1.Qualitative information on quarterly results
(1) Review of operating results
During the fiscal first quarter ended March 31, 2023 (from April 1, 2022 to June 30, 2022), consolidated sales amounted to 673.0 billion yen (up 168.4 billion yen compared to the first quarter of the previous fiscal year), operating profit was 89.1 billion yen (increased by 36.1 billion yen), recurring profit was 377 .7 billion yen (increased by 224.1 billion yen), profit attributable to owners of the parent company amounted to 343.3 billion yen (increased by 192.2 billion yen).
Due to the good performance of OCEAN NETWORK EXPRESS PTE. LTD. (ONE), our equity affiliate, equity in earnings of unconsolidated subsidiaries and affiliates of 274.3 billion yen in non-operating revenue was recorded. Within this amount, equity in the profits of ONE subsidiaries amounted to 264.4 billion yen.
The variations in the average exchange rate between the US dollar and the yen as well as the average price of bunker oil during the first quarter of the current fiscal year and prior years are presented in the following tables.
Overview by business sector
Segment information for the three months ended June 30, 2022 (from April 1, 2022 to June 30, 2022) is as follows.
In the container shipping division, although ONE was impacted by overall supply chain disruptions caused by port congestion, as well as lockdowns in China and the situation in Russia and Ukraine, Freight remained strong and financial results were strong. In major trades, sailings were canceled in North American trade as turnaround times lengthened due to port congestion and cargo volumes declined due to blockages in China. As a result, pickups and usage have fallen compared to the same period last year. Also in European trade, removals and usage fell compared to the same period last year due to port congestion caused by the impact of closures and the accumulation of containers destined for Russia in the ports. On the other hand, freight rates were higher than at the same period last year on both lines of business, which boosted overall results.
At terminals in Japan, although handling volumes declined slightly due to delays in container ship travel schedules and the impact of closures, they were generally unchanged from the same period last year. last. At overseas terminals, handling volumes decreased compared to the same period last year due to the sale of several terminals in North America.
As a result of the above, profit increased on the back of higher revenues across the Liner Trade business compared to the same period last year.
Air freight company
In the air freight business, freight volumes slowed slightly due to the impact of lockdowns in China and other factors. Due to the widespread suspension of flights on the Shanghai route and the cancellation of flights on the Europe route due to the situation in Russia and Ukraine, the space provided and the shipment volumes were lower than plan. initial. However, freight rates remained high due to strong demand for transportation of semiconductor manufacturing equipment and renewed long-term contracts under favorable market conditions.
As a result of the above, profit increased on the back of higher revenues across the air cargo business compared to the same period last year.
In the air freight forwarding business, although tight supply and demand conditions have started to ease following the return of international passenger flights, selling prices have evolved at high levels compared to the same period last year. As a result, some level of profit was achieved despite lower handling volumes year over year caused by the impact of the lockdowns in China and other factors.
In the ocean freight forwarding business, handling volumes were down from the same period last year due to slower shipments caused by lockdowns and other factors, but profit levels remained firm due to persistently high selling prices and efforts to develop sales of ancillary services such as customs clearance.
In the contract logistics business, although labor and energy costs skyrocketed particularly in Europe and the United States, handling volumes increased compared to the same period last year thanks to active shipments mainly due to strong demand for consumer goods.
In the cabotage business, although handling volumes fell on several services, they increased in the ferry business, and the overall financial results benefited from the depreciation of the yen and the surge in feeder freight rates.
As a result of the above, profit increased due to higher revenues across the logistics business compared to the same period last year.
bulk shipping company
In the automotive transportation division, although automotive production volumes declined due to the shortage of automotive components caused by COVID-19 and the global shortage of semiconductors, vessel utilization was improved by optimizing the vessel deployment plan and navigation schedules. As a result, transportation volumes remained generally unchanged compared to the same period last year and financial results benefited from the exchange rate. In addition, the purchase of environmentally friendly vessels is actively promoted, and the second LNG-powered car and truck transporter has entered into service. In the automotive logistics activity, following the evolution of the commercial environment, the scope of activity of certain regions was reviewed and actions were taken to increase profitability while reorganizing the portfolio, in particular by acquiring shipments from China. At the same time, preparations were made for the opening of the finished car terminal in Egypt and efforts were made to develop new businesses.
In the Dry Bulk division, the Capesize market temporarily recovered after the end of the seasonal market correction in late April, when increased ship wait times in China due to shutdowns combined with more active coal shipments. This non-seasonal rise in market levels was then followed by a rapid fall. From June, the market fell further as worries about slowing global economic activity grew, and the market trended at lower levels than the same period last year. In the Panamax segment, strong grain and coal freight volumes kept markets at higher levels than a year earlier through May. Thereafter, market levels began to decline alongside the deterioration of the Capesize market, but overall the market moved to levels above the same period last year. Also, in the
The Handymax and Handy markets, cross trade, especially from the Pacific Ocean to the Atlantic Ocean, became more active and shipments of small bulk cargoes were strong causing the markets to trend at levels above the same period last year. In this environment, alongside securing revenues through the use of futures contracts to minimize the impact of market fluctuations, efforts have been made to stabilize revenues by securing long-term contracts and reducing costs. through efficient operations.
In the energy division, the balance between supply and demand for VLCC (Very Large Crude Carrier) did not improve and the markets remained at historically low levels. In the petrochemical tanker market, due to the impact of the situation in Russia and Ukraine, the origin of shipments to Europe shifted from Russia to the United States and India, resulting in longer sailing distances. The subsequent decline in the supply of transmission capacity led to tighter supply and demand conditions, resulting in significantly higher market levels compared to the same period last year. In the VLGC (Very Large LPG Carrier) market, the balance between supply and demand has tightened due to congestion in the Panama Canal and strong freight volumes to Europe despite seasonally higher demand low, and the market moved to higher levels than the same period last year. In the LNG carriers, the results are stable thanks to the support of long-term contracts which generate stable revenues. In addition, in offshore, FPSOs (Floating Production, Storage and Offloading) and drillships were stable.
As a result of the above, the entire bulk shipping business saw increased profits on the back of higher revenues
compared to the same period last year.
In addition, in the energy business division, an extraordinary loss of approximately 17.8 billion yen was recorded in the LNG transportation-related LNG carrier business involving the Sakhalin 2 project due to the deteriorating business environment. caused by the situation in Russia and Ukraine.
Real estate and other business
In the real estate segment, profit decreased due to lower revenues compared to the same period last year following the partial transfer of shares of a subsidiary during the last financial year.
In Other Business Services, although some manufacturing businesses did not perform as well as last year due to the impact of higher oil prices, the strong performance of the fuel sales business bunker and marine equipment supply sales activity boosted overall results. In the cruise business, operations were suspended at the end of March due to a problem with the electrical equipment on board the ship, but cruises resumed from the beginning of June. As a result of the above, Other Business Services revenue increased compared to the same period last year, and a profit was recorded.
Source: Nippon Yusen Kabushiki Kaisha