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 the NYK Line’s results for the first quarter of the fiscal year ending March 31, 2023.

During the first quarter, as the supply chain disruptions remained ongoing from the last fiscal year, the lockdowns in China and situation involving Russia and Ukraine had an impact on our group. However, supported by continued strong market conditions, the Liner & Logistics Business (Liner Trade Business, Air Cargo Transportation Business and Logistics Business), which handles primarily consumer goods, was the main driver of the group’s overall financial results. Also, the automotive transportation business in the Bulk Shipping Business faced lower automobile production volumes due to the global shortage of semiconductors and automotive components, but transportation volumes remained generally unchanged from the same period last year through efforts to optimize vessel deployment and sailing schedules. In the dry bulk business division, the medium and large vessel markets were firm on strong shipments of coal and grain, and the small vessel market also trended at high levels on support from shipments of minor bulk cargo. In the energy business division, although the VLCC (Very Large Crude Carrier) market continued to be weak due to imbalanced supply and demand conditions, the VLGC (Very Large LPG Carrier) market improved on strong shipment volumes to Europe. Also, LNG carriers and the offshore business were steady on support from stable medium to long-term contracts. In addition, depreciation of the Japanese yen against the US dollar boosted the financial results in each business.

As a result of the above factors, the consolidated financial results through the first quarter of the current fiscal year were revenue of JPY673.0 billion, operating profit of JPY89.1 billion, recurring profit of JPY377.7 billion and profit attributable to owners of parent of JPY343.3 billion, excellent results exceeding the same period last year.

Due in part to the impact of the situation involving Russia and Ukraine and global inflation, it remains difficult to foresee the business environment, but as the full-year consolidated financial results for the fiscal year ending March 31, 2023, we expect to achieve revenue of JPY2,500.0 billion, operating profit of JPY250.0 billion, recurring profit of JPY1,040.0 billion and profit attributable to owners of parent of JPY960.0 billion.

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%. In accordance with this basic policy, at the present time, the interim dividend for the current fiscal year (ending March 31, 2023) has been increased by JPY350 per share from the initial forecast to JPY1,000 per share. Concerning the year-end dividend, following the 3-for-1 common stock split to be conducted with a record date of September 30, 2022 and effective date of October 1, 2022, it was initially planned to issue a dividend of JPY135 per share, but it has been increased by JPY10 to JPY145 per share. Concerning the full-year dividend, it is not possible to simply add the interim and year-end dividend together due to the stock split, but based on the number of shares prior to the stock split, we plan to issue a full-year dividend of JPY1,435 per share.

Concerning the NYK Group ESG Story that indicates specific measures for integrating the ESG principles into management strategies as set forth in the medium-term management plan “Staying ahead 2022 with Digitalization and Green”, we issued the “NYK Group ESG Story 2022” in March of this year to report on the progress and explain several of the growth strategies based on the extra long-term perspective of 2050. We are steadily advancing the ESG initiatives in accordance with this story, and during the first quarter, we decided to form a partnership with Akita Prefecture and opened the Akita Branch with the aim of promoting the renewable energy business including offshore wind power and contributing to training the personnel needed for such projects and revitalizing the region.

In April of this year, Yusen Logistics Co., Ltd., a global logistics provider and member of the NYK Group, announced the “Yusen Logistics Group ESG Story” that positions ESG as a cornerstone of management and sets forth future initiatives. Going forward, the NYK Group as a whole will continue to promote ESG management, create a wide range of stories and generate new value as a “Sustainable Solution Provider” that is needed and chosen by society.

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)

FY2021
Q1 Result
FY2022
Q1 Result
Change
Revenues 504.6 673.0 168.4
Operating Profit 53.0 89.1 36.1
Reccuring Profit 153.6 377.7 224.1
Profit attributable to owners of parent 151.0 343.3 192.2
Average Exchange Rate ¥109.80/US$ ¥126.49/US$ Yen Down
¥16.69/US$
Average Bunker Oil Price US$441.92/MT US$789.48/MT Price Up
US$347.56/MT
  • *Figures are rounded down to the nearest 100 million yen.

Revenue

Recurring Profit

Earnings Forecast for the Fiscal Year 2022

Compared to the consolidated forecast issued at the start of the fiscal year, each business performed above expectations in the first quarter.
It is still difficult to foresee the business environment due to the risk of slowing global growth from the disruptions caused by the situation involving Russia and Ukraine and ongoing global inflation. However, in the container shipping division, the forecast is based on the assumption that the supply chain disruptions will gradually improve from the second half after the peak season and the strong cargo volumes and high freight rates will weaken.
At the terminals in Japan, handling volumes are expected to remain unchanged from the last fiscal year. At the overseas terminals, with priority to transferring the terminal in the North America west coast to ONE, it is planned to then successively transfer the terminals in the other regions.
In the Air Cargo Transportation Business, seasonal peak demand will occur early in the second half, but due to the gradual return of international passenger flights, the tight supply-and-demand conditions are expected to soften to a certain extent.
In the Logistics Business, due to loosening in the tight supply-and-demand conditions, profit levels are expected to fall to a certain extent in both the air freight forwarding business and ocean freight forwarding business. In the contract logistics business, although soaring personnel expenses will have an impact, continued efforts will be made to stabilize earnings through cost cutting measures and revisions to the service contracts, including price adjustments.
In the automotive transportation division, lower automobile production volumes due to the semiconductor and automotive component shortages continue to be a concern, but transportation volumes are forecast to remain firm through efforts to acquire transportation demand including used vehicles and construction equipment.
In the dry bulk business division, although market levels are expected to decline for all vessel segments compared to the last fiscal year, they are forecast to remain at strong levels.
In the energy business division, the VLCC market is expected to recover from the second half, and the VLGC market is forecast to remain firm. Overall, the business is expected to remain strong on support from the stable medium to long-term contracts in LNG carriers and the offshore business.

(Billion yen)

FY2022
Previous Forecast
(announced on May 9, 2022)
FY2022
(Revised Forecast)
Change
Revenues 2,300.0 2,500.0 200.0
Operating Profit 187.0 250.0 63.0
Reccuring Profit 760.0 1,040.0 280.0
Profit attributable to owners of parent 720.0 960.0 240.0
Average Exchange Rate ¥120.00/US$ ¥127.62/US$ Yen Down
¥7.62/US$
Average Bunker Oil Price US$741.25/MT US$838.24/MT Price Up
US$96.99/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%.
In accordance with this basic policy, at the present time, the interim dividend planned for the current fiscal year (ending March 31, 2023) has been increased by JPY350 per share from the initial forecast to JPY1,000 per share. Concerning the year-end dividend, following the 3-for-1 common stock split to be conducted with a record date of September 30, 2022 and effective date of October 1, 2022, it was planned to issue a dividend of JPY135 per share, but this dividend has been increased by JPY10 to JPY145 per share. Concerning the full-year dividend, it is not possible to simply add the interim and year-end dividend together due to the stock split, but based on the number of shares prior to the stock split, it is equivalent to a full-year dividend of JPY1,435 per share.

August 3, 2022
President
Hitoshi Nagasawa