October 16, 2018
To Whom It May Concern,
Kawasaki Kisen Kaisha, Ltd.
IR & PR Group
Mitsui O.S.K. Lines, Ltd.
Corporate Communication Division
Nippon Yusen Kabushiki Kaisha
IR Group
Notice of Revisions in First Half and Full Year Consolidated Business Forecasts ofIntegrated Container Shipping Operating Company Ocean Network Express Pte. Ltd.
Ocean Network Express Holdings, Ltd. (hereinafter referred to as “ONE Holdings,” which wasestablished by Kawasaki Kisen Kaisha, Ltd., Mitsui O.S.K. Lines Ltd., and Nippon Yusen
Kabushiki Kaisha (hereinafter referred to as “the three parent companies”) as a holdingcompany for the integration of the three parent companies’ container shipping businesses,
commenced the business in April 2018 through its subsidiary, the integrated business operatingcompany Ocean Network Express Pte. Ltd. (hereinafter referred to as “ONE”).
ONE Holdings and ONE have engaged in the businesses by steadily creating synergistic effects
through the business integration to achieve profitability from the initial year after thecommencement of services. However, the three parent companies have received a report fromONE Holdings of a downward revision in ONE’s first half and full year consolidated business
forecasts.
Although ONE is the equity-method company of each of three parent companies, thecompanies today announced the revisions as follows to ONE’s consolidated financial forecasts
announced on July 31, 2018, in light of the impact that ONE’s revisions will have on theconsolidated financial forecasts of each parent company.
Meanwhile, each of the three parent companies will individually disclose any revision to its
consolidated financial forecasts, if necessary.
1. Revisions to ONE’s consolidated business forecast for the first half of FY2018 (April 1, 2018
to September 30, 2018)

Revenue

Profit/Loss after Tax

US$ million

US$ million

Previous Forecast (A)5,442-38

Revised Forecast(B)5,030-310

Change (B-A)-412-272

Change (%)

-7.5%

-

Reference: Assumption of bunker prices: Previously US$440.00, currently US$434.00

2. Revisions to ONE’s consolidated business forecast for FY2018 (April 1, 2018 to March 31,2019)
Revenue

Profit/Loss after Tax

US$ million

US$ million

Previous Forecast (A)12,254

110

Revised Forecast(B)11,000-600

Change (B-A)-1,254-710

Change (%)-10.2%-

Reference: Assumption of bunker prices: Previously US$454.00, currently US$451.00

3. Reason for revision of forecast
For the first half of the fiscal year, synergistic effects of the business integration have emerged
steadily. On the other hand, liftings and utilization dropped due to the impact of teethingproblems immediately after the commencement of services in April of this year. ONE sought toregain lost ground during the peak season from July to September, but liftings and utilization
remained lower than the outlook because the negative impact remained on its main Asia-North
America routes and Intra-Asia routes. ONE made a downward revision in the previously
announced forecast due to the decrease in revenue resulting from the above-mentioned lower
liftings and utilization, with additional negative effects from the higher cost of returning
containers brought on by decreased liftings on backhaul voyages (from North America to Asia,
Europe to Asia, etc.).
The teething problems regarding ONE’s services have already been resolved, and both ONE
Holdings and ONE are working earnestly to restore the trust of customers and further improve
service quality. However, liftings and utilization are still on the way to recovery, and the target foradditional cost reduction to address increased bunker prices, is expected to be lower than thetarget in the previously announced forecast. Therefore, ONE made a downward revision in thepreviously announced full-year business forecast as well.

[Note] The future forecast described above is issued on the basis of currently available
information as of the announcement date. Please note that the actual results may differ fromthis forecast due to various factors in the future.

(Attachment) Supplemental Explanation
Q1

Can you provide details on specific factors and specific routes responsible for thedownward revision? What are the results for liftings and utilization for the second quarterof the fiscal year?

A1

The three parent companies will disclose details including numbers on the day when eachof them announces second quarter financial results, upon compiling and analyzing thesedetails. Nevertheless, the first factor behind the downward revision is the stagnation ofliftings and utilization, and the second is the underachievement in the additional cost
reduction to address increased bunker prices, which are included in the full-year forecast
announced at the time of the first quarter financial results.

Q2

Can you elaborate on the teething problems regarding bookings immediately after thecommencement of services?

A2

Booking reception and documentation operations were delayed because ONE staff were
not completely familiarized with the newly introduced IT system, and the staff were shorthanded. This caused significant inconvenience for customers. Issues such as the staff’s
skill level and personnel shortages have already been addressed, and their operations
have returned to normal.

Q3

Is there any concern about underachievement of the synergic effects from the businessintegration?

A3

The synergistic effects for the initial year turned out to be higher than the initial outlook.
The factors for the downward revision are due mainly to stagnation in liftings andutilization, and underachievement of the additional cost-reduction plan to address risingbunker prices.

Q4

Have you already factored in the impact of the U.S.-China trade friction?

A4

A certain degree of that impact is included in the second half outlook in consideration ofcurrent trends in cargo trade.

Q5

Wasn’t it necessary to make a downward revision at the time of announcing the firstquarter financial results (end of July of this year)?

A5Liftings and utilization were expected to improve in the peak season starting from Julyand continuing through September at the time, but consequently, ONE did not achievethese targets.

Q6

Does ONE plan to make revision in the forecast for the FY2019 and FY2020 businessplans, which were disclosed before?

A6

ONE will determine the need to revise the plan upon assessing the situation.