Iino Kaiun Kaisha, Ltd. (Iino Lines)

Transcription

1 Financial Results For the Year Ended March 31, Consolidated Iino Kaiun Kaisha, Ltd. (Iino Lines) Stock code: 9119 URL: Representative: Tomoyuki Sekine President Contact: Satoshi koyama, Group Manager of Accounting Group Telephone: Scheduled date of the annual general meeting of shareholders: June 28, 2011 Scheduled date to commence dividend payment: June 28, 2011 April 28, 2011 (Rounded to the nearest million yen) 1. Consolidated Financial Results for the Year Ended March 31, 2011 (April 1, 2010 to March 31, 2011) (1) Operating Results (The percentage figures represent changes from the previous corresponding period) Revenues Operating Profit Recurring Profit Net Income million yen % million yen % million yen % million yen % FY ,472 (3.3) 2,393 (41.4) 1,059 (52.4) FY ,031 (18.5) 4,086 (65.7) 2,225 (80.2) 180 (96.8) Note Comprehensive Profit or loss FY2010 1,221 millions yen(71.2%) FY millions yen(-%) Net income per share Net income per share, fully diluted Return on equity Recurring profit / total assets Operating profit / Revenues yen yen % % % FY FY Note: Investment gains or losses on the equity method: FY2010: 216 million yen, FY2009: (459) million yen (2) Financial Position Total assets Net assets 1 Shareholders equity ratio Net assets Per share million yen million yen % yen FY ,842 52, FY ,735 52, Note: Treasury stock: FY2010: 52,265 million yen FY2009: 52,240 million yen (3) Cash Flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash and cash equivalents at end of period million yen million yen million yen million yen FY ,993 (13,187) 1,946 13,091 FY ,353 (12,784) 3,170 13,728

2 2. Dividends Dividend per share Q1 Q2 Q3 Q4 Full year Total dividends paid (Full year) Payout ratio (Consolidated) Dividends / Net assets (Consolidated) yen yen yen yen yen million yen % % FY , FY FY (Forecast) Note: Forecast of dividends during FY2011 is undecided as of April 28, Forecast of Consolidated Earnings for the Year Ending March 31, 2011 (April 1, 2010 to March 31, 2011) (The percentage figures represent changes from the previous corresponding period) FY2011 Revenues Operating Profit Recurring Profit Net Income million yen % million yen % million yen % million yen % H1 (Apr-Sep) 37,300 (2.7) 0 - (1,000) - (1,000) - FY (Apr-Mar) 76, ,000 (16.4) 200 (81.1) 200 (69.4) Net income FY2011 per share yen H1 (Apr-Sep) (9.38) FY (Apr-Mar) 1.88 Appropriate Use of Earnings Forecasts and Other Important Information These materials contain various forward-looking statements and other forecasts regarding performance and other matters. Such statements are based information available at the time of preparation as well as certain reasonable assumptions. Actual results may differ materially from those expressed or implied by forward-looking statements due to a range of factors. For the assumptions underlying the earnings forecasts presented and other information regarding the use of such forecasts, refer to 1. Results for the Fiscal Second Quarter (three months ended September 30, 2009) page 3-4 in the "Operating Results and Financial Position" section. 2

3 Operating Results and Financial Position 1. Results for the Fiscal Year Ended March 31, 2011 In the fiscal year ended March 31, 2011 (fiscal 2010), the global economy continued its mild recovery on the back of economic stimulus measures in countries throughout the world as well as economic expansion in Asia and other emerging countries, particularly China. A number of downside risks emerged, however, including the spreading euro crisis stemming from southern Europe, rising prices of oil, corn and other commodities, and rising tensions in the Middle East and North Africa. The US economy continues to recover mildly, led by an increase in both personal spending and capital expenditure, as well as the effects of an accommodative monetary policy. However, unemployment remains high as in other industrialized countries, despite some signs of improvement. China s economy continued to expand, primarily driven by domestic demand. However, the pace of economic growth has cooled somewhat as the real estate bubble and heightened inflationary concerns have prompted the government to shift from an accommodative to a tighter monetary policy. In Japan, the economy showed signs of a pickup, primarily in capital expenditure and exports, but the situation remains adverse, highlighted by deflation, the strong yen, and continued high unemployment. On top of this, further concerns have been raised by the earthquake and tsunami disaster that hit eastern Japan in March and the ensuing incident at the Fukushima Daiichi Nuclear Power Plant. Amid this environment, the Company comprising the Oceangoing Shipping segment, the Regional Shipping Segment, and the Real Estate segment generated consolidated revenues of 74,472 million (down 3.3% year on year), consolidated operating profit of 2,393 million (down 41.4% year on year), consolidated recurring profit of 1,059 million (down 52.4% year on year), and consolidated net income of 654 million (up 263.3% year on year). Following is an overview of performance by segment. 1) Oceangoing Shipping In fiscal 2010, despite the recovery in demand for oil, especially from emerging countries, oil tanker and petrochemical product tanker freight rates languished as overall tonnage supply-demand fundamentals weakened due to supply pressure from completed newbuilds. Chemical tanker freight rates recovered as firm economic growth in China and Southeast Asia supported significant growth in Asian demand for petrochemical products, the main chemical tanker cargo. This led to a recovery in marine transport volume, including long-haul transport bound for Asia from Europe and the US, from the summer months onward. LPG tanker freight rates were firm due to a tightening of tonnage supply-demand in response to the start of new projects by countries in the Middle East to boost production. LNG tanker freight rates were initially soft, due to a delay in new projects in the first half of fiscal 2010 and a weakening of the tonnage supply-demand balance caused by a significant decline in LNG imports in the US in conjunction with increased production of shale gas. However, LNG tanker freight rates turned upward in the second half of fiscal 2010, as the cold winter in the northern hemisphere spurred an increase in LNG demand. 3

4 In the bulk carrier market, freight rates were stable, supported in the fiscal first half by demand for transport of steel raw materials and grains to China, but declined in the fiscal second half due to the increase in completed newbuilds and the drop in vessel demand in Australia due to flooding. In the Oceangoing Shipping segment, the Company ensured stable revenues in the Oil Tanker Division by keeping most of its vessels deployed on medium- to long-term contracts. The Company also worked to raise customer satisfaction vis-à-vis Company-managed vessels through joint efforts by operating divisions and vessel management divisions to provide high-quality vessel management services. The Chemical Tanker Division experienced a decline in contracts of affreightment on some routes, but transport was generally stable on the Company s main Middle East-to-Asia routes, and it secured new contracts of affreightment. Freight rates recovered, but this was not enough to cover the drop in revenues caused by yen appreciation and higher costs due to the surge in fuel oil prices. Amid this environment, the division worked to raise profitability in numerous ways. It renewed existing contracts on favorable terms, won new contracts of affreightment, efficiently deployed its fleet, and operated vessels at reduced speeds. It also rearranged tonnage by decommissioning unprofitable and superannuated vessels and replacing them with optimal vessel types. The Large Gas Tanker Division worked to secure stable revenues by deploying LPG tankers and LNG tankers on existing contracts. The LPG Tanker Division also worked to expand its fleet size and win new medium- to long-term contracts from domestic cargo owners. The Bulk Carrier Division achieved stable revenues from vessels hired to transport woodchips to paper makers and thermal coal to electric utilities, and also worked to earn revenues by aggressively booking cargo, especially on contracts of affreightment for coal and fertilizers. The division deployed its vessels in Asia (primarily Japan), the Pacific region, the Middle East, and South America, diversifying its routes, and endeavored to further increase profits by reducing vessel operating costs and efficiently deploying vessels. As a result, the Oceangoing Shipping segment earned operating profit of 1,062 million (down 65.2% year on year) on revenues of 60,861 million (down 4.2% year on year). 2) Regional Shipping In domestic transport, freight rates were firm as LPG demand during the winter months was robust and ethylene (which uses petrochemical gases as a raw material) production increased versus the previous fiscal year. International short-haul transport rates were firm, as the number of newbuilds was limited and transport demand in the Far East and Southeast Asia was strong. In domestic transport, the division adjusted shipping tonnage by docking tonnage during the summer months when LPG demand is low. The division also used some domestic vessels on international short-haul transport, as it aggressively worked to capture petrochemical gas exports to China and other countries. In international short-haul transport, the division continued to secure stable revenues by deploying most of its vessels on medium- to long-term contracts. The division also added two new 4

5 vessels to its fleet, eyeing stable transport and earnings in the future. As a result, the Regional Shipping Segment earned operating profit of 459 million (up 50.0% year on year) on revenues of 8,322 million (up 0.6% year on year). 3) Real Estate In fiscal 2010, office vacancy rates remained high, as despite some signs of an improvement in corporate earnings, the economic recovery continued to stall in its tracks. Additionally, office rents have yet to bottom out in the face of intensifying competition for tenants. The Real Estate Related Business Division also faced a deteriorating business environment in fiscal 2010, marked by corporate advertising budget cuts and weak magazine sales. The Real Estate and Leasing Division maintained stable occupancy rates, as it worked to provide high-quality service to tenants and thus resist rising vacancy rates. Reconstruction of the Iino Building (the Iino Group s head office) is progressing smoothly, with the building slated to open this autumn. The Real Estate Related Business Division, in addition to renting photo studio space, offers advertising, graphic design, photo retouching, and a wide variety of other services. The division continued working to retain existing customers while cultivating new customers. As a result, the Real Estate Segment earned operating profit of 873 million (up 20.1% year on year) on revenues of 5,308 million (up 1.7% year on year). Outlook for the Fiscal Year Ending March 31, 2012 (Fiscal 2011) The global economy is in the midst of a mild recovery, supported by economic growth in Asia, particularly China. Many downside risks remain, however, including high unemployment rates and fiscal unsoundness, particularly in developed countries. Amid this environment, the Iino Group believes that continued vigilance will be required in fiscal It expects the yen to remain persistently strong and does not anticipate a rapid recovery in the chemical tanker market. Accordingly, the Chemical Tanker Division has taken steady steps to adjust tonnage, including disposing of unprofitable and superannuated vessels and replacing them with optimal vessel types. The Real Estate Business continues to face a challenging leasing market, but we are keeping occupancy rates relatively high by providing high-quality service in existing office buildings. In addition, we have tentatively secured tenants for all floors of the Iino Building, which is scheduled to open this autumn. We therefore expect the Real Estate Business to gradually improve from the second half of fiscal The Company s current forecast for the fiscal year ending March 31, 2012 is as follows. Consolidated earnings forecast (full-year) Fiscal 2010 (actual) Fiscal 2011 (forecast) Change millions of yen (%) Revenues 74,472 76,000 (2.1) Operating profit 2,393 2,000 (16.4) Recurring profit 1, (81.1) Net income (69.4) Forecast assumes an exchange rate of 85 to US$1 and Singapore bunker price of $600/MT. 5

6 *The above forecast represents the Company s judgment based on currently available information and is therefore subject to potential risks and uncertainties. Actual results may differ from those expressed or implied by the above forecast due to changes in various factors. 2. Consolidated Financial Position 1) Assets, Liabilities, and Net Assets Total assets at fiscal year-end (March 31, 2011) were 184,842 million, an increase of 4,107 million from March 31, The increase was mainly attributable to an increase in construction in progress due to the ongoing Iino Building reconstruction and construction of new vessels, which more than offset a decline in vessels, buildings, and structures due to depreciation and asset sales. Liabilities totaled 131,971 million, at March 31, 2011, an increase of 3,963 million from March 31, The increase was mainly attributable to an increase in long-term borrowings related to the Iino Building reconstruction project. Net assets totaled 52,871 million at March 31, 2011, a decrease of 144 million from March 31, Although dividend payments and other factors decreased retained earnings by 413 million, accumulated other comprehensive income increased by 441 million owing to an increase in deferred hedge gains. As a result, the consolidated shareholders equity ratio was 28.3% at March 31, ) Cash Flows In fiscal 2010 (ended March 31, 2011), operating activities provided net cash of 10,993 million (versus 12,353 provided in fiscal 2009). This figure mainly comprised pretax income of 1,253 million and depreciation of 8,625 million. Investing activities used net cash of 13,187 million (versus 12,784 million used in fiscal 2009). This was chiefly because outlays of 29,193 million to acquire fixed assets, mainly vessels and real estate, exceeded proceeds of 15,762 million from sales of fixed assets, mainly vessels. Financing activities provided net cash of 1,946 million (versus 3,170 million provided in fiscal 2009). The net cash inflow stems mainly from a 3,196 million net increase in short- and long-term borrowings and bonds issued, partially offset by dividend payments of 1,065 million. As a result, cash and cash equivalents totaled 13,091 million at March 31, 2011 (versus 13,728 million at March 31, 2010). For reference: Cash flow indicators Fiscal year ended March 31, Shareholders equity ratio (%) Shareholders equity ratio at market value (%) Cash flow to interest-bearing debt (years) Interest coverage ratio (X) Notes: The above ratios were calculated as follows. Shareholders equity ratio: Shareholders equity / Total assets Shareholders equity ratio at market value: Market capitalization / Total assets Cash flow to interest-bearing debt: Interest-bearing debt / Operating cash flow Interest coverage ratio: Operating cash flow / Interest expense 1. All of the above ratios were calculated using consolidated financial statement data. 2. Market capitalization was calculated by multiplying the fiscal-year-end closing share price by the number of shares outstanding at fiscal year-end (net of treasury stock). 3. Interest-bearing debt is all debt, of the debt carried on the consolidated balance sheet, on 6

7 which interest is payable. 3. Management Strategy (1) Basic Management Strategy The Iino Group s management philosophy is based on the principle that securing safety is the foundation of our business operations. Guided by this philosophy, the Group strives to provide a stable supply of good services and products at fair prices while constantly seeking to reduce costs in all areas and pursuing efficient corporate management. In carrying out its management strategy, the Group will ensure that its operations comply fully with laws and regulations and demonstrate consideration for society and the environment. Core Businesses Capitalizing on the human and physical resources of its group companies, the Iino Group will continue to pursue its operations in the following three core businesses. Oceangoing Shipping: Maritime transportation of cargo such as petroleum products, petrochemical products, liquefied natural gas, liquefied petroleum gas, thermal coal, fertilizers, wood chips, and other basic materials Regional Shipping: Transport of liquefied natural gas, liquefied petroleum gas, petrochemical gases and other basic materials, primarily in domestic and adjacent waters Real Estate: Ownership, operation and management of rental office buildings, as well as operation of photo studios, primarily in central Tokyo (2) Medium- and Long-Term Management Strategies, Target Business Indicators and Prospective Challenges Fiscal 2010 would have marked the fourth year of ISG12 (Iino's Strategic Growth Plan to 2012), the medium-term business plan launched in fiscal ISG12 was formulated before the financial crisis, however, and Iino Group management determined that the current business environment was not conducive to achieving ISG12 s goals in a number of ways. As a result, as announced on April 14, 2011, management decided to formulate and put into effect new medium-term business plan before ISG12 s original expiration date. Titled IEG14 (Iino s Evolutionary Growth Plan to 2014), the new plan will run from April 2011 through March Fiscal 2010 was seen as a bridge year leading up to IEG14, and the entire Group worked together to formulate IEG14 s key points. During fiscal 2010, concentrated efforts were made to address those issues that could be worked on immediately. For example, in the chemical tanker business, IEG14 calls for enhancing the fleet to bolster resilience to market fluctuations. To this end, we disposed of unprofitable and superannuated vessels and replaced them with optimal vessel types. Also, in the real estate business, the construction of the Iino Building, which was one of the cornerstones of ISG12, has been progressing with its opening scheduled for this fall. During fiscal 2010, we tentatively secured tenants for all of the building s office floors. Under the new medium-term business plan, IEG14, the Iino Group will continue to make qualitative improvements to its two-pronged business platform encompassing the Shipping Business which comprises the Oceangoing Shipping and Regional Shipping segments and the Real Estate Business. Under IEG14, the Iino Group and its employees aim to evolve and grow together through contributions to society. In quantitative terms, the Iino Group will use operating profit to measure its growth and evolution, and management will focus on increasing operating profit. To achieve IEG14 s objectives, we specified three key issues as the plan s 3 7

8 pillars, and specified 5 cornerstones as bases to support these three pillars. The first of IEG14 s 3 pillars is to Restructure the Chemical Tanker Division. This will involve a number of initiatives to enhance profitability, including increasing the profitability of the mainstay Middle East routes, developing new core routes other than Middle East routes, bolstering cargo-booking capabilities through overseas joint ventures, and enhancing organizational strengths. Parallel to this, we will reduce the number of unprofitable vessels and diversify timing and sources of shipping tonnage in order to become more resilient to market fluctuations, as well as raise our cost competitiveness. IEG14 s second pillar is to Reinforce the Stable Earnings Base including the Real Estate Business. In the Real Estate Business, the Iino Building (scheduled to open this autumn) has tentatively signed up tenants for all offices. We will work to raise the quality of our building operations and management, including at existing buildings. In the dedicated vessel business (which continuously allocates the same vessels to specific customers), we will build frameworks to provide high-quality services primarily through Group-owned vessels and in-house Group ship management. IEG14 s third pillar is to Develop the Small- and Medium-Size Vessel Business to Capture Emerging Market Demand. In the Bulk Carrier Division, we will expand our fleet of Panamax and smaller vessels, especially Small Handy vessels (approximately 30,000 dwt), and we will develop routes with a focus on transporting raw steel materials. As an objective carried over from the previous medium-term business plan, we will also develop and strengthen small and medium-size gas tanker (the type used in our Regional Shipping Business) operations with a focus on deploying vessels in Asia. The 5 cornerstones that will support these 3 pillars are: Bolster Resilience to Market Fluctuations, Bolster Financial Base, Make Qualitative Improvements, Enhance Safety, and Reduce Environmental Footprint. Together with the 3 pillars, by laying these 5 cornerstones we hope to continuously become stronger as a corporate group. 8

9 Reformation Restructure the Chemical Tanker Division Increase profitability of Middle East route Develop new core route Boost cargo booking capabilities through Joint Ventures Enhance organizational strengths Reduce the number of unprofitable vessels Diversify sources of shipping tonnage Growth and Evolution Stabilization Reinforce Sable Earnings Base Enhance the Quality of the building operations and management Effectively utilize assets Expand dedicated vessel Business Growth Develop the Small Gas Tanker Business to Capture Emerging Market Demand Expand the Panamax and Small Handy Business Ramp up vessel deployment in the small- to medium-size gas tanker business in Asia Bolster Resilience to Market Fluctuations Bolster Financial Base Make Qualitative Improvements Enhance Safety Reduce Environmental Footprint 9

10 Numerical Targets (billions of yen) (For Reference) Fiscal 2010(1) Fiscal 2011 Fiscal 2012 Fiscal 2013 Mid 2010s Revenues Operating profit Recurring profit Net income Shareholders or higher equity Interest-bearing or lower debt Net D/E ratio or lower Operating CF Investing CF (41.0) (14.5) (5.0) (1) The forecast figures for fiscal 2010 are the consolidated forecasts noted in the Financial Results for the Nine Months ended December 31, 2010, announced on January 31, Market Assumptions Exchange rate /US$ Bunker oil US$/MT Panamax (2) 18,000 20,000 20,000 US$/Day Small Handy US$/Day (2) 13,000 14,000 14,000 (2) Market assumptions for Panamax and Small Handy carriers are based on the Pacific Round route. The forecasts of business performance and other forward-looking statements given in these materials reflect the Company s best judgment based on the information available at the time of preparation. These forward-looking statements are subject to various potential and underlying risks and uncertainties. Actual results may vary materially from forecasts due to changes in various factors 10

11 (1)Consolidated Balance Sheets As of March 31, 2011 (In million yen) As of March 31, 2010 Assets Current assets Cash and deposits 10,891 8,879 Notes and accounts receivable 5,344 4,370 Supplies 2,161 2,279 Merchandise Real estate held for sale Deferred and prepaid expenses 1,517 1,609 Deferred tax assets Refund of corporation tax claimed as a result of tax loss carry-back, not taxable Other current assets 4,563 7,488 Allowance for doubtful accounts (2) (19) Total current assets 24,945 25,115 Fixed assets Tangible fixed assets Vessels, net 56,012 63,239 Buildings and structures, net 11,297 12,010 Land 40,019 40,074 Construction in progress 35,638 22,349 Other tangible fixed assets, net Total tangible fixed assets 143, ,904 Intangible fixed assets Telephone subscription rights 9 9 Other intangible fixed assets Total intangible fixed assets Investments and other assets Investment securities 14,407 14,927 Long-term loans Deferred income taxes Other long-term assets 1,184 1,552 Allowance for doubtful accounts - (0) Total investments and other assets 15,991 16,875 Total fixed assets 159, ,620 Total assets 184, ,735 11

12 As of March 31, 2011 (In million yen) As of March 31, 2010 Liabilities Current liabilities Accounts payable 5,528 4,535 Current portion of bonds Short-term borrowings 20,665 15,885 Accrued expenses Income taxes payable Advances received 1,612 1,729 Reserve for bonuses Deferred tax liabilities Other current liabilities 3,358 2,018 Total current liabilities 32,798 25,191 Fixed liabilities Bonds Long-term borrowings 89,395 92,242 Reserve for employees' retirement benefits 1,180 1,290 Reserve for directors' retirement benefits Reserve for special repairs Leasehold deposits received 2,996 3,012 Deferred tax liabilities 1,524 1,573 Other fixed liabilities 2,977 3,229 Total liabilities 99, ,817 Total liabilities 131, ,008 Net assets Shareholders' capital Common stock 13,092 13,092 Additional paid-in capital 6,432 6,432 Retained earnings 33,362 33,775 Treasury stock (2,305) (2,303) Total shareholders' capital 50,580 50,995 Valuation and translation adjustments Net unrealized gains (losses) on other securities Deferred hedge gains (losses) 1, Foreign currency translation adjustments (116) (49) Total valuation and translation adjustments 1,685 1,244 Minority Interests Total net assets 52,871 52,727 Total liabilities and net assets 184, ,735 12

13 (2)Consolidated Statements of Operations Year Ended March 31, 2011/2010 (In million yen) Year Ended March 31, 2011 Year Ended March 31, 2010 Revenues 74,472 77,031 Costs and expenses 65,830 66,433 Gross profit 8,643 10,598 Selling, general and administrative expenses 6,250 6,512 Operating profit 2,393 4,086 Non-operating income Interest income Dividend income Silent partnership income Equity income of non-consolidated subsidiaries and affiliates Foreign exchange income Others Total 1,349 1,415 Non-operating expenses Interest expenses 2,657 2,771 Equity expense of non-consolidated subsidiaries and affiliates Loss on provision for doubtful accounts 0 6 Others Total 2,682 3,276 Recurring profit 1,059 2,225 Extraordinary profit Gain on sale of fixed assets 1,032 2,515 Gain on reversal of reserve for special repairs Gain on a state subsidy Cancellation fee for chatered ships Others - 46 Total 1,566 2,629 Extraordinary losses Loss on reconstruction of office building - 1,094 Loss on disposal of fixed assets 32 3 Loss on sale of fixed assets 43 1,705 Loss on impairment - - Loss on sale of investment securities - 1 Loss on write-down of investment securities Loss on cancellation of derivatives 69 - Cancellation fee for chatered ships Loss on adjustment for changes of accounting standard for asset retirement obligations 56 - Others Total 1,373 3,036 Income before income taxes 1,253 1,817 Income tax, inhabitants tax and enterprise tax Income tax adjustments (185) 1,409 Income before Minority interests Minority interests in income (loss) 5 50 Net income

14 (3) Consolidated Statements of Comprehensive Income(loss) Year Ended September 30, 2011 (In million yen) Year Ended March 31, 2011 Year Ended March 31, 2010 Income before Minority interests (loss) Other Comprehensive Income Net unrealized gains (losses) on other securities (179) - Deferred hedge gains (losses) Foreign currency translation adjustments (69) - Equity income of non-consolidated subsidiaries and affiliates (31) - Total of other Comprehensive Income(loss) Comprehensive Income(loss) 1,221 - (A breakdown of Comprehensive Income(loss) Comprehensive Income attributable to the parent company's shareholders 1,094 - Comprehensive Income attributable to the subsidiary company's shareholders

15 (4)Consolidated Statements of Changes in Shareholders' Capital Year Ended March 31, 2011 (In million yen) Year Ended March 31, 2010 Shareholders' capital Common stock Balance at the beginning of the period 13,092 13,092 Total changes during the period - - Balance at the end of current period 13,092 13,092 Additional paid-in capital Balance at the beginning of the period 6,432 6,432 Sale of treasury stock (0) (0) Total changes during the period (0) (0) Balance at the end of current period 6,432 6,432 Retained earnings Balance at the beginning of the period 33,775 35,035 Cash dividends (1,067) (1,440) Net income Total changes during the period (413) (1,260) Balance at the end of current period 33,362 33,775 Treasury stock Balance at the beginning of the period (2,303) (2,300) Purchase of treasury stock (2) (3) Sale of treasury stock 0 0 Total changes during the period (2) (3) Balance at the end of current period (2,305) (2,303) Total shareholders' capital Balance at the beginning of the period 50,995 52,258 Cash dividends (1,067) (1,440) Net income Purchase of treasury stock (2) (3) Sale of treasury stock 0 0 Total changes during the period (415) (1,263) Balance at the end of current period 50,580 50,995 15

16 Year Ended March 31, 2010 (In million yen) Year Ended March 31, 2009 Valuation and translation adjustments Net unrealized gains (losses) on other securities Balance at the beginning of the period 477 (143) Items other than shareholders' capital during the period, net (179) 620 Total changes during the period (179) 620 Balance at the end of current period Deferred hedge gains (losses) Balance at the beginning of the period 816 1,018 Items other than shareholders' capital during the period, net 687 (202) Total changes during the period 687 (202) Balance at the end of current period 1, Foreign currency translation adjustments Balance at the beginning of the period (49) (52) Items other than shareholders' capital during the period, net (67) 4 Total changes during the period (67) 4 Balance at the end of current period (116) (49) Total valuation and translation adjustments Balance at the beginning of the period 1, Items other than shareholders' capital during the period, net Total changes during the period Balance at the end of current period 1,685 1,244 Minority Interests Balance at the beginning of the period Items other than shareholders' capital during the period, net Total changes during the period Balance at the end of current period Total net assets Balance at the beginning of the period 52,727 53,395 Cash dividends (1,067) (1,440) Net income Purchase of treasury stock (2) (3) Sale of treasury stock 0 0 Items other than shareholders' capital during the period, net Total changes during the period 144 (668) Balance at the end of current period 16 52,871 52,727

17 (5) Consolidated Statements of Cash Flows Year Ended March 31, 2011 (In million yen) Year Ended March 31, 2010 Cash flows from operating activities Income before income taxes 1,253 1,817 Depreciation and amortization 8,625 9,989 Equity (income) expense of non-consolidated subsidiaries and affiliates (216) 459 Increase (decrease) in reserve for employees' retirement benefits (109) (210) Increase (decrease) in reserve for directors' retirement benefits (18) (43) Interest and dividend income (890) (1,004) (Gain) loss on write-down of investment securities Interest expenses 2,657 2,771 (Gain) loss on sale of tangible and intangible fixed assets (989) (811) (Increase) decrease in accounts receivable, trade (974) 664 Increase (decrease) in accounts payable, trade 995 (369) Other 2,093 (595) Sub Total 12,820 12,670 Interest and dividend received 904 1,029 Interest paid (2,670) (2,757) Income taxes (paid) refund (61) 1,411 Net cash provided by (used in) operating activities 10,993 12,353 Cash flows from investment activities Purchase of tangible and intangible fixed assets (29,193) (27,094) Sale of tangible and intangible fixed assets 15,762 16,060 Purchase of investment securities (13) (1,881) Sale of investment securities Other Net cash provided by (used in) investing activities (13,187) (12,784) Cash flows from financing activities Net increase (decrease) in short-term borrowings 211 (4,288) Proceeds from long-term borrowings 15,394 33,757 Repayment of long-term borrowings (12,109) (24,484) Proceeds from issue of bonds - 1,000 Payments for redemption of bonds (300) (1,200) Proceeds of treasury stock 0 0 Payments for treasury stock (2) (3) Cash dividends paid (1,065) (1,440) Cash dividends paid to minority shareholders (8) (4) Repayment of lease obligations (175) (168) Net cash provided by (used in) financing activities 1,946 3,170 Effect of exchange rate change on cash and cash equivalents (390) (98) Increase (decrease) in cash and cash equivalents (637) 2,641 Cash and cash equivalents at the beginning of the period 13,728 11,087 Cash and cash equivalents at the end of the period 13,091 13,728 17

18 (6)Business Segment Information Year Ended March 31, 2011 (April 1, 2010 to March 31, 2011) (In million yen) Oceangoing Shipping Regional Shipping Real estate Total Elimination or corporate Consolidated I. Revenues (1) External sales 61,374 7,790 5,307 74,472-74,472 (2) Inter-segment sales (513) (19) - Total 60,861 8,322 5,308 74,491 (19) 74,472 Operating profit (loss) 1, ,394 (-1) 2,393 II. Assets, depreciation & capital expenditures: Assets 77,608 5,067 77, ,308 24, ,842 Depreciation 7, , ,625 Capital expenditure 19,909 2,401 8,835 31, ,169 Year Ended March 31, 2010 (April 1, 2009 to March 31, 2010) (In million yen) Oceangoing Shipping Regional Shipping Real estate Total Elimination or corporate Consolidated I. Revenues (1) External sales 64,047 7,765 5,219 77,031-77,031 (2) Inter-segment sales (489) (23) - Total 63,558 8,276 5,219 77,053 (23) 77,031 Operating profit (loss) 3, , ,086 II. Assets, depreciation & capital expenditures: Assets 80,602 5,998 69, ,324 24, ,735 Depreciation 8, ,989-9,989 Capital expenditure 8, ,315 26, ,861 18