Financial Highlights
Brief Report for
F i s c a l Ye a r 2 0 2 2

May 8 th, 2023

1∎A. Financial Highlights for Fiscal Year 2022
A-１

︓Financial Results for FY2022

A-２

︓Financial Results for FY2022 by Segment

A-３

︓Key Factors of Improvement for “K” Lineʼs Own Businesses in FY2022(Full-year results comparison with the previous year)∎B. Forecasts and Initiatives for Fiscal Year 2023

Index

B-１

︓Forecasts for FY2023 and Key Factors

B-２

︓Forecasts for FY2023 by Segment

B-３

︓Key Factors for “K” Lineʼs Own Businesses in FY2023(Full-year results comparison with the previous year)∎C. Status and Progress of Medium-term Management Plan
C-１

︓Changes in the business environment

C-２〜７︓Capital Policy

C⁻８〜11

︓Business Strategy

C⁻12〜14

︓Functional Strategy

Reference: Schedule for Business Briefings∎Appendix. Index table etc.
（Market Results and Assumptions/ Market Exposure）

２
2

A. Financial Highlights
for Fiscal Year 2022

3

A. Financial Highlights for Fiscal Year 2022

A-１︓ Financial Results for FY2022∎ Financial Results FY2022（billion yen）

FY2022

FY2021Total(a)-(b)(b)Operating Revenues
and Profit/Loss

1Q

2Q

1H

3Q

4Q

2H

Operating Revenues

228.5

254.4

482.9

245.9

213.8

459.7

942.6

756.9

185.6

Operating Income/Loss

18.9

34.1

53.0

27.6

-1.7

25.9

78.8

17.6

61.1

Ordinary Income/Loss

267.4

300.1

567.5

74.4

48.9

123.3

690.8

657.5

33.3

Net Income/Loss Attributableto Owners of Parent

266.6

298.8

565.4

72.8

56.6

129.4

694.9

642.4

52.4

¥126.49 ¥136.64 ¥131.56 ¥143.98 ¥133.17 ¥138.57 ¥135.07¥112.06¥23.01$551$218

Exchange Rate(\/$)

Bunker Price(/MT)

$821

$878

$850

$727

$650

$688

Total
(a)

$769

∎ Key Factors（year-on-year comparison）‣ Operating income increased mainly due to higher transportation demand in the Dry Bulk segment and economic recovery
following the end of the COVID-19 pandemic in the Product Logistics segment including Car Carrier Business.
‣ Containership Business operated by equity-method affiliate OCEAN NETWORK EXPRESS PTE. LTD. (ONE) posted higher ordinary
and net income as market conditions were at a high level in the first half. This was amid robust cargo demand, in addition to theimpact of exchange rate fluctuations.

∎ Key Financial Indicator
Indicators
Equity CapitalInterest-Bearing
Liability

DER
Equity Ratio

FY2022(c)

1,515.3
351.6
23%
74%

（billion yen）
FY2021
(d)

884.6
423.5
48%
56%

(c)-(d)

630.7
-71.9
-25 points
18 points∎ Shareholderʼs return
Dividend︓

The year-end dividend forecast for the period under review is 300
yen per share. When combined with the interim dividend of 100
yen per share, the full-year dividend is expected to be 400 yen
per share. （Based on shares after stock split*1）

Share buy-back ︓ “K” LINE acquired 35.236 million of its own common shares
between November 8, 2022 and March 24, 2023. As of March 29,
2023, 33.536 million of these shares have been cancelled, whichis equal to 11.80% of the Companyʼs total issued shares before
this cancellation *2.

*1 The note is made taking the effect of stock split implemented on October 1, 2022 into consideration.
*2 For the details, please refer to “Notice Regarding Completion of Cancellation of Treasury Stock” announced on March 29, 2023.

4

A. Financial Highlights for Fiscal Year 2022

A-２︓ Financial Results for FY2022 by Segment∎ Financial Results for FY2022 by Segment（billion yen）

FY2022Business Segment(Upper row: Operating Revenues)(Lower row: Ordinary Income/Loss)

84.6

87.0

171.6

76.2

64.5

140.7

Total
(e)
312.2

15.0

10.9

26.0

-2.9

-1.4

-4.3

21.6

23.7

-2.1

24.7

26.0

50.8

26.2

23.2

49.4

100.2

89.7

10.4

5.8

3.3

9.2

0.1

0.5

0.6

9.8

4.7

5.0

115.7

138.9

254.6

141.3

123.8

265.1

519.7

380.1

139.5

248.8

288.1

536.9

79.0

54.1

133.1

670.0

640.8

29.2

11.9

12.5

24.4

12.8

12.0

24.8

49.3

41.7

7.6

238.0

266.0

504.0

60.7

42.8

103.5

607.4

623.8

-16.4

3.4

2.5

5.9

2.2

2.1

4.3

10.3

10.5

-0.2

0.1

0.4

0.5

0.0

0.2

0.2

0.8

-0.1

0.9

-

-

-

-

-

-

-

-

-

-2.4

-2.6

-5.0

-1.9

-4.6

-6.5

-11.4

-11.7

0.2

228.5

254.4

482.9

245.9

213.8

459.7

942.6

756.9

185.6

267.4

300.1

567.5

74.4

48.9

123.3

690.8

657.5

33.3

1Q

Dry Bulk
Energy Resource
Transport
Product Logistics
Containership
Other
Adjustment
Total

2Q

1H

3Q

2H

4Q

∎ Key Factors by Segment (year-on-year comparison)‣ Dry Bulk‧

‣Energy Resource Transport

Although demand in the dry bulk market remained strong in
the first half, it decreased in the second half. This stemmed
from stagnating cargo movements caused by the zero-COVID
measures in China. Towards the end of the fiscal year, themarket conditions for both Cape and Panamax and smaller
sizes

entereda

FY2021Total(e)-(f)
(f)
276.4
35.7

recoveryphase.

This

was

based

‧

LNG Carrier, Thermal Coal Carrier, VLCC (Very Large
Crude Carrier) and LPG Carrier‣Product Logistics‧

In Car Carrier Business, although carmakers in part saw affects to
production and delivery due to factors such as the semiconductor

Businesses secured

and automotive parts shortage, our earnings rose thanks to anstable profits backed by medium- to long-term

improvement in vessel operation efficiency and profitability as

charter contracts.

robust cargo demand continued.
‧

ONE showed strong performance in the first half thanks to highonfreight rates. Short-term rates fell in the second half of the year

expectations of an economic recovery after Chinaʼs zero-COVID

along with supply chain normalization, which caused a recovery inpolicy was eliminated.

the supply of ships and a decline in transport demand. Nevertheless,ONEʼs full-year performance remained as strong as in the previous
year.

5

A. Financial Highlights for Fiscal Year 2022

A-３︓Key Factors of Improvement for “K” Lineʼs Own Businesses
in FY2022 (Full-year results comparison with the previous year)
FY2021

Dry Bulk

Energy Resource
Transport

Product Logistics-2.1bln

5.0bln45.6bln(excl. Containership)

Ordinary
Income/Loss(billion yen)

➂

100.0

12.4
80.0

①

60.0

②
1.0

1.3

40.0

11.9

45.5bln

20.0① Dry Bulk

FY2022• Results were seen from efforts to realize fleet
optimization through structural reforms, alongwith measures to maintain efficient vessel
deployment and reduce operating costs.
• Expanding stable earnings by acquiring new
medium- to long-term contracts based on astronger customer-oriented sales system.

94.0bln
14.7bln② Energy Resource Transport

17.7• Ensuring stable earnings through medium- tolong-term contracts.

31.5bln• Enhancing profitability by withdrawing from
unprofitable businesses.

15.5

2.4bln1.9
2.2➂ Product Logistics (excl. Containership)
Car Carriers- 15.445.5bln

improvement for "K" Line's own businesses
excluding exchange rate effects+33.8bln

0.0(Total improvement of ¥48.5 bln
when the foreign exchange impact is included)

Exchange rate impact

31.5bln

14.7bln• Dry Bulk

︓

1.3bln• Energy Resource Transport ︓1.0bln• Product Logistics

︓

Own BusinessProfitability improvement

12.4bln*2Market conditions, other2.4bln• Effect of business measures*1:28.1bln•Dry Bulk: -15.4bln• Effect of structural reform:3.3bln•Energy Resource Transport: 2.2bln•Product Logistics: 15.5bln• Profitability improved due to rate restorations.
• Improving fleet competitiveness by securing large
size vessel.
• Cargo volumes continued their post-pandemic
recovery, and the tight supply and demandsituation remains.
• Results were seen based on efforts to strategicallypursue new and high-and-heavy cargo*3 contracts,
while maintaining space for existing cargo.
• Profitability improved thanks to continuing efforts
to enhance vessel operation efficiency, mainly
through route rationalization.

Short sea and coastal/Port /Logistics• Improvements were seen in the short sea andcoastal / logistics businesses.
• In addition to market demand remaining high forthe short sea and coastal business in particular,
profitability improved due to measures such as
withdrawal from unprofitable routes.

*1 acquisition of new contracts, ship allocation efficiency etc. *2 including impact of oil prices. *3 Oversized cargo such as construction and agricultural machinery, and rail vehicles

6B. Forecasts and Initiatives

for Fiscal Year 2023

7

B. Forecasts and Initiatives for Fiscal Year 2023

B-１︓Forecasts for FY2023 and Key Factors∎ Forecasts for FY2023（billion yen）

FY2023
1H
2H
Forecast Forecast
Operating Revenues
434.0
436.0
Operating Revenues
and Profit/Loss

Total
(g)
870.0

FY2022Total(g)-(h)
(h)
942.6
-72.6

Operating Income/Loss

43.0

42.0

85.0

78.8

6.2

Ordinary Income/Loss

66.0

64.0

130.0

690.8

-560.8Net Income/Loss Attributableto Owners of Parent

62.0

58.0

120.0

694.9

-574.9¥125.59 ¥125.00 ¥125.29
$656
$701
$679

¥135.07$769-¥9.77-$91

Exhange Rate(\/$)
Bunker Price(/MT)∎ Key Factors（year-on-year comparison）‣ Operating income is expected to increase by 6.2 billion yen compared to FY2022. This is based on steady
performance anticipated for Car Carrier Business, despite the softening of the dry bulk market.
‣ Ordinary income is expected to be 130.0billion yen as the containership market gradually stabilizes when comparedto FY2022.

∎ Key factor assumption‣Yen-US$ exchange rate ¥125.29/$（average for FY2023）‣Bunker price∎ Estimates sensitivity (12 months)‣Yen-US$ rate: each ¥1 weaker(stronger) adds (subtracts) ± ¥1.5bln$679/MT‣Market assumption
Please refer to Appendix‣Bunker price: each $10/MT down (up)adds (subtracts) ± ¥0.1bln*Exchange rate fluctuations related to equity
in earnings of subsidiaries, “ONE” is included.

∎ Shareholderʼs return▸ The planned shareholder return for FY2023 is 200 yen per
share, which is a basic dividend of 120 yen per share plus
an additional dividend of 80 yen per share.
▸ An additional shareholder return of 50.0 billion yen (min.)is planned for fiscal 2023.
➡ details︓C-6 【Capital Policy】︓Return to Shareholders (pg.17)

8

B. Forecasts and Initiatives for Fiscal Year 2023

B-２︓Forecasts for FY2023 by Segment∎ Forecasts for FY2023 by Segment
FY2023
1H
2H(Lower row: Ordinary Income/Loss) Forecast Forecast
131.0
126.0
Dry Bulk
6.0
6.0
Energy Resource
44.0
45.0
Transport
3.0
5.0
254.0
260.0
Product Logistics
61.0
57.0
26.0
25.0
Containership
27.0
23.0
5.0
5.0
Other
0.0
0.0
Adjustment
-4.0
-4.0
434.0
436.0
Total
66.0
64.0

(billion yen)

Business Segment(Upper row︓Operating Revenues)

Total
(i)
257.0
12.0
89.0
8.0
514.0
118.0
51.0
50.0
10.0
0.0
-8.0
870.0
130.0

* Oversized cargo such as construction and agricultural machinery, and rail vehicles

FY2022Total(i)-(j)
(j)
312.2
-55.2
21.6
-9.6
100.2
-11.2
9.8
-1.8
519.7
-5.7
670.0
-552.0
49.3
1.7
607.4
-557.4
10.3
-0.3
0.8
-0.8
-11.4
3.4
942.6
-72.6
690.8
-560.8∎ Key Factors by Segments (year-on-year comparison）‣ Dry Bulk‧‧

The Cape market is expected to remain firm. This isbased on anticipated tightening of supply anddemand as economic activity gathers speed in China,
and on limited capacity to complete new vessels.
The “K” Line Group will continue to improve its
profitability by appropriately managing market
exposure
andenhancingvesseldeployment
efficiency.

‣ Energy Resource Transport‧ LNG Carrier, Thermal Coal Carrier, VLCC (VeryLarge Crude Carrier), and LPG Carrier Businesses
are expected to secure stable profits backed bymedium- to long-term charter contracts.

‣ Product Logistics‧ While geopolitical risks and the possibility of global
economic stagnation remain for Car Carrier
Business, vehicle production and shipments are
expected to continue recovering from the previous
year due to a greater supply of semiconductors andauto parts. We will continue to promote various
measures such as increasing high-and-heavy cargovolume. At the same time, we will maintain fleet
and vessel deployment flexibility allowing rapid
response to changes in global economic trends andcargo movements.
‧ For Containership Business, freight rates are
expected to settle down as supply chains normalize.
Uncertainty in the global economy is predicted tocontinue, based on worldwide inflation and soaring
energy prices, rising interest rates especially in the
United States, and geopolitical risks in Europe andAsia. ONE will maintain steady business operations,while monitoring the economic environment andtaking responsive measures based on demand
trends.
9

B. Forecasts and Initiatives for Fiscal Year 2023

B-３︓ Key Factors for “K” Lineʼs Own Businesses
in FY2023 (Full-year results comparison with the previous year)
FY2022

Temporary
Factors *-11.5bln

FY2022(excl.
Temporary
Factors)

Dry Bulk

EnergyResource
Transport

Product Logistics(excl.
Containership)-7.7bln

0.8bln12.4bln

Dry Bulk
FY2023
Forecast

Ordinary
Income/Loss(billion yen)•

We will secure stable earnings by continuing
and increasing the number of medium- to longterm contracts.

•

To counter the impact of the softening dry bulk
market, we will work on profitability
improvement measures, such as enhancing
vessel operation efficiency and reducing costs.

•

Given the growing need for environmental
measures, we will actively promote sales
activities that make the most of our strong
business foundation and high transport service
quality. We will expand stable earnings byadding more medium- to long-term contracts
and implement appropriate risk control.

Energy Resource Transport•“K” Line will ensure stable earnings throughmedium- to long-term contracts.

Product Logistics (excl. Containership)

Car Carriers

840億円
94.0bln

82.5bln•

88.0bln••

Improving profitability through rate
restorations
We will continue efforts to optimize our fleet
and enhance vessel operation and deployment
efficiency
While geopolitical risks and the possibility of
global economic stagnation remain for the
automobile sales market worldwide, vehicle
production and shipments are expected tocontinue recovering from the previous year due
to a greater supply of semiconductors and autoparts.

Short sea and coastal/Port /Logistics••

In the Coastal and Short Sea business,earnings are expected to deteriorate due toworsening market and cargo conditions.
Nevertheless, we will strive to secure stablecargo business including medium- to long-term
contracts for biomass fuel transport.
Promoting business through collaboration
among our subsidiary companies to utilize theirknowledge and experience and to createsynergies between businesses within the Group* Temporary factors include the impact of exchange rate fluctuations and changes in the method for allocating general and administrative expenses and other charges.

10

C. Status and Progress of

Medium-term Management
Plan

11

C. Status and Progress of Medium-term Management Plan

C-１︓ Changes in the business environment
The global business environment will remain uncertain due to factors such as economic decoupling,
continued concerns about downward pressure on the global economy, and energy policy developments
in various countries

Economic
decouplingExternal
Environment• Economic separation due to
conflict between the United States
and China, as well as Russiaʼs war
in Ukraine• Continued geopolitical risk

Anticipated
Risks and
Opportunities• Concern about impacts on trade• Concern about impacts on resource
supplyGlobaleconomyEnergypolicies• Unstable economic conditions due
to interest rates rising andremaining at high levels• Continued emergence of negative
economic forecasts, including the IMFʼslowering of its economic growth outlook• Fluidity in national energy policies
concerning target energy mixes,
including renewable energy, nuclear
power, and fossil fuels, etc.
• Application of treaty on new CO2
emission regulations to large oceangoing vessels• Slowdown of the real economy due
to rising procurement costs and otherfactors, and the negative impact onpurchasing power• Soaring energy prices• Continuation of global inflationarypressure• Future demand for transporting new
fuels• Increase in benefits of environmentallyfriendly vessels due to restrictions on
output of existing vessels and thenecessity to make modifications toimprove fuel efficiency• Impact of the expansion of industries
covered by the EU-ETS*

Action Based on
the Medium-termManagement Plan

• Realizing growth by considering the emissions reduction and decarbonization of the Company and society as a business opportunity
based on the long-term management vision• Strengthening earning power through resource allocation according to the characteristics of each business based on the portfolio strategy• Working with customers to respond to “changes in the business environment” and the “energy mix transition phase”• Strengthening of safety and quality management systems as a shipping company supporting global social infrastructure* EU-ETS︓EU Emission Trading System

12C. Status and Progress of Medium-term Management Plan

C-２【Capital Policy】︓ Capital Policy Progress
Maintaining both capital efficiency and financial soundness based on an awareness of optimal capital
structure and cash flow
Improving corporate value by proactively returning profits to shareholders after investing for growth• Performance under the current five-year medium-term plan will be based on the improvementof “K” Lineʼs own businesses with a focus on the Product Logistics segment. According to thelatest earnings forecast, cumulative operating cash flow is expected to exceed theforecast made at the beginning of fiscal 2022 by more than 200.0 billion yen.

Cash
Allocation• The plan is to return to shareholders operating cash flow that exceeds the initial forecast, by
distributing at least 500.0 billion yen during the period of the medium-term plan. This
will be done after implementing the business investment necessary to improve
corporate value. Also, We will always maintain awareness of the optimal capital structure andensure capital efficiency and financial soundness.

Business
Investment
Plan

Shareholder
Return Policy
ReturnDelivery Plan

• Investments necessary to improve corporate value will be made without relaxing
investment discipline. Approximately 80% of the total funds will be allocated mainly
to the businesses with the role of driving growth, and an investment increase ofabout 110.0 billion yen is planned during the period of the medium-term plan.
• Approximately 60% of these funds will be allocated to environmental investments,
and we will strive to gain a competitive advantage by seizing the opportunity to promoteemissions reduction and decarbonization measures.

Return Policy
Dividend
Additional
Shareholder
returns

The period of themedium-term
management plan

FY2023

Initiatives to further raise
the level of our business
management are part of ourcapital policies. Throughthese efforts, we will
enhance and promote ourbusiness portfolio and cash
flow management with theaim of improving the priceto-book ratio. This will bedone by adopting businessspecific management
indicators (ROIC, EVA, etc.)that promote awareness ofcapital costs.

 Thanks to surplus operating cash flow, we have raised our planned total shareholder returns during theperiod of the medium-term plan to a minimum of 500.0 billion yen. This revises the scope of our previousplan, namely, from a minimum of 400.0 billion yen to a maximum of 500.0 billion yen.
(For fiscal 2021-22, 250.0 billion yen of the total have been returned to shareholders. For fiscal 2023-26, 250.0 billion
yen or more will be returned.) The basic dividend for the remainder of the medium-term plan period (fiscal 2023-26) will be 120 yen per share In fiscal 2023, we plan to pay a dividend of 200 yen per share with an additional dividend of 80 yen per
share.
 Additional shareholder returns of 110.0 billion yen are planned for the remainder of the medium-term
management plan period.
 Of the total, at least 50.0 billion yen is earmarked for distribution in fiscal 2023.

Always maintaining awareness of optimal capital structure and cash allocationaccording to the medium-term management plan, along with capital efficiency andfinancial soundness, and striving to further enhance corporate value

13

C. Status and Progress of Medium-term Management Plan

C-３【Capital Policy】︓ Earnings targets and performance progress
Focusing on businesses with role of driving growth, we will work to achieve ourearnings targets ahead of schedule.
Total“K” Lineʼs Own Businesses
Strong start for the first year of themedium-term management plan.
Good performance in the product logistics
segment is expected to continue in thesecond year as well.

Efforts will be made for steady achievementof the earnings targets in the medium-term
management plan ahead of schedule

Total140.0
Ordinary
Income/Loss(billion yen)

83.3

80.0

70.0

70.0

34.0
Containership
Business

The businesses
with role ofdriving growth

Other

FY2021

FY2022

FY2023(Forecast)〜FY2026

14

C. Status and Progress of Medium-term Management Plan

C-４【Capital Policy】︓Cash Allocation
Since the medium-term management plan was announced, we now expect to exceed planned operating cash flow by 200.0 billion
yen during the medium-term management plan period.
We plan to provide shareholder returns of 500.0 billion yen or more after making business investments necessary to improve
corporate value.

Approach to resource
allocation for surplus cash flow

Operating cash flow is expected toincrease by 200.0billion yen compared toinitial plan announcement due toimproved performance.
Operating CF
200.0 billion yen~

財務CF

財務CF

200.0 billion yen~

Financial CF

Strengthening
the financial baseStrengthening
the financial baseFinancial CF

Operating CF~1,200Billion yen

Operating CF

Business
Investment
630.0
billion yen

Business
Investment
520.0
billion yen

When using the generated cash, we will
strive for a balance between investment
in growth and shareholder returns.
Due to factors such as exchange rate
fluctuation effects and new investment
opportunities, we plan to invest 630.0
billion yen from the cash flow increaseof 110.0 billion yen compared to thetime of the medium-term management
plan announcement.

investment / shareholder returns~1,000Billion yen

minimum of
400.0 billion yen

minimum of
500.0 billion yen~

maximum of
500.0 billion yen

Time of medium-term
management planannouncement

SurplusportionLatestassumptions

Cash-in-flow（FY21-26）

Time of medium-term
management planannouncement

SurplusportionWe plan to return 500.0 billion yen or
more to shareholders thanks to theoperating cash flow surplus (minimum
raised by more than 100.0 billion yen
from 400.0 billion yen).

Latestassumptions

Cash-out-flow（FY21-26）

15

C. Status and Progress of Medium-term Management Plan

C-５【Capital Policy】︓Business Investment Plan
Based on the medium-term management plan, investment will focus on the role of driving growth and environmental measures.
We will exercise investment discipline by considering risks and returns according to business or purpose before making investments.

Focusing 80% ofinvestment on role ofdriving growth（billion yen）

100%

80%

120.0

Car Carriers

60%

40%

20%

0%

（billion yen）

630.0
Coal & Iron Ore
Carriers

200.0

LNG Carriers

160.0
30.0
300

Enhancing the business andthe earnings base throughcustomer-oriented sales andinvestment

Responding to environmental
needs with alternative fuelvessels, and capturing new
demand

100%

80%

630.0
Alternative
Investment
etc.

255.0

60%
While
expandingexisting
businesses, capturing demandin Asia
New business opportunities
through emissions reduction
and decarbonization
Other investments in accordancewith each business role underthe medium-term management
plan

Cumulative
investment
amount（FY22-26）

Allocating 60% of investment
on environmental measuresthat can create a competitive
advantage

40%

Environmental
Investment

375.0
20%

0%

Cumulative
investment
amount（FY22-26）

Business investment
policy••To invest discreetly during goodtimes and to invest strategicallyduring bad times
Creating a well-balanced portfolio
of investments while monitoring
demand and vessel price trends• Basedonthemedium-term
management plan, we will promotesteadyearnings
improvement
using a disciplined investment planthat focuses on growth-drivers andenvironmental measures.
• Maintaining and enhancing thecompetitiveness of our otherbusinesses by pairing them withenvironmental
investmentsin• Alternative Fuel Vessel
accordance with their designated• New Business (such as
roles.
carbon-neutral• Based on the above, the total
promotion businessplanned investment amount is
etc.)
630.0 billion yen, which is 110.0• Environmentallybillion yen more than the initialfriendly equipment
figure under the medium-termsuch as Seawing etc.
management plan. By maintaining
investment discipline, we will
ensure awareness of risks andreturns as well as cost of capitaland make investments only after
scrutinizing the profitability of each
investment project.
16

C. Status and Progress of Medium-term Management Plan

C-６【Capital Policy】︓Return to Shareholders
The basic dividend for the remaining period of the medium-term management plan will be 120 yen per share, and the total returnamount over the medium-term management plan period will be at least 500.0 billion yen.
In fiscal 2023, along with the additional dividend of 80 yen per share, an additional return of at least 50.0 billion yen is planned.

ActualFY21
Dividend andadditional
shareholder
return per
share

Additional
shareholder
returnPlan

FY22More than amount stated in themedium-term management planannouncement

FY24

FY25

FY26

Dividend︓200 yen/ share(Basic dividend 120 yen / share＋additional dividend80 yen / share)

Share buy-backAdditional return︓50.0 billion yen

90.0 billion yen

Responsive
returndelivery

Additional return 110.0 billion yen〜
Additional
Dividend
300 yen/share

Additional
Dividend

Basic Dividend

100 yen/share

Of which, at least

50.0 billion yen

Additional
Dividend
80 yen/share

Additional
Dividend
100 yen/share

Total
returnamountFY23

100 yen/share

Responsive
return delivery

120 yen/share

120 yen/share

120 yen/share

110.0 billion yen〜 （of which, at least 50.0 billion yen in FY23)

Additional
Dividend

20.0 billion yen

Basic Dividend

30.0 billion yen

Total returnamount120 yen/share（additional dividend
80 yen/share)

50.0 billion yen 200.0 billion yen* Amounts of dividends are based on shared after stock split

90.0 billion yen（30.0 billion yen/year）
250.0 billion yen 〜

The fiscal 2023 dividend forecast includes an interim dividend of 100 yen
per share and a year-end dividend of 100 yen per share17

C. Status and Progress of Medium-term Management Plan

C-７【Capital Policy】︓Further Advancement of Business
Management Target for each KPISteady progress on earnings targets using management indicators
Based on the growth results, we will strive to achieve the ordinary income target of 140.0 billion yen,which was set under the medium-term management plan, ahead of schedule.

ROIC*
FY2022（Result）

FY2026（Target）

Current
progress andresponse
policyROE

Earnings targets

Ordinary income

29％
6.0~7.0％• We will achieve sustainable growth byimplementing an internal management
system using business-specificfinancial KPIs (ROIC, EVA, etc.). The
aim is to maximize corporate value
during the medium-term management
plan period through a project for
further advancement of business
management.

58％

690.8 billion yen（of which, 83.3 billion yen wasderived from “K” Lineʼs own business）

More thanOrdinary income• Surpassing targets due to improved
performance of both Containership
Business and “K” Lineʼs own businesses.
• During the period of the medium-term
management plan, we aim tosustainably achieve the target while
maintaining awareness of capitalefficiency, including further
strengthening of “K” Lineʼs own
businesses.

• Good performance in the productlogistics segment is currently being
maintained.

10％140.0 billion yen• Efforts will be made for steady target
achievement ahead of schedule during
the medium-term management plan
period, through improvement of “K”
Lineʼs own businesses.

*ROIC includes off-balance-sheet charter hire of 500.0 to 600.0 billion yen. Equity ratio is 57-59%, including off-balance-sheet charter hire at the end of fiscal 2022.

18

C. Status and Progress of Medium-term Management Plan

C-８【Business Strategy】︓Importance and progress ofeach businessWorking on initiatives specific to each business according to its role under the
medium-term management plan

Role of driving
growthCoal & Iron Ore
Carriers

Smooth advancement of enhancement of partnerships with target customers based on environmental
measures.
In addition, making progress on fleet development that can lead to greater market responsiveness andresilience.

Car Carriers

Enhancing and expanding the business base and preparing for the launch eco-friendly
vessels.

LNG CarriersRole of supportingsmooth energy source
conversion and taking
on new business
opportunities

Role of contributing byenhancing profitability

In addition to business expansion in Qatar, where our largest customer is, we will make steadyprogress on strengthening our customer base in emerging regions where growth is expected.

Thermal Coal

Implementing proposal-based sales and building long-term relationships with customers inorder to help them reduce emissions and decarbonize.

VLGC・VLCC

Carbon reduction and elimination initiatives based on collaboration with customers.

Bulk Carriers
Short Sea and Coastal

Port/Logistics

Transforming the profit structure by enhancing market resilience and expanding thecustomer base in Asia.
Having completed the conversion of Kawasaki Kinkai Kisen into a wholly owned subsidiary,
we created and further enhanced synergies among group companies by utilizing theirexpertise.

Role of supporting the businessas a shareholder and stabilizing
the earning baseContainerships

While taking the shareholder standpoint, securing capacity in line with market growthand improving profitability by maintaining and enhancing cost competitiveness.

Expansion of new business infields where “K” LINE can utilize
its strengths

Projects foremissions reduction
and decarbonization

In addition to progress on the establishment of “K” Line Wind Service (KWS), investigations
are continuing concerning the provision of ammonia fuel for ships, and demonstration
projects involving CCS as well as CO2 transport.

19

C. Status and Progress of Medium-term Management Plan

C-９【Business Strategy】︓ Coal & Iron Ore Carriers Growth Strategy Progress
Smooth advancement of enhancement of partnerships with target customers based on environmental measures.
Progress is also being made on the fleet improvement, which should lead to greater resilience andresponsiveness to changing market conditions. Planning is being carried out for stable business promotion.

Enhancing measures for target markets and customers base
Maintaining andstrengthening relationships
with Japanese and Korean
steel mills

Environment-oriented sales
activities targeting steel
mills in India and the Middle
East

Measures

Proactive response tocustomer demand forenvironmental
measures.

Advancing our customer-oriented sales system bystrengthening environmental sales capabilities in Asia,
while also investing for growth and establishing a vessel
operation system to meet the demand for marinetransport powered by alternative fuels.

Progress

Progress on measures foremissions reduction anddecarbonization, including
a stronger response withsteel mill companies tothe trend toward
procurement of direct
reduced iron.

Began joint research with
EGA concerning
decarbonization, and signed
contracts for expansion of
JSW India routes.

•

Environment-oriented sales
activities targeting resource
majorsSigned an MOU with Anglo
American concerning joint
research and comprehensive
discussions on
decarbonization measures.

Direct reduced iron: A new thoroughly low-carbon technology for direct reduction of iron is gaining attention.
It involves raw material of an electric furnace for which oxygen has been removed from iron ore (iron oxide).

Resilience andresponsiveness tochanging market
conditions
Proper fleet development
and exposure control.

Strengthening resilience andresponsiveness to market fluctuation
risk by promoting vessel deployment
based on cargo contract periods,
and optimizing internal and longterm chartered vessel capacity

20

C. Status and Progress of Medium-term Management Plan

C-10【Business Strategy】︓Car Carriers - Growth Strategy
Progress
Enhancing business profitability by implementing various measures under the medium-term management plan.
While further enhancing profitability, promoting environmental measures and strengthening market resilienceat the same time.

Enhancing measures for target markets and customers baseenhancing profitability

Existing finishedvehicle OEMs*

Capturing BEV*
transport demand

Measures

Enhancing the transport
base for existingfiinished vehicle OEMsand introducing ecofriendly ships.

Preparing a BEVtransport system andcapturing new BEV
transport demand.

Expanding market
share among highand-heavy vehicle
customers

Increasing earnings throughrate restorations, and bybolstering unprofitable contracts
and routes.

Progress

Securing transportcapacity for existing
finished vehicle OEMs.
Moreover, we will
prepare for the
introduction of additional
eco-friendly ships from2024 onward.

Preparations to secure astable BEV transportsystem and to capture
new BEV transportdemand.

Increasing in high-andheavy transport volume
based on greater highand-heavy transportcapacity.

Route network reorganization has
been completed. Amid strong demand
for marine transport, freight rates arebeing restored and profitability isimproving.

High & Heavy**BEV: Battery Electric Vehicle。 *OEM: Original Equipment Manufacturing. * High& Heavy: Oversized cargo such as construction and agricultural machinery, and rail vehicles

21

C. Status and Progress of Medium-term Management Plan

C-11【Business Strategy】︓LNG Carriers - Growth Strategy
Progress
In addition to business expansion in Qatar, location of our largest business scale, we are making steadyprogress on strengthening our customer base in emerging regions where growth is expected.

Enhancing measures for target markets and customers base
Expansion of business base in Qatar

strengthening customer basein emerging regions

Measures

Securing unfinalized projects during the period of themedium-term management plan, through our firstclass ship management quality and safety management
capabilities, and using our business relationships thatstretch back decades

Moving the ship management site to Singapore andbuilding close relationships with customers andpartners by strengthening the sales system there

Progress

Signed long-term time charter contracts for a total of
12 vessels with QatarEnergy in August and November
2022. Aiming to further increase the number ofcontracted vessels.

Signed long-term time charter contracts for multiple
vessels with PETRONAS, which recognized our service
quality and ship management expertise.

* emerging regions: China, Malaysia, India and Indonesia etc.

22

C. Status and Progress of Medium-term Management Plan

C-12【Functional Strategy】︓ Progress overview
The measures of each function are progressing as planned to achieve targets.
We will maximize corporate value by enhancing the basic functional strategies and strengtheningorganizational sales capabilities.
Strategic policies
Main progress
Maximize
Corporate Value

Environment・Technology

Maximize
Corporate Value

Safety・Ship Quality
Management

Portfolio
Management

strengtheningorganizational sales
capabilities

DigitalTransformation

Continuing initiatives topursue new technologies
while also enhancing
measures for technology
investigation andverification in preparation
for implementation

Enhancing organization
system which covers safety
and quality management
both world-wide marinetransport businesses andregional businesses

HR ・ Organization

HR・
Organization• Safety and quality control systems have been
established at three sites worldwide.
• K Line Marine Solutions was launched as a neworganization responsible for maritime technology
and affairs.

Enhancing the core values ofsafety, environmental
conservation and quality
through the utilization ofdata and digital technology
and increasing the added
value of our services.

• K-IMS modernization• Pursuing “K” Line Group synergy from the angles of IT
and digital transformation• improving added value based on our DX Strategy 2023
• Digitalization of business process.
• “K” Assist project to develop autonomous navigation
vesselWhile embracing diverse
values, securing the quality
and quantity of humanresources for each businessportfolio.

• Recruiting and developing human resources forbusiness transformation, as well as environmental
and technical human resources and professional
shipping executives to manage “K” Lineʼs businessportfolio.
• As part of diversity and inclusion efforts, continuing
to promote womenʼs active engagement and tofoster a sense of unity among personnel in andoutside Japan

Functional Strategy
Environment・
safety・DigitalTransformation Technology ship quality
management• Seawing development and operational preparations.
• Compliance with IMO regulations (EEXI, CII)
• Progress on initiatives to decarbonization

23

C. Status and Progress of Medium-term Management Plan

C-13【Functional Strategy】︓ Main progress
Environment・Technology
Steady progress on Seawing development andoperational preparations.



Digital Transformation
Promoting smooth K-IMS modernization

Pursuing “K” Line Group synergy from the angles of IT and digitaltransformation⁻Using kite for trial, we have completed automatedunfolding/folding test, and primary flight test. Continuing with
development.

⁻

Deck system installation to the first vessel has been
completed at the end of 2022. Planning to start trial on thevessel in accordance with progress of development mentioned
above.

Compliance with IMO regulations (EEXI, CII) is also
progressing smoothly⁻

A system for CII monitoring using K-IMS has been created,and continuous monitoring has begun.

⁻Jointly developed ammonia fueled Cape size bulker and car
carrier vessel obtained an Approval in Principle (AiP) fromClassification Society Class NK.
Aiming to take delivery of ammonia fueled Cape size bulker
and social implementation in 2026.

⁻⁻

above︓unfolded/ inflated kite for test ⁻
below︓Deck System installed⁻

K Marine Ship Management began full-scale operations in
Singapore⁻

Ship management of all the energy transport vessels has been transferred by
the end of December 2022.

⁻

Promoting continuity of ship management and high response to customers by
diversifying supervision system.

HR・Organization


K Line Marine Solutions was launched as a new organization
responsible for maritime technology and affairs⁻

Maritime technical functions, which were previously dispersed among thesafety and ship quality management division and each business divisions,have been consolidated.

⁻

By promoting retired marine superintendent or external human resource, weenhance marine technical support system and respond to diverse ways ofworking at the same time.

For DX on land, in addition to DX on sea, with aim of 100% digitalization ofdata, we will improve our add value by reforming communication
infrastructure and transforming communication culture, with the idea thatdata, business process digitalization is source of competitiveness.

Photo︓Global IT meeting, to enhance interactive
communication among DX personnel in “K” Line Group.

Safety・Ship Quality Management
Functional enhancement/formation of IT subsidiary and optimizing theGroupʼs IT/DX resources.

Based on the 3 stages and 5 perspectives of our DX Strategy 2023,
improving added value as a source of competitiveness

Progress on initiatives to decarbonization.

Enhancing transferring K-IMSʼs whole data infrastructure to the cloud,insourcing program development and extensibility. (K-IMS is a systemgroup to collect, accumulate and analyze important data related operating
vessels

Steadily recruiting and developing human resources for business
transformation, as well as environmental and technical humanresources and professional shipping executives to manage “K”
Lineʼs business portfolio
⁻

Quantity︓Increasing recruitment of new graduate and employing
experienced personnel through out the year. Assigning mainly to the threebusinesses with role of driving growth.

⁻

Quality︓We enhanced trainings for organization management, financeliteracy and utilizing digital technologies.

As part of diversity and inclusion efforts, continuing to foster asense of unity among personnel in and outside Japan⁻

Progress were seen on framing and expanding system to support balancing
work and family life, career development and promoting supportive work
climate in order to organize an environment so that we can promotewomenʼs active engagement.

24

C. Status and Progress of Medium-term Management Plan

C-13 Further Advancement of Business Management

Establishing a business management system that promotes awareness of capitalcosts and cash flows for each business
Having each business adopt
responsible accounting
management

Establishing a business
management system that promotes
awareness of capital costs and cash
flows for each business

Maintaining and strengthening
investment discipline byadopting business investment
management

Group-wide management(led by corporate division)

Business division management(led by business divisions)

Enhancing financial management and promoting group-wide
optimization, including group-wide capital structure and businessportfolios

Enhancing management of business activities
as well as assets and liabilities

Investment discipline management from a group-wide perspective

Creating an investment plan for growth

Utilizing as an indicator for
portfolios and business policies

Checking investment progress
on a regular basis

Creating risk scenarios foreach business or project
Businessmanagement
based on KPIs foreach business

Performing investment basedon careful selection ofprojects that can help improve
corporate value

Introduction planned
for fiscal 2023

25

C. Status and Progress of Medium-term Management Plan

Reference: Schedule for Business Briefings
As stated in the financial results briefing materials for the second quarter of fiscal 2022,
we plan to hold a business briefing in the near future
Subject
Materials

︓ Explanation of the Groupʼs three growth-driver businesses and our sustainability
management
︓ The briefing materials and archive will be made available on our website.
TOPICS

Briefing on oursustainability
management

Briefing on our three
growth-driverbusinesses

Presenter

Yukikazu Myochin sustainability management

President & CEO Coal & iron ore carrier businessPresident& CEO Atsuo Asano
Executive Officer

 LNG carrier businessPresident& CEO Kazuhiko Harigai
専務執⾏役員
Executive
Officer Car carrier business

Managing
Executive Officer

Vice President

Senior Managing

常務執⾏役員 Takenori Igarashi
26Appendix

27

Appendix

Market Results and Assumptions/ Market Exposure∎ Dry Bulk Market Results and Assumption
FY2022
1Q

2Q

3Q

4Q

CAPE
PANAMAX$21,600$25,300$13,700$15,850$14,900$14,700$9,150$10,000

FY2023
1Q
2Q
3Q
4Q
Forecast
Total
Forecast Forecast Forecast Forecast$14,750$19,000$22,000$22,000$10,000$18,250$16,350$15,500$15,500$16,500$14,500$15,500

HANDYMAXSMALL HANDY$28,900$27,550$19,750$18,700$14,850$15,050$10,150$9,700$18,300$17,650

Dry Bulk Market$14,500$12,000$14,500$13,000$14,500$13,000$12,500$11,000$14,000$12,250∎ Tanker Market Results and Assumption
World Scale
（WS）
VLCC
（Middle East/Japan）
AFRAMAX（South Asia/Japan）

FY2022
2Q

3Q

4Q

46
△$3,25071$32,25095$66,200

65$50,350

FY2023
1Q
2Q
3Q
4Q
Total
Forecast
Forecast Forecast Forecast Forecast
69
55
55
55
55
55
$36,400$32,000$32,000$32,000$32,000$32,000

167$18,000

214$35,500

254$55,000

206$57,650210$41,5501Q

FY2020

FY2021

FY2022

Panamax and smaller size

86
88

88
80

85
87

Wood Chip Carriers
Total

7
181

6
174

7
179

VLCC
LPG Carriers

6
4

6
4

6
4

Other Tankers
Thermal Coal Carriers

6
26

5
31

2
28

LNG Carriers
Total

44
86

43
89

44
84

CAPE

125
$25,000

166$40,000

166$40,000

152$35,000∎ FY2023︓Market Exposure∎ Transition of Fleet Scale
Vessel Type152
$35,000

Vessel TypeCAPE
Panamax and smaller size

Wood Chip Carriers
VLCC
LPG Carriers
Thermal Coal CarriersMarket Exposure
23%
16%
0%
0%
0%
4%

28

Appendix

Car Carriers Total Units Carried by Service Routes
FY2022

Total Units Carried（1,000 units）

1Q

OutboundHomebound
OthersIntra-Europe

2Q

303
48
212
195
758
87

Total Units Carried

Number of Fleet

3Q

362
62
242
177
843
87

4Q

346
60
248
179
832
86

283
63
227
186
760
86

(10,000 Units)
100
80

82

79 82

74

81 80 82

73

77 75

81

89
78

95
84

1Q

Total

88

86

2Q

4Q

Forecast Forecast Forecast Forecast

1,295
232
929
737
3,193
86

99

FY2023
3Q

93
84

356
63
258
193
869
87

91

367
49
257
200
872
87

84 84

368
54
260
191
872
87

79

74

73

77

74 76 76

1,469
212
1,046
785
3,512
87

84 83

90
87 87 87
76

63

62

60

379
48
271
201
898
87

Forecast

44

40
20
0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2014F

2015F

2016F

Japan・FE/North America
Trade not From/To Japan・FE

2017F

2018F

Japan・FE/Europe

2019F

Trade bound for Japan・FE

2020F

2021F

2022F

Japan・FE/The Other Area
Intra-Europe

2023F

29

Appendix“K” Line Group Fleet Composition
MAR 2022

174

89

3

83

44

41

434

MAR 2023

179

84

3

85

42

41

434

0

100

200

Dry Bulk Carriers
Car Carriers

300

400

LNG Carriers/Tankers/Thermal Coal Carriers
Short Sea and Coastal ships

Offshore Energy Support Vessels
Containerships

MAR 2022

MAR 2023
Owned

500

Chartered

Total

合計

Type of VesselNo.

DWT(MT)

No.

DWT(MT)

No.

DWT(MT)

No.

DWT(MT)

Dry Bulk

50

6,119,663

129

16,509,739

179

22,629,402

174

22,490,344

Thermal Coal Carriers

8702,50720

1,805,786

28

2,508,293

31

2,762,433

LNG Carriers

43

3,590,640

1

77,16344

3,667,803

43

3,652,067

Tankers

9

1,869,817

3

410,80812

2,280,625

15

2,381,297

Drillship

1

-

0

-

1

-

1

-

FPSO

1

-

0

-

1

-

1

-

LNG Bunkering Vessel

1

2,431

0

-

1

2,431

1

2,431

Car Carriers

31

439,33854

974,45885

1,413,796

83

1,362,224

Short Sea and Coastal Ships

24

234,37418

171,30442405,67844

489,046

Containerships

11849,85630

2,970,195

41

3,820,051

41

3,820,051

Total

179

13,808,626

255

22,919,453

434

36,728,079

434

36,959,893* The numer of owners vessels includes co-owned vessels, and deadweight tonnage includes share of other companies' ownership in co-owned vessels.
* Includes flagships and spot and/or short-term activities at the end of term.

30Appendix“K” Line Group Vessels in Operation/New Building Delivery Schedule∎ “K” Line Group Vessels in Operation
Business/Vessel Types

Segment

CAPE
OVER PANAMAX
PANAMAXHANDYMAXSMALL HANDY
CHIP

Mar-23

竣⼯隻数

2023

2024
2

80
5
43
39
5
7

CAPE

3

OVER PANAMAX

1

174

179

HANDYMAX

6
2
0
4
12
44
28
1
1
1

1

LPG Carriers

1

LNG Carriers

1

LNC Carriers
Thermal Coal Carriers
DrillshipFPSO
LNG Bunkering Vessel

6
2
3
4
15
43
31
1
1
1

FPSO

1

Total

92

87

17
38
10
3
4
4
7
83
12
13
4
7
5
0
41

17
39
10
4
6
4
5
85
12
13
4
7
5
0
41

44

42

168

168

434

434

Total

Tankers

VLCC
AFRAMAX
Chemical Tankers
LPG Carriers
Total

Car Carriers

Product Logistics
Containerships

Short Sea and Coastal Ships
Total

Grand Total

Mar-22
80
8
46
30
4
6

Dry Bulk

Energy Resource
Transport∎ New Building Delivery Schedule

7,000 Units
6,000 Units
5,000 Units
4,000 Units
3,000 Units
2,000 Units〜2,000 Units
Total
14,000TEU
8,000TEU
5,500TEU
4,200TEU
1,700TEU
1,200TEU
Total

2025

1

PANAMAX

Liquefied CO2 vessel

1

6

2

Car Carriers(7,000 Unit)

1

4

Short Sea andCoastal Ships

2

2

Total

11

12

3

9

31

【Disclaimer】
Information contained in this material is provided solely for informational purposes and is not an offer or a solicitation of an offer to buy
or sell securities.
You are requested to make investment decisions using your own judgment.
【Forward-looking statements】
This material contains forward-looking statements concerning future plans and forecast, these statements are based on information
currently available.
Furthermore, “K” LINE therefore cautions readers that actual results may differ materially from economic conditions, supply anddemand in the shipping industry, price of bunker, foreign currency exchange rates.

32