Today, NYK president Hitoshi Nagasawa marked the 136th anniversary of NYK’s founding.
On October 1, NYK celebrated its 136th anniversary. I am delighted that all NYK Group employees have been a valued part of adding a page to our history. I would like to take this opportunity to convey my respect to everyone who has been involved in creating this long history of the NYK Group, as well as to express my gratitude to all of the stakeholders who are supporting our business activities in a variety of ways.
The historic upturn in the maritime shipping industry resulting from the soaring container freight rates and strong dry bulk market remains ongoing. During the first quarter of the fiscal year ending March 2022, we recorded a recurring profit of ￥153.6 billion, and we expect to achieve a new record high recurring profit of ￥500.0 billion for the full year. I would like to express my gratitude to all of our group employees for their endeavors and express my sincere respect for their efforts. We are taking advantage of these good results after suffering from the long-term structural recession in maritime industry, by announcing a wide range of initiatives aimed at the future, several of which I will introduce to you today.
First, as part of the efforts to promote stronger ESG management, we have decided to invest about ￥200 billion to build a large number of LNG-fueled pure car and truck carriers. Preparations are also being made in relation to the dry bulk fleet, and we will accelerate the use of LNG fuel, which reduces the environmental burden and has been called a bridging solution until we will ultimately shift to using truly green ammonia and hydrogen fuel in the future.
Also, we have announced the replacement of Asuka II, which had been a multi-year concern. Currently, the cruise market is facing strong headwinds, but passing on Japan’s cruise ship culture to the next generation and contributing to regional revitalization have extremely important meaning from the perspective of ESG.
Next, I would like to mention the reorganization of the real estate portfolio. In addition to the new construction projects in Onarimon and Yokohama, some of the shares of Yusen Real Estate Corporation have been transferred to Japan Post Real Estate Co. Ltd. This transfer was determined to be necessary to increase the value of our real estate holdings and enable the further growth of Yusen Real Estate. In addition, we are also making steady progress in other areas too, such as making preparations to participate in the offshore wind power business and securing new LNG carrier contracts that will provide stable-freight-rate business.
On the other hand, I would like to take this opportunity to mention the grounding of the wood-chip carrier Crimson Polaris off the coast of Hachinohe and the subsequent oil spill. Although we are only the charterer of this vessel, we are taking very seriously the fact that some of the fuel spilled into the ocean and washed ashore on the neighboring shoreline along with part of the cargo. In light of our social responsibility for this accident as one of the parties involved, more than 100 company personnel have traveled to the grounding scene to assist the shoreline clean-up operations, and we will continue to look for opportunities to provide further assistance. Other concrete actions such as a detailed analysis of the accident will take place going forward, but it is paramount that we further reinforce our safety awareness and resolve never to allow a similar accident to occur again. I would like to reemphasize that “safety is an immovable core tenet” for the NYK Group and the main goal of ESG management.
Next, I would like to comment on the new long-term GHG reduction target of “achieving net-zero emissions by 2050,” announced on September 30. Japan and several other countries and industries had already announced the goal of achieving zero emissions, and even within the current IMO (International Maritime Organization) discussions, there have been increasing calls to revise the 2050 GHG emissions target to zero. Given this situation, we determined that our original long-term target of reducing GHG emissions by 50 percent per ton-kilometer by 2050 compared to the base year of 2015 would no longer be sufficient for responding to the current requirements from society. The new target will initially cover only the international maritime shipping business, but achieving this target will require huge environmental investments and R&D, and it is essential that we obtain the understanding and cooperation of all stakeholders, including the shipyards, ship-equipment manufacturers, and customers. Moreover, to secure a stable supply system for next-generation fuels, we need to work together with various groups and companies, as well as establish port infrastructure on a global scale.
We have reached the conclusion that as a leading company in international maritime industry, the NYK Group has an obligation to play a prominent role in these activities and be a strong driver of forward progress. As I have stated many times before, companies that do not sincerely address this issue will cease to exist. Based on a strong determination to do whatever it takes to achieve net-zero emissions by 2050, we intend to take on the challenge of this difficult issue.
Finally, I would like to touch again on the importance of communication. The global disruption caused by COVID-19 remains ongoing, and it continues to have a major impact on our business environment. The stricter border-control measures in many countries and prolonged reduction in international passenger flights have altered global trade patterns, but at some point, a change will occur. I want everyone to remain attentive and closely observe customer and market trends so that we do not overlook the signs of this turning point. I want all employees and divisions to concentrate on strengthening communication in all directions.
For now, the business environment at the NYK Group as a whole is expected to remain steady, but within the group, we also have businesses involved in tourism, foods and drinks, etc. that are facing an extremely difficult situation. However, the sun will rise again. Try to remain positive and look forward to better times ahead.
COVID-19 continues to disrupt daily life, and it is important not to let your guard down. I express my sincere wish for the continued health of you, your families, and everyone working on the front lines of logistics.
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