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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 second quarter of the year ending March 31, 2019.

First, the company's consolidated subsidiary Nippon Cargo Airlines Co., Ltd. submitted improvement measures in August in response to the business improvement order received from the Minister of Land, Infrastructure, Transportation and Tourism in July of this year regarding improper maintenance operations. I sincerely apologize to all shareholders and investors for the inconvenience and concern this issue has caused. Nippon Cargo Airlines Co., Ltd has taken the business improvement order seriously and sincerely, and along with working to prevent reoccurrence, I will make the utmost effort to ensure legal compliance throughout the group.

The interim consolidated results were: revenue of ¥915.6 billion, operating loss of¥4.1 billion, recurring loss of ¥9.0 billion and loss attributable to owners of parent of ¥9.7 billion. The bottom line improved as a result of the gradual market recovery in the dry bulk division and increased shipments of stable profit cargo in the liquid division. On the other hand, revenues fell year on year and a loss was recorded due to the increased one-time costs in the first quarter for terminating the container shipping business, the downward revision to the results of the integrated container shipping line Ocean Network Express Pte. Ltd. (“ONE”), which was jointly established with Kawasaki Kisen Kaisha, Ltd. and Mitsui O.S.K. Lines, Ltd., and the suspension of airline operations and recording of an impairment loss on some of the aircraft at Nippon Cargo Airlines Co., Ltd. At ONE, the service disruption that occurred just after the company started offering service in April of this year continued to have an impact on several of the shipping routes, resulting in a downward revision to the bottom line. The service disruption has already ended, and efforts are being made to improve the bottom line going forward.

The consolidated results for the full year are expected to be: revenue of ¥1,810.0 billion, operating profit of ¥5.5 billion, recurring loss of ¥13.0 billion and loss attributable to owners of parent of ¥6.0 billion. Concerning the interim dividend, a dividend of ¥10 per share will be issued. In addition, it is planned to issue a year-end dividend of ¥10 per share.

Looking back at the year up to now, the global economy was supported by a modest virtuous cycle, and the marine shipping markets tended to recover. However, in addition to the impact of excess liquidity resulting from the financial easing policies in each country and the concerns regarding trade friction between major economies, digital technology is rapidly advancing, there is a shift towards a low carbon society and the environmental regulations are becoming increasingly strict. As a result of these factors, the “opaque world” is starting to expand.

In order to overcome this external environment, from this year, the NYK Group has started “Staying Ahead 2022 with Digitalization and Green” as the new Medium-term Management Plan. While working to strengthen the ability to withstand the business environment and increase the earnings capability, the group will continue to promote initiatives for Digitalization and Green in an effort to optimize the overall supply chain and create new value in the environmental field. However, given the results through the second quarter and the downward revision to the consolidated business forecast, an emergency response will be made in order to fully execute the new Medium-term Management Plan. As part of this emergency response, efforts will be made to improve the bottom line at the liner segment and air cargo transportation segment, and it will also include various measures for further liquidating the group's assets and strengthening governance group-wide. I will work to advance this emergency response, as well as bring the group together and give my utmost effort to quickly recovering the business results and ensuring legal compliance.

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 half results ending October 31, 2018.

(Billion yen)
FY 2017 2Q
FY 2018 2Q
Operating Income
Recurring Profit
Net Income
Average Exchange Rate
¥1.72/Yen Up
Average Bunker Oil Price
US$98.13 Up

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



Recurring Profit

Recurring Profit

Earnings Forecast for the Fiscal Year 2018

In the container shipping division, although the service disruption at ONE has already ended, the drop in loading volumes and slot utilization ratio have not fully recovered, and the results are expected to significantly deteriorate. On the other hand, most of the one-time costs required to terminate the container shipping business have already been recorded in the first quarter and are expected to greatly decline in the second half. In the Air Cargo Transportation segment, while the aircraft for which soundness has been confirmed are successively being returned to service, the situation is expected to remain challenging in the second half. The Logistics segment is expected to remain strong. The market in the dry bulk division is expected to continue the modest recovery, and the market in the tanker division is expected to rise as the market enters the peak season in the second half. Both LNG carriers and the offshore business are expected to continue securing stable earnings. In the automobile transport segment, shipping traffic is expected to decline as a result of the delay in the recovery of shipments to resource rich countries. However, the company will work to further optimize operational efficiency and improve profitability.

(Billion yen)
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. The company will issue a dividend of ¥10 per share as planned as the interim division for the current fiscal year. In addition, it is planned to issue a year-end dividend of ¥10 per share, and there is no expected change to the full-year dividend of ¥20 per share.

October 31, 2018
Tadaaki Naito
Tadaaki Naito President