to the nearest 100 million yen)

 Performance per segment was as follows.


  Regarding Dry Bulk Business, in the Cape-size sector, the demand for the transportation of iron ore from Brazil to China is vigorous, and in the medium and small size vessel sector, the demand for the shipment of grains from South America is strong as well as the market rate has recently been on a recovery. However, the overall vessel supply-demand, mainly in medium and small size vessel sector, did not recover in earnest because the scrapping of the vessels in surplus was shelved with the recovery of the chartering market.


As a result, by having the effects of hovered market rates from the end of the previous fiscal year, the overall Dry Bulk Segment recorded year-on-year decrease in both revenue and profit.



  Regarding Energy Transportation Business, concerning large crude oil tankers (VLCCs), LPG carriers, thermal coal carriers, LNG carriers, and drillship and FPSO (Floating Production, Storage and Offloading system), the business stayed firm for mid- and long-term charter contracts and year-on-year increase in both revenue and profit was recorded.


  Concerning the offshore support vessel business, the vessel supply-demand and the market rate improved, and a loss was narrowed.



  Regarding Car Carrier Business, the volume of finished vehicles shipped by the Group decreased year-on-year because of the rationalization including the cancellation and the realignment for some unprofitable trades including other-than-Japan trades, even though stable cargo movements were maintained in the trades from the Far East. However, because of an improvement in vessel operation efficiency, a recovery in freight rates and optimization of the fleet allocation, the overall car carrier business recorded a year-on-year decrease in revenue but turned a profit.


  Regarding Logistics Business, Despite the steady performance mainly in towage, sea-land integrated transportation and warehousing business in the domestic logistics sector, due to the decline of air cargoes lifting to inter Asia, Europe and the United States in the international logistics sector, the overall logistics business recorded year-on-year decrease in both revenue and profit.


   Regarding Short Sea and Coastal Business, the transportation volume significantly increased in the short sea business, the operating ratio in liner vessel improved with less effects of the typhoons in the coastal business as well as fuel price was declined. As a result, year-on-year increase in both revenue and profit was recorded.


  Regarding Containership Business, in the operating revenues of OCEAN NETWORK EXPRESS PTE. LTD. (hereinafter referred to as “ONE”), the Company’s equity-method affiliate, by the recovery of liftings and space utilization, the improvement of freight rate of long-term contracts in North America dominant services, the improvement of the cargo portfolio, and the tackles to improve its profitability including reduction of operational costs through the realignment and rationalization of trades, ONE overall recorded a year-on-year increase and turned a profit. Regarding the containership business remaining in the Company, a year-on-year decrease in revenue was recorded, but a loss was narrowed due to a decrease of the temporary losses occurred by the business transfer.




  Other Segment includes but not limited to the Group’s ship management service, travel agency service, and real estate and administration service. The segment recorded a year-on-year increase in revenue but a profit was narrowed.

2) Consolidated Forecasts for Fiscal Year 2019

Fiscal Year 2019,
ended March 2020
Prior Forecast
(at the time of announcement
of the 1st Quarter result)
Current Forecast
(at the time of announcement
of the 2nd Quarter result)
% indicates year-on-year change
Operating revenues 750.0 740.0 (1.3%)
Operating income 6.0 6.0 -
Ordinary income 5.0 5.0 -
Profit attributable to
owners of parent
11.0 11.0 -
Exchange Rate (¥/US$)
(12-month average)※
¥108.67 ¥108.58 (0.1%)
Fuel oil price (US$/MT)
(12-month average)※
US$556 US$485 (12.8%)

(Billion Yen; rounded to the nearest 100 million yen)


 In Dry Bulk Segment, the market rates will continue to improve and stable profit will be secured with the expectation of the robust vessel demand and the supply decline due to the increase in the number of works to install scrubber systems mainly on large-size vessels.


 In Energy Resource Transport Segment, securing stable profit under mid- and long-term contracts is on-going expected.


 In Product Logistics Segment, the car carrier business is expected to achieve a profit improvement this fiscal year by the recovery of freight rates and the effect of the trades rationalization, despite the expected decline in demand due to external factors, such as the trade dispute between the United States and China. Although the market rates in Europe dominant services deteriorated from the previous fiscal year, ONE is now clear of the teething problems occurred immediately after the commencement of services and has been carrying out measures to improve earnings such as securing liftings, optimizing the cargo portfolio, rationalizing the fleet allocation, and reducing general and administrative expenses. As a result, ONE is expected to improve its profitability.


 As explained above, although market rates are recovering as a trend, mainly in Dry Bulk and Energy Resource Transport Segment, the vessel supply-demand gap has not been fully resolved and the business environment is expected to remain uncertain. However, as the Company will strive further to improve earnings by promoting additional cost reduction and operation efficiency improvement, the Company has kept unchanged its previously announced forecasts of full-year results, including operating income, ordinary income, and profit attributable to owners of the parent.



 Our important task is to maximize returns to our shareholders while maintaining necessary internal reserves to fund our capital investment and strengthen our financial position for the sake of sustainable growth, which is a priority of our management plan.

However, the slow down in the global economic outlook could lead to the deterioration in the transportation demand and the business environment remains critical toward achieving the consolidated full-year business forecasts, although the consolidated financial results in the 1st half of the current fiscal year were better than expected. The Company will make a concerted effort to further improve its financial results, but it is with sincere regret that the Company announces it has decided to pay no interim dividend. The year-end dividend remains yet to be determined. We will update you again in due course once further judgment has been made as to dividend payment forecast after comprehensively taking into consideration the full-year forecasts and the Company’s financial conditions.



  All of "K" LINE Group members are vigilantly dedicated to the accomplishment of our goals with one voice, and we appreciate your continued support and encouragement.



 Thank you very much for your kind attention.


October 31, 2019


Yukikazu Myochin
President & CEO
Kawasaki Kisen Kaisha, Ltd