Financial Indicators

Liner Trade

Summary of Fiscal year 2011 Third Quarter results

On East-West North American and European routes, in order to improve the deteriorated supply-demand balance as a result of continuing delivery of large-sized container vessels, we have withdrawn the number of vessels in service and taken other rationalization measures, but these measures were not sufficient to offset the impact of falling freight rates and yen appreciation, and revenues on East-West routes declined significantly compared to the third quarter of the previous year. On North-South routes including voyages to South America, we rationalized vessel allocation in response to lackluster demand and successfully minimized the impact of declining freight rates. On Asian routes, cargo volumes in some regions were impacted by the Thai floods, but overall shipping volumes grew solidly. Though we instituted various cost-saving measures throughout the shipping service, including operating vessels at reduced speed to save fuel, the measures were insufficient to offset the higher cost of rising bunker oil prices. Consequently, results for the liner trade segment worsened significantly compared to the previous year's third quarter, and the segment posted a loss.

Terminal and Harbor Transport

Summary of Fiscal year 2011 Third Quarter results

Domestic and overseas container terminals' handling volumes were on a par with the third quarter of the previous year. We continued to reduce costs, and as a result, the segment's earnings were also on a par with a year ago.

Air Cargo Transportation

Summary of Fiscal year 2011 Third Quarter results

Nippon Cargo Airlines Co. Ltd. (NCA) experienced weaker airfreight demand on Japan- and Asia-originated routes as a result of credit concerns in Europe and the U.S. Due to higher fuel oil prices, results deteriorated compared with last year's third quarter, when airfreight volumes were recovering, but through continuous cost-saving measures, we maintained profitable during the period.

Logistics

Summary of Fiscal year 2011 Third Quarter results

In the airfreight business, while Asia-originated cargo volumes slumped from the impact of Thai floods, there was an reconstruction demand which contributed to the profitability of Japan-originated shipments to Thailand. Additionally, exports from the Americas and Europe were firm. The seaborne freight business was relatively buoyant, as strong Asian-oriented demand offset weaker Christmas-related demand following the slump in the European economy. In the logistics business, results suffered from stagnant U.S. personal consumption which weakened imports from Asia. Overall, segment revenues declined but recurring profit increased thanks to improved profitability.

Bulk Shipping

Summary of Fiscal year 2011 Third Quarter results

Just as Japanese automakers began to recover from the production cutbacks caused by the Great East Japan Earthquake and stage a second-half comeback, the Thai floods again fractured supply chains in the automobile industry. Car carrier shipments suffered significantly as Thailand-originated volumes plunged and production of some vehicle types in Japan also stalled. We added one new car carrier to the fleet during the quarter and strove to reduce operating expenses, mainly fuel costs.

Supply-side pressure heightened with the delivery of a large amount of newbuild tonnage. Meanwhile, iron ore shipments to China increased as iron ore price declined, and the Capesize bulker market continued to recover from a bottoming-out in September. The markets for Panamax and other small- and mid-sized bulk bulkers softened towards the end of the year on declining coal and steel materials shipment volumes. We strove to lower fuel costs through rigorous measures such as operating the fleet at reduced speeds.

Overall, shipping volumes failed to meet expectations as higher winter petroleum demand from China and other newly emerging and developing nations was undercut by declining demand in Europe and the U.S. Supply-side pressure heightened due to the delivery of a large amount of newbuild tonnage, along with the slow progress in scrapping aged vessels and decline in offshore storage. As a result, the crude oil tanker market slumped as areas of improvement failed to maintain momentum. The petroleum products tanker market also sagged due to weaker naphtha demand from Asia and the deteriorating supply-demand balance.

As a result of the above, the bulk shipping segment posted a consecutive quarterly loss on lower revenues compared with the same period of the previous year.

Cruise

Summary of Fiscal year 2011 Third Quarter results

In the Japanese market, Asuka II suffered from tepid demand around the Christmas season amid a stalled domestic economy. In the North American market, Crystal Cruises was impacted by a delayed U.S. economic recovery, credit problems in Europe, and Middle East unrest. Overall, the cruises segment recorded a decrease in the load factor and revenues compared with the same period of the previous year, and the segment's loss widened.

Real Estate

Summary of Fiscal year 2011 Third Quarter results

The real estate business's results were on a par with the previous year.

Other Business Services

Summary of Fiscal year 2011 Third Quarter results

In other business services, the trading business's revenues increased on higher bunker oil prices and as a whole, revenues from other business services increased, but earnings were on par with the previous year.