K Line expects firm rates for dry bulk in the future
Due to the significant improvement in business performance of OCEAN NETWORK EXPRESS PTE. LTD. (hereinafter referred to as “ONE”), the company recorded 499.280 billion yen of equity in the earnings of unconsolidated subsidiaries and affiliates for the consolidated year-to-date second quarter. In equity recorded in earnings of unconsolidated subsidiaries and affiliates, “ONE” accounted for 494.552 billion yen in the second quarter cumulatively and 261.651 billion yen in the second quarter alone.
Performance by segment was as follows.
(i) Dry Bulk Segment
Dry bulk company
In the Cape-size sector, despite the increase in the supply of vessels due to the stagnation of economic activity and the decongestion of ports in China, the main area of demand, market prices remained generally firm while fluctuating somewhat due to the subsequent recovery in shipping demand and increased port congestion in the Far East due to heavy weather, which led to a tightening of the ship supply-demand balance.
In the medium and small vessels sector, although the supply of vessels increased due to the temporary drop in transport demand due to seasonal factors and the drop in transport demand for steel products to Europe , combined with reduced port congestion in China, market rates remained generally firm, driven by increased demand for grain transportation to China.
In these circumstances, the Group has endeavored to manage market exposures appropriately, reduce operating costs and improve the efficiency of vessel operations.
As a result, the overall dry bulk segment recorded a year-over-year increase in both revenue and profit.
(ii) Energy Resources Transportation Segment
LNG Carrier, Electricity, LNG Carrier and Offshore
Concerning LNG carriers, thermal coal carriers, large oil tankers (VLCC), LNG carriers, drilling ships and FPSOs (Floating Production, Storage and Offloading system), activity remained firm on medium and long term and helped to secure profit.
As a result, the entire Energy Resources Transportation segment recorded a year-on-year increase in both revenue and profit.
(iii) Product Logistics Segment
car transport company
In the global car sales market, although the shortage of semiconductors and auto parts, the lockdown in Shanghai, and the situations in Russia and Ukraine affected production and shipments in some regions, the recovery after the impact of COVID-19 continued. In addition, the Group has endeavored to achieve recovery in freight levels and to improve operational efficiency.
In the domestic and port logistics activity, the volume of domestic container handling remained at the same level from one year to the next. In the towing business, the volume of work remained strong. Warehousing activity remained sustained. Regarding the international logistics business, although the demand for ocean and air freight transport in the forwarding sector showed a downward trend, the handling volume generally remained firm. In the finished vehicle transportation business, the ground transportation volume and finished vehicle storage volume increased.
Short Sea and Coastal Maritime Activities
In short sea shipping, although the shipping demand for steel and wood products remained firm, the shipping volume of coal declined year-on-year. In the coastal business, freight volume remained stable and trucking volume increased year-on-year. The volume of passenger and passenger car transport improved year-on-year due to the removal of restrictions on movement associated with COVID-19.
container ship company
Regarding the performance of “ONE”, although recent market rates have weakened as the balance between supply and demand has tightened, overall market rates have increased year on year. other. As a result, “ONE”‘s business performance improved year on year.
As a result, the entire Product Logistics segment recorded a year-over-year increase in revenue and profit.
Other includes, but is not limited to, Ship Management Service, Travel Agency Service and Group Property and Administration Service. The segment recorded a year-over-year increase in revenue and returned to profitability.
(2) Qualitative information on the consolidated financial position
Consolidated assets at the end of the consolidated 2nd quarter of this fiscal year were 2,175.675 billion yen, an increase of 600.715 billion yen from the end of the prior fiscal year due to an increase in placement and other factors.
Consolidated liabilities decreased from 29.126 billion yen to 560.950 billion yen due to a decrease in other current liabilities and other factors compared to the end of the prior year.
Consolidated net assets were 1,614.725 billion yen, an increase of 629.842 billion yen from the end of the prior year due to an increase in retained earnings and other factors.
(3) Qualitative information on the consolidated outlook for the 2022 financial year
In the dry bulk segment, despite uncertainties such as the effect of inflation in major countries on the global economy and the delayed recovery of economic activity in China, market rates are expected to remain firm as Coal shipping demand coupled with energy issues will support the market and limited new shipbuilding will lead to a tighter ship supply-demand balance. Faced with these uncertainties, the Group will closely monitor the development of transport demand and trade flows and will prepare to react quickly. At the same time, in the face of the growing need to deal with environmental issues and leverage its strength in high-quality transportation, the Group will strive to ensure stable profit by increasing operating efficiency. ships and reducing costs as well as increasing medium and long-term contracts.
In the Energy Resources Transportation Segment, the Group will strive to ensure stable profitability under medium and long-term contracts for LNG carriers, thermal coal carriers, large oil tankers (VLCC), LPG carriers, drillships and FPSOs (Floating Production, storage and offloading system).
With respect to the product logistics segment, with respect to the car transport business, although the impact of shortages of semiconductors and auto parts and the situation in Russia and Ukraine on sales global vehicle markets are causing concern, sales and freight movements should recover and freight levels should be restored. In addition, the Group will continue to strive to improve operational efficiency through measures such as the appropriate restructuring of the fleet and the reorganization of the business network. Regarding the logistics activity, the demand for domestic container handling should remain strong in the segments of domestic logistics and port activity. With regard to the international logistics activity, the demand for maritime and air transport is expected to decrease in the forwarding activity. In the overland finished vehicle sector, handling volume is expected to increase due to the continued upward trend in vehicle imports into Australia. In the container sector, although there are signs of easing congestion in some ports, port congestion continues in the main ports on the east coast of North America and in northern Europe , and supply chain disruptions are expected to continue. The global economy is becoming increasingly uncertain due to the situation in Russia and Ukraine, global inflation and rising interest rates, all of which can impact transport demand. “ONE” will closely monitor the economic environment and strive to ensure the stability of business operations while implementing measures to adapt to changes in supply and demand.
Our core policy is to enhance shareholder profits over the medium to long term by proactively promoting shareholder returns, including share buybacks. This is done by considering cash flow and ensuring the level of investment and financial stability necessary to enhance the value of our business. Based on this basic dividend policy, for the year ended March 31, 2023, the Company resumes payment of an interim dividend of 300.00 yen per share (before the stock split) and plans the payment of a year-end dividend of 100.00 yen per share (After stock split).
At the meeting of the board of directors held on November 4, 2022, the company decided to redeem its shares in accordance with Article 156 of the Company Law of Japan, as applied pursuant to paragraph 3 of Article 165 of the Companies Law of Japan. Please refer to (Redemption of Shares) on the (Important Subsequent Event) page for further details.
Source: Kawasaki Kisen Kaisha, Ltd.