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Management Message

I would like to take this opportunity to thank all NYK Line shareholders and investors for their enduring support. Yasumi Kudo, President

I would like to express my sincerest gratitude to all of the company's shareholders and investors for their understanding and support of the NYK Group's activities. I am pleased to have this opportunity to report on NYK Line's financial results for the first quarter of the fiscal year ending March 31, 2019.

First, I would like to sincerely apologize to all shareholders and investors in regards to the issuance of a Business Improvement Order Regarding the Securing of Air Transport Safety by the Ministry of Land, Infrastructure, Transport and Tourism to the consolidated subsidiary Nippon Cargo Airlines Co., Ltd. (NCA) on July 20. NYK Line has seriously and sincerely accepted the current actions taken against NCA, and at the same time, we will oversee and support NCA's efforts to make definite improvements to the operations and business, and implement initiatives to strengthen the compliance system and prevent recurrence.

From June 17, NCA has temporarily grounded all of the aircraft it operates until the airworthiness of the aircraft can be confirmed. As of today, two aircraft have been returned to service, but the fewer flights than anticipated during the quarter negatively impacted the business results year on year.

Also, from this year, the results in the liner segment will be made up of the remaining expenses for terminating the container shipping business at the end of March, the profit or loss from the terminal business in Japan and overseas and the profit or loss accounted for by the equity method from Ocean Network Express Pte. Ltd. (ONE), the shipping line jointly established with Kawasaki Kisen Kaisha, Ltd. and Mitsui O.S.K. Lines, Ltd. In regards to the performance during the first quarter, administrative problems occurred at ONE just after the start of service. These problems resulted from issues involving securing sufficient personnel and familiarization with the systems, but various improvements have been made and operations are returning to normal. On the other hand, recurring profit and loss deteriorated significantly year on year as a result of a delay in the timing of the handover of the operational assets (ships and containers) to ONE and the larger than expected one-time costs for terminating the business by NYK Line.

Although there were year on year improvements in the dry bulk division due to the gradual improvement in the shipping market and in the liquid division following the accumulation of strong performances, as a result, the figures for the first quarter were an operating loss of ¥8.1 billion, recurring loss of ¥6.6 billion and quarterly net loss attributable to owners of the parent of ¥4.5 billion. Also, the revenue declined year on year to ¥464.8 billion, but the main reason for the decline is the fact that the revenue from the container shipping division is no longer included in the results following the launch of ONE.

Regarding the forecast for the full year, as a result of revision to the underlying premise of the business plan issued by NCA at the beginning of the year, as well as the significant deterioration of the results in the liner business in the first quarter, the forecast was revised down to: revenue of ¥1,765.0 billion, operating income of ¥2.0 billion, recurring profit of ¥10.0 billion and net income of ¥12.0 billion. Also, the planned dividends have been revised down to: interim dividend of ¥10.0 per share and a year-end dividend of ¥10.0 per share.

In accordance with the basic strategy set forth in the new medium-term management plan announced in March, we will accelerate growth through the steady implementation of various initiatives, as well as place maximum effort on ensuring legal compliance within the entire NYK Group.

I ask for your continued understanding and support for the NYK Group in the future.

Financial Results Overview

Please see the below chart and graph for our year to date first quarter results ending july 31, 2018.

(Billion yen)
FY 2017 1Q
FY 2018 1Q
Operating Income
Recurring Profit
Net Income
Average Exchange Rate
¥3.38/Yen Up
Average Bunker Oil Price
US$69.22 Up

(Note)Figures are rounded down to the nearest 100 million yen.



Recurring Profit

Recurring Profit

Earnings Forecast for the Fiscal Year 2018

Concerning the future outlook, in the container shipping division, the service being offered by ONE is already being carried out stably, and efforts will be made to achieve improvements through the continued accumulation of synergies resulting from the integration and the further reduction of costs. Also, the recording of one-time costs in relation to the termination of the container shipping business at NYK Line is expected to drop significantly. In the Air Cargo Transportation segment, the difficult situation resulting from the decreased scale of operations is expected to continue. Logistics is expected to remain strong. In the dry bulk division, the market is expected to continue the gradual recovery, and in the tanker division as well, the market will enter the busy season in the second half and is expected to rise. LNG carriers and the offshore business are also expected to continue securing stable earnings. In the car transportation division, although shipping volumes are expected to decline slightly due to the delay in the recovery of shipping traffic to resource rich countries, the Company will work to optimize operational efficiency and increase the profitability.
In view of the above, the Company has revised its forecast of second quarter and full-year consolidated financial results, as follows.

(Billion yen)
Operating Income
Recurring Profit
Net Income attributable
to owners
of the parent company
Fiscal Year
March 31,
Operating Income
Recurring Profit
Net Income attributable
to owners
of the parent company
Average Exchange Rate
Average Bunker Oil Price

(Note)Figures are rounded down to the nearest 100 million yen.

Dividends for the Fiscal Year ending March 31, 2019

NYK Line has designated the stable return of profits to shareholders as one of the most important management priorities, and the distribution of profits is decided after taking into consideration a wide range of factors, including the earnings outlook, while aiming to maintain a dividend payout ratio of 25%. Following the revision to the full year consolidated earnings outlook stated in above, both the interim dividend and year-end dividend have been lowered by ¥10 from the most recent outlook to ¥10 per share, for a full-year dividend of ¥20 per share.

July 31, 2018
Tadaaki Naito
Tadaaki Naito President