Message from the President

I would like to express my sincere gratitude to all of our company’s shareholders and investors for your understanding and support of the NYK Group’s activities. I am pleased to have this opportunity to report as follows on NYK Line’s results for the fiscal year ending March 31, 2022.

During the fiscal year, COVID-19 continued to have a major impact around the world, but as a result of the strong markets created by robust cargo demand ongoing from the previous fiscal year, Liner & Logistics (Liner Trade, Air Cargo Transportation and Logistics segments) was the main driver of the group’s overall financial results. On the other hand, in the Bulk Shipping segment, although crude oil and petrochemical tankers continued to experience historically weak markets, our ratio of short-term contracts affected by market fluctuations is limited. Combined with improved market levels and benefits of the structural reforms carried out last fiscal year in the dry bulk shipping division and increased handling volumes in the car transportation division, the Bulk Shipping segment as a whole achieved greatly improved results compared to last fiscal year.

As a result of these factors, the consolidated financial results for the current fiscal year were revenue of JPY2,280.7 billion, operating profit of JPY268.9 billion, recurring profit of JPY1,003.1 billion and profit attributable to owners of parent of JPY1,009.1 billion, a new record high.

In addition to COVID-19, the impact of the situation in Russia and Ukraine makes it difficult for us to foresee the business environment in which the NYK Group will operate in the coming fiscal year, but as the consolidated forecast for the fiscal year ending March 31, 2023, we expect to achieve revenue of JPY2,300.0 billion, operating profit of JPY187.0 billion, recurring profit of JPY760.0 billion and profit attributable to owners of parent of JPY720.0 billion. Under our basic philosophy of “Bringing value to life”, we deliver value to people and society, and take pride in supporting daily life. While ensuring the safety of our employees throughout the group working at sea, land and air, we will continue striving to achieve safe and continued operations.

We have designated the stable return of profits to shareholders as one of the most important management priorities, and the distribution of profits is decided after comprehensively taking into account the business forecast and other factors and generally targeting a consolidated payout ratio of 25%. At the same time, based on an ongoing minimum dividend that is not affected by the business results, an annual dividend of JPY20 per share has been set as the minimum dividend for the time being. In addition to this basic dividend policy, we considered a share buyback, but for the current fiscal year, we will only issue a dividend. The year-end dividend has been increased from the previous forecast by JPY250 to JPY1,250 per share, and including the interim dividend, we plan to issue a full-year dividend of JPY1,450 per share. Concerning the upcoming fiscal year, based on the same policy, we currently plan to issue an interim dividend of JPY650 and year-end dividend of JPY400 for a full-year dividend of JPY1,050.

In accordance with our medium-term management plan “Staying ahead 2022 with Digitalization and Green”, we have worked to improve profitability and strengthen our ability to withstand the future changes in the business environment by optimizing the business portfolio and accumulating stable-freight-rate business. Also, in September of last year we announced the long-term greenhouse gas emissions reduction target of “Achieve net-zero emissions by 2050” in the group’s oceangoing businesses. Along with promoting the use of LNG-fueled vessels, which has been designated a bridge solution until the realization of zero-emission ships in the future, we will accelerate the initiatives for decarbonizing the oceangoing businesses by developing zero-emission ships capable of using alternative fuels such as ammonia. Through these initiatives, we will create new value as a “Sustainable Solution Provider” who is needed by society and industry. Going forward, we will continue to nimbly respond to changes in the business environment based on the “NYK Group ESG Story”, which sets forth specific actions for positioning ESG management as a growth strategy.

Going forward, I ask all of the shareholders and investors for your continued understanding and support for the NYK Group.

Financial Results Overview

Please see the below chart and graph for our year to date financial results.

(Billion yen)

FY2020
Full-Year Result
FY2021
Full-Year Result
Change
Revenues 1,608.4 2,280.7 672.3
Operating Profit 71.5 268.9 197.4
Reccuring Profit 215.3 1,003.1 787.8
Profit attributable to owners of parent 139.2 1,009.1 869.8
Average Exchange Rate ¥105.79/US$ ¥112.06/US$ Yen Down
¥6.27/US$
Average Bunker Oil Price US$362.95/MT US$531.19/MT Price Up
US$168.25/MT
  • *Figures are rounded down to the nearest 100 million yen.

Revenue

Recurring Profit

Earnings Forecast for the Fiscal Year 2022

In the container shipping division, although the next fiscal year remains difficult to foresee due to the impact of the COVID-19 lockdowns in China and the situation in Russia and Ukraine, the forecast is based on the assumption that the robust demand mainly in North America ongoing from the current fiscal year will settle down and the situation will gradually normalize from the second half. At the terminals in Japan, handling volumes are forecast to remain unchanged from the current fiscal year, and concerning the overseas terminals, efforts will be made with the aim of transferring the terminals on the west coast of North America to ONE early in the next fiscal year.
In the Air Cargo Transportation business, supply-and-demand is expected to slacken to a certain extent due to the return of international passenger flights and lower demand, but the overall results are forecast to remain strong.
In the Logistics business, handling volumes are expected to remain unchanged from the current fiscal year in the air freight forwarding business, and although profit levels will decrease due to lower transportation demand and the return of international passenger flights, they are forecast to remain elevated compared to normal years. In the ocean freight forwarding business, handling volumes are expected to increase, but profit levels are forecast to decline due to slackening transportation demand. In the contract logistics business, earnings are expected to stabilize as a result of the initiatives carried out to date to reduce costs and revise the contracts, including price adjustments.
In the automotive transportation division, improvement is anticipated in the semiconductor shortage, and shipping volumes are forecast to increase primarily in North America.
In the dry bulk business division, although the markets for all vessel segments are expected to settle down compared to the current fiscal year, the results are forecast to remain firm.
In the energy business division, the VLCC (Very Large Crude Carrier) and VLGC (Very Large LPG Carrier) markets continue to be weak, but the results are expected to remain steady based on support from the stable medium to long-term contracts in the LNG carrier and offshore businesses.
Based on the above forecast, profit is expected to be lower on increased revenue in the next consolidated fiscal year, but the business results are expected to remain at a favorable level.

(Notes) From fiscal year ending March 2023, “Air Cargo Transportation” and “Logistics” are treated as business instead of segment. In addition, “logistic business” is renamed as “contract logistics business”. As for Bulk Shipping business, “car transportation division” is changed to “automotive transportation division”, “dry bulk division” to “dry bulk business division”, and “energy division” to “energy business division”.

(Billion yen)

FY2021
(Result)
FY2022
(Forecast)
Change
Revenues 2,280.7 2,300.0 19.3
Operating Profit 268.9 187.0 -81.9
Reccuring Profit 1,003.1 760.0 -243.1
Profit attributable to owners of parent 1,009.1 720.0 -289.1
Average Exchange Rate ¥112.06/US$ ¥120.00/US$ Yen Down
¥7.94/US$
Average Bunker Oil Price US$531.19/MT US$741.25/MT Price Up
US$210.06/MT
  • *Figures are rounded down to the nearest 100 million yen.

Dividends

We have designated the stable return of profits to shareholders as one of the most important management priorities, and the distribution of profits is decided after comprehensively taking into account the business forecast and other factors and generally targeting a consolidated payout ratio of 25%. At the same time, based on an ongoing minimum dividend that is not affected by the business results, an annual dividend of JPY20 per share has been set as the minimum dividend for the time being.
In addition to this basic policy, we considered a share buyback, but for the current fiscal year (year ending March 2022), we will only issue a dividend. The year-end dividend has been increased from the previous forecast by JPY250 to JPY1,250, and including the interim dividend, we plan to issue a full-year dividend of JPY1,450 per share.
Concerning the upcoming fiscal year (year ending March 2023), based on the same policy, we currently plan to issue an interim dividend of JPY650 and year-end dividend of JPY400 for a full-year dividend of JPY1,050.

May 9, 2022
President
Hitoshi Nagasawa