Kawasaki Kisen Kaisha Aktie

Financial highlights brief report for third quarter fiscal year 2025.

A: Financial highlights for third quarter fiscal year 2025.

A-1: Financial results for third quarter fiscal year 2025.

First, I will explain the results through the third quarter of fiscal year 2025. Operating revenues were JPY 767.7 billion, down JPY 37.2 billion year-on-year. Operating income was JPY 68.7 billion, a decrease of JPY 23.5 billion year-on-year. Ordinary income was JPY 88.6 billion, a decrease of JPY 200.2 billion year-on-year. Net income attributable to owners of parent was JPY 102.6 billion, a decrease of JPY 182.1 billion year-on-year. The average exchange rate was JPY 148.52 per U.S. dollar, and the bunker price was $535.

With regard to the cumulative performance through the third quarter compared with the same period of the previous year, operating income declined due to several factors. These include an average yen appreciation of JPY 3.75, higher operating expenses resulting from an increase in the number of vessels deployed in the Car Carrier business and weak market conditions in the Dry Bulk business in the first quarter.

In Containership business, cargo transport volume increased in the first half, particularly in the second quarter due to front-loaded shipments to North America. However, transport volume has since struggled to grow. Freight rate market conditions have remained at low levels from the latter half of the second quarter through the third quarter, partly due to the entry of newly built vessels into the market.

As a result of the factors just mentioned, the performance of equity method affiliate, Ocean Network Express, ONE, saw a significant decline in both revenue and profit. Accordingly, "K" Line's equity method income also decreased. In addition to the decline in operating income, both ordinary income and net income attributable to owners of parent also decreased year-on-year.

For the key financial indicators, please refer to the table in the lower left of the slide. The key financial indicators show that equity capital was JPY 1,739.7 billion. Interest-bearing liability was JPY 309 billion. Debt equity ratio was 17.8% and equity ratio was 76.1%. In addition, off-balance sheet assets and liabilities, including charter hire obligations, amount to approximately JPY 600 billion to JPY 700 billion. After taking these into account, the equity ratio would be approximately 58% to 60%.

A-2: Financial results for third quarter fiscal year 2025 by segment. I will briefly explain the situation by segment. In the Dry Bulk segment, market conditions for both Capesize and Panamax and smaller sizes remained firm from the second quarter onward, supported by a recovery in cargo movements and earnings improved in the third quarter. However, on a cumulative basis from the first through the third quarter, performance was affected by unfavorable market conditions in the first quarter as well as the previously mentioned impacts of labor disputes and a crane collapse incident at loading ports. As a result, performance in the first half was sluggish and both revenue and profit declined year-on-year.

Next, I will explain the Energy Resource Transport segment. LNG Carriers, LPG Carriers, Thermal Coal Carriers, VLCCs and other vessels have generally generated stable earnings under medium- to long-term contracts. Although there was a slight negative impact from foreign exchange movements, the absence in the current fiscal year of onetime losses incurred in fiscal year 2024 have resulted in higher cumulative profit through the third quarter.

I will now turn to the Product Logistics segment. In the Car Carrier business, there were headwinds such as the termination of U.S. electric vehicle subsidies at the end of September 2025, geopolitical factors, including trade policy and production impacts caused by the suspension of semiconductor shipments. Nevertheless, global automobile sales have generally remained firm and demand for ocean transportation has continued to trend upward.

On the other hand, compared with the same period of the previous year, profit declined due to factors, including a somewhat stronger yen and higher operating costs resulting from an increase in the number of vessels in operation following the delivery of new vessels.

With regard to the Containership business, shipment trends are as explained earlier. In particular, cargo movements and transport volumes in the third quarter were sluggish, mainly on routes to North America due to the reactionary decline following front-loaded shipments in the first half. In addition, the easing of vessel supply-demand conditions following the delivery of new vessels, together with persistently low short-term freight rates resulted in declines in both revenue and profit at ONE. As a result, equity method income declined significantly and "K" Line's Containership business also saw a decrease in profit.

B: Forecasts and initiatives for fiscal year 2025.

B-1: Forecasts for fiscal year 2025 and key factors. Now I will go over the full year earnings forecast. As a premise, with regard to transit through the Suez Canal, we believe that it will be difficult to resume passage before the end of March, at least at this point in time. Regarding the exchange rate assumption, we have previously explained an exchange rate of JPY 145 through the second quarter. However, based on recent conditions, this has been revised to JPY 150. The assumed bunker price is $524. Assumptions regarding market conditions and the cargo volume outlook are summarized in the appendix, so please refer to those materials.

As you are all aware, the current business environment remains highly uncertain due to geopolitical factors, including developments in the Middle East, U.S. security and trade policies. While some container shipping companies have expressed a view that transits through the Suez Canal may resume, we do not believe that conditions are right at present for an immediate resumption of passage. In particular, we will continue to closely monitor the situation in and around the Red Sea. And based on input from external experts as well as information obtained from insurance companies, we believe it will be necessary to determine the appropriate timing for resuming transit going forward. In any case, confirming the vessels can transit safely remains the most important prerequisite.

With respect to the full year earnings outlook for the current fiscal year, we forecast operating revenues of JPY 1.06 trillion, a year-on-year decrease of JPY 41.9 billion. Operating income is expected to be JPY 84 billion, a decrease of JPY 18.8 billion year-on-year. Ordinary income is forecast at JPY 100 billion, a decline of JPY 208 billion, and net income attributable to owners of the parent is expected to be JPY 115 billion, down JPY 190.3 billion year-on-year.

Compared with the previous fiscal year, the decline in operating income reflects factors common to the results from the first through the third quarters, including lower profits in "K" Line's owned businesses such as the Car Carrier and Dry Bulk businesses, resulting in a year-on-year decrease of JPY 18.8 billion. With regard to ordinary income, in addition to the decline in operating income, lower earnings in the Containership business, namely at ONE, have also had an impact.

Next, I will explain the comparison with the full year earnings forecast announced on November 5. Ordinary income remains unchanged at JPY 100 billion. Net income attributable to owners of the parent has increased by JPY 10 billion. However, this increase is due to technical accounting factors, specifically a revision to the adjustment for income taxes related to deferred tax assets.

Regarding dollar-yen exchange rate impacts, a JPY 1 movement in the rate has a forecast impact of approximately JPY 700 million, while for the bunker price, a $10 change corresponds to an impact of approximately JPY 10 million. As such, we expect the impact over the remaining period to be limited.

With respect to dividends, we plan to pay JPY 120 per share for the current fiscal year with no change from our previous forecast. As in the previous 2 years, we are announcing the dividend outlook for the next fiscal year at this point in time. For fiscal year 2026, based on the current situation, we plan to increase the annual dividend by JPY 20 from JPY 100 to JPY 120 per share. Details regarding flexible additional shareholder returns of JPY 50 billion or more, including the funding source for the JPY 20 dividend increase in fiscal year 2026 will be explained later.

B-2: Forecasts for fiscal year 2025 by segment. I will now go over the segment performance and the full year earnings outlook. In the Dry Bulk segment, market conditions in the second half of the fiscal year have generally remained firm. However, as a certain level of exposure has already been fixed, the improvement in market conditions has not been immediately reflected in earnings.

Looking at the full year, performance in the first half was weak due to unfavorable market conditions in the first quarter as well as the impact of labor disputes at loading ports in the first quarter, which constituted a company-specific factor. As a result, both revenue and profit are expected to decline year-on-year for the full year, and the figures announced in November have been left unchanged.

With regard to the Energy Resource Transport segment, earnings have remained stable as the business is largely supported by medium- to long-term contracts. In addition, onetime negative factors that affected earnings in fiscal 2024 are no longer present this fiscal year, resulting in a year-on-year increase in profit. Furthermore, compared with the forecasts announced in November, profit has increased by JPY 1.5 billion, reflecting the impact of revisions to the exchange rate assumptions as well as improvements in market conditions for tankers and LPG carriers.

In the Product Logistics segment, Car Carrier business has been affected by geopolitical factors, including U.S. trade policy and retaliatory measures by the United States Trade Representative, USTR. However, automobile sales themselves have remained relatively firm throughout the year, and the number of vehicles transported by "K" Line has increased slightly compared with fiscal year 2024.

On the other hand, due to a trend toward a stronger yen on a full year basis and an increase in just under 5 vessels in operation, operating costs and associated port charges have increased. As a result, profits are expected to decline compared with the previous fiscal year.

As for the Containership business, as explained earlier, the current market environment remains extremely challenging in terms of freight rates. You may have already seen the third quarter figures in the Containership business materials, which were somewhat unfavorable. That said, we expect a recovery in the fourth quarter. Specifically, the modest improvement in market conditions seen around December is expected to be reflected in results from January onward. Accordingly, there has been no change to the earnings outlook for ONE that was announced in November, and we continue to expect "K" Line's performance outlook to remain broadly at a similar level.

C: Status and progress of the medium-term management plan.

C-1: Capital policy. Capital policy progress and corporate value improvement. The materials have been updated. While they contain a significant amount of information, I hope you will review them later at your convenience.

C2: Capital policy, shareholders' return policy. Next, I will explain our shareholder return policy. The graph on this slide illustrates the total amount of shareholder returns during the period of the current medium-term management plan, among other items. For fiscal year 2025, we plan to maintain the dividend at JPY 120 per share as previously announced. This time, we are also announcing that the planned dividend for the next fiscal year will be increased by JPY 20 per share from JPY 100 to JPY 120 per share.

As stated previously, we have communicated that the total shareholder returns during the period of the medium-term management plan will amount to JPY 800 billion or more. Of this total, JPY 50 billion or more has been incorporated as additional shareholder returns to be implemented within the plan period. Accordingly, in addition to the JPY 120 per share dividend for the current fiscal year and the previously announced JPY 100 per share dividend for the next fiscal year, we have explained that we would carry out flexible additional shareholder returns of JPY 50 billion or more.

Although we have decided to increase the dividend by JPY 20 per share, there has been no change to the policy of providing additional shareholder returns of JPY 50 billion or more. There has also been no change to the management allocation of JPY 80 billion, which is defined as the balance between operating cash flow and investment cash flow after shareholder returns.

After closely reviewing various figures, we have confirmed that the funds equivalent to the JPY 20 per share dividend increase can be secured without drawing from the additional shareholder returns of JPY 50 billion or more and without shifting funds from the management allocation. Furthermore, from the perspective of ensuring the execution of JPY 800 billion or more in shareholder returns over the 5-year period of the medium-term management plan, we have accumulated past shareholder return results, including share buybacks. Based on this review and in order to ensure the achievement of the JPY 800 billion or more target, we determined that it was appropriate to announce the JPY 20 dividend increase at this time. With regard to the additional shareholder returns of JPY 50 billion or more, we will continue to examine the timing and methods going forward.

C4: Shipping industry environment. Finally, I would like to summarize the environment surrounding the shipping industry. The most significant factor is the situation in the Middle East, particularly the timing of the resumption of transits through the Suez Canal in relation to developments in and around the Red Sea. In addition, the outlook remains highly uncertain as to how the USTR's retaliatory measures, which have been postponed by 1 year, will be handled around October next year.

With respect to the resumption of transits through the Suez Canal, the situation has not yet reached a point where it can be considered fully safe. Accordingly, we believe it is essential to prioritize the safety of crew members, cargo and vessels above all else and to determine the timing of resumption based on objective consideration of expert opinions and feedback from various stakeholders. Therefore, we do not believe that conditions are right for an immediate resumption from the beginning of the next fiscal year. At the same time, from the perspective of transport efficiency, we recognize the need to carefully examine and determine the appropriate timing...

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[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Financial highlights brief report for second quarter fiscal year 2025.

A: Financial highlights for second quarter fiscal year 2025. A-1: Financial results for second quarter fiscal year 2025.

The results through the second quarter of fiscal year 2025 are as follows: Operating revenues totaled JPY 500.5 billion, down JPY 37.4 billion year-on-year. Operating income was JPY 42.9 billion, a decrease of JPY 18.1 billion year-on-year. Ordinary income was JPY 59.6 billion, a decrease of JPY 127.6 billion year-on-year. Interim net income loss attributable to owners of parent was JPY 68.6 billion, a decrease of JPY 114.5 billion year-on-year. The average exchange rate was JPY 146.18, and the average bunker price was $547.

Segment information is shown on the slide on the next page. Operating income for the second quarter of fiscal year 2025 results was lower year-on-year due to the impact of foreign exchange rates, which appreciated JPY 7.71 year-on-year, higher car carrier operating expenses and a favorable dry bulk market, but lower year-on-year.

In the Containership business, transport volume remained at the same level as in the same period of the previous fiscal year due to factors such as pre-tariff rush order demand, but short-term freight rates decreased compared to the same period of the previous fiscal year due to the impact of delivery of new vessels, et cetera. As a result, equity method income of OCEAN NETWORK EXPRESS, ONE, and equity-method affiliates decreased, and ordinary income or loss and interim net income or loss also declined year-on-year. Extraordinary income such as gain on sale of owned vessels and gain on sale of a portion of subsidiary shares was recorded.

Key financial indicators are shown in the lower left-hand corner of the slide. Equity capital was JPY 1,683.9 billion. Interest-bearing liability was JPY 312.2 billion. Debt equity ratio was 18.5%, and the equity ratio was 75.6%. Off-balance sheet assets and liabilities, such as charter hire amount to approximately JPY 600 billion to JPY 700 billion. And after taking these into account, the consolidated equity ratio will be 58% to 60%.

A-2: Financial results for second quarter fiscal year 2025 by segment. Results by segment through the second quarter. Here are some key points. In the Dry Bulk segment, the market for both Capesize and Panamax and smaller sizes recovered and remained firm in the second quarter. On the other hand, for the first half of the year as a whole, market conditions were weaker than in the same period last year, and ordinary income or loss was also lower year-on-year.

Meanwhile, in the Energy Resource Transport segment, LNG carriers, LPG carriers, thermal coal carriers, VLCCs, Drillship, and FPSOs, among others, continue to operate steadily back by medium- to long-term contracts. The absence of onetime losses recognized in the same period last year also contributed to a profit increase year-on-year.

In the Product Logistics segment, the Car Carrier business saw a limited impact from U.S. tariffs through the second quarter, and the number of vehicles transported slightly increased year-on-year, supported by solid demand in countries around the world. However, profit decreased year-on-year due to exchange rate impacts and increased operating costs, et cetera.

In the Containership Business, cargo transport volume remained at the same level as the previous fiscal year, including pre-tariff rush order demand, but profit declined as market conditions were sluggish due to increased supply of new vessels and equity method investment income from ONE decreased.

B: Forecasts and initiatives for fiscal year 2025. B-1: Forecast for fiscal year 2025 and key factors. This is the forecast and key factors for fiscal year 2025. First, the forecast assumes that in fiscal year 2025, both "K" LINE's owned businesses and containership business will not transit through the Suez Canal, but via the Cape of Good Hope.

In light of the recent U.S.-China talks, we have not factored in the impact of US TR's port entry fees for car carriers. At the U.S.-China talks on October 30, it was agreed to postpone or partially cancel the imposition of additional tariffs for 1 year, et cetera. However, the impact on cargo movements, et cetera, cannot be clearly ascertained, so we will keep an eye on future developments. The average exchange rate for fiscal year 2025 is JPY 145.91, and the bunker price is $536. Please refer to the appendix on the slide for market conditions and volume forecasts.

Based on these assumptions, our forecasts for fiscal year 2025 are: operating revenues of JPY 984 billion, down JPY 63.9 billion year-on-year; operating income of JPY 86 billion, down JPY 16.8 billion year-on-year; ordinary income of JPY 100 billion, down JPY 208 billion year-on-year; and net income attributable to owners of parent was JPY 105 billion, a decrease of JPY 200.3 billion year-on-year.

Operating income decreased year-on-year due to a decline in profits from car carriers and Dry Bulk as well as yen appreciation. On the other hand, at the ordinary income or loss level, a decline in equity method income derived from ONE and other factors also contributed to the decrease in income. A JPY 1 change in the yen-dollar exchange rate is estimated to affect profit by plus or minus JPY 1 billion, while a $10 change in the bunker price is estimated to impact profit by plus or minus JPY 10 million.

The annual dividend forecast for 2025 remains unchanged from the previous announcement in August and is expected to be JPY 120 per share, including a basic dividend of JPY 40 per share and an additional dividend of JPY 80 per share. In the light of the current business environment and other factors, we are continuing to review the timing and methods of the flexible additional return of JPY 50 billion or more announced in May.

B-2: Forecasts for fiscal year 2025 by segment. I would like to explain the forecast for fiscal year 2025 by segment. For the Dry Bulk segment, profit is expected to decrease year-on-year, mainly due to exchange rate impacts, but also due to the effects of accidents and disputes at loading ports in addition to the market slump in the first quarter compared to the same period of the previous year.

In the Energy Resource Transport segment, LNG carriers, LPG carriers, thermal coal carriers, and VLCCs, et cetera, are operating stably backed by medium- to long-term contracts, and we expect an increase in profit, partly due to the absence of onetime factors from the previous year.

In the Car Carrier business of the Product Logistics segment, the impact of U.S. tariff policy has been factored in as negative JPY 3.5 billion for the full year as before, but we believe the impact on the overall business is negligible. In general, transport volume is expected to increase slightly from the previous fiscal year, supported by solid demand in countries around the world. On the other hand, profit is expected to decrease year-on-year due to the impact of the strong yen, increased operating costs and other factors. The impact of the US TR port charges has not been factored in, as I explained earlier.

In the Containership business of the Product Logistics segment, we expect freight rates to be sluggish in the second half of fiscal year 2025 due to geopolitical risks and the impact of U.S. tariffs as well as an increase in supply due to the deliveries of new vessels. As a result, due to the decrease in equity method investment income derived from ONE, we expect ordinary income of JPY 21.5 billion, a decrease of JPY 184.5 billion year-on-year and a decrease of JPY 17.5 billion from the previous announcement in August.

In the August announcement, in the light of the business environment at that time, ONE's overall profit or loss was estimated to be just under $700 million. At this time, as stated in ONE's public announcement, ONE's overall profit or loss is expected to be approximately $310 million.

B-3: Comparison of income and loss for fiscal year 2025 compared to the August 2025 announcement. This slide shows a comparison of income and loss for fiscal year 2025. The left side of the slide shows the August forecast for ordinary income of JPY 120 billion. And the right side of the slide shows this latest forecast for ordinary income of JPY 100 billion. As for "K" LINE's own businesses, the Dry Bulk segment has seen an increase of JPY 1.5 billion since the August announcement.

On the other hand, in the Car Carrier business, there is no change in the negative JPY 3.5 billion impact of the U.S. tariffs, which was factored in at the time of the August announcement. However, a further negative impact of JPY 4 billion from the August announcement is expected due to a decrease in the number of units shipped to Europe as a result of the model changeover and the impact of production issues.

Overall, the forecast for "K" LINE's owned businesses is JPY 78.5 billion, a decrease of JPY 2.5 billion from the JPY 81 billion announced previously in August. In the Containership business, we expect a decrease in profit of JPY 17.5 billion, mainly due to the effects of the factors I just explained, and we forecast ordinary profit of JPY 21.5 billion for the full fiscal year.

C: Status and progress of the medium-term management plan. C-1: Capital Policy: Capital policy progress and corporate value improvement. I would like to explain our current capital policy. In the area of enhancing earning power, as I explained earlier, we expect the full year ordinary income for fiscal year 2025 to be down by JPY 20 billion from the August announcement to JPY 100 billion. On the other hand, the operating cash flow forecast for the current medium-term management plan period through fiscal year 2026 remains unchanged from the previous announcement in August at around JPY 1.5 trillion. This leaves the starting line for the overall cash allocation unchanged.

As for the investment plan, there is no change from the previously announced JPY 610 billion in investment cash flow through fiscal year 2026. We will continue to examine the optimal capital structure with the aim of achieving both financial soundness and capital efficiency. With regard to shareholder return policy, we will continue to be aware of the optimal capital structure, ensure the investments necessary to improve corporate value and growth, ensure financial soundness and actively return to shareholders any portion of capital exceeding the appropriate capital based on cash flow.

Therefore, based on the latest cash allocation, the planned dividend for fiscal year 2025 is JPY 120 per share, consisting of a basic dividend of JPY 40 per share and an additional dividend of JPY 80 per share. And there is no change in the total amount of returns of JPY 800 billion or more over the medium-term management plan period.

We are also continuing to consider the method and timing of the flexible additional shareholder return of JPY 50 billion or more, which we have already announced in the light of the business environment, and we plan to firmly implement it by fiscal year 2026, the current medium-term management plan period. We recognized that the current P/B ratio of less than 1.0 is a major challenge, and we will continue our efforts to be recognized by the market through the realization of an optimal capital structure and business growth.

C-2: Capital Policy: Shareholders' return policy. Please refer to the slide that summarizes the overall shareholder returns during the medium-term management plan period through fiscal year 2026 as it details what we have explained in the previous slides. The following slide and beyond summarize the business environment, tariffs and USTR status, but we will not explain them here as we hope you will refer to them again. This concludes my explanation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Financial highlights brief report for first quarter fiscal year 2025. A, financial highlights for first quarter fiscal year 2025. A-1, financial results for first quarter fiscal year 2025. For the fiscal 2025 first quarter results, operating revenues were JPY 244.9 billion. Operating income was JPY 19.8 billion. Ordinary income was JPY 21.6 billion, and net income attributable to owners of parent was JPY 29.9 billion, representing a year-on-year decrease in both revenue and profit. The dollar-yen exchange rate for the first quarter was JPY 145.32, which is approximately JPY 10 stronger than the roughly JPY 155 rate in the same period of the previous year. The bunker price was $550, a slight decrease compared to the same period last year. Details by business segment are provided on the next page, but the decline in operating income compared to the same period last year was primarily due to the impact of exchange rates and a sluggish dry bulk market in the first quarter.

In terms of ordinary income, in addition to the decrease in operating income, the equity method income and loss from OCEAN NETWORK EXPRESS, ONE, which operates our Containership business, was also reflected. Particularly in the first quarter, the decline in average freight rates compared to the same period last year led to a reduction in ONE's earnings, contributing to the decline in our ordinary income. Net income for the quarter came to JPY 29.9 billion as we recorded extraordinary income from the sale of owned vessels and a portion of subsidiary shares. As there have been no significant changes in our financial indicators since the end of March, I will not cover them this time. A-2, financial results for first quarter fiscal year 2025 by segment. Now I would like to discuss the results by segment. Starting this fiscal year, we have changed the method for allocating foreign exchange gains and losses to each segment. Previously, foreign exchange gains and losses on foreign currency-denominated assets and liabilities not linked to a specific segment were allocated to each segment based on a certain formula.

However, starting this fiscal year, we have changed the method so that these are now recognized at the corporate level. The figures for the same period of the previous fiscal year given for comparison have been restated using the new method adopted this fiscal year. In other words, the figures shown enable comparison using the same basis. Regarding the Dry Bulk segment compared to the same period last year, the Capesize market saw a temporary improvement in June. However, due to accidents and disputes at loading ports, the market was weak overall. For Panamax and smaller sizes as well, cargo movements of coal and grain were sluggish and the market did not gain momentum. As a result, the Dry Bulk segment as a whole was impacted by the stronger yen, market conditions and business disruptions due to accidents and disputes at loading ports. Consequently, an ordinary loss of JPY 0.5 billion was recorded. The Energy Resource Transport segment has a relatively high proportion of long-term contracts, so earnings fluctuations tend to be limited.

However, in the first quarter of the previous fiscal year, there were onetime losses. As those factors were absent this year, results improved year-on-year. Starting this period, performance will now be reported separately for Car Carrier business, which is part of the Product Logistics segment. In Car Carrier business, although additional tariffs were imposed on automobile exports to the United States, vehicle demand remained relatively strong, not only in the United States, but also worldwide, resulting in overall strong transport demand. As a result, profitability remained at a high level. However, due to the appreciation of the yen, both revenue and profit declined compared to the same period last year. As for Containership business, ONE's transport volume saw a slight increase compared to the same period last year, including pre-tariff rush order demand. However, due to a decline in freight rates, profit decreased, resulting in a large year-on-year drop in earnings.

B, forecasts and initiatives for fiscal year 2025. B-1, forecast for fiscal year 2025 and key factors. I will now explain the updated performance forecast for the current fiscal year. With regard to U.S. tariff policy, while China continues to negotiate a trade deal with the U.S., other major trade partners have largely reached agreements on their specific tariff rates, including Japan, the EU, South Korea, Taiwan, et cetera. However, it remains difficult to predict how these developments will affect the real economy going forward, particularly cargo movements relevant to our business, and the outlook continues to be unclear. Although it is difficult to foresee the extent and timing of the impacts, we have updated our figures based on our current forecasts. First, let me explain a few of the assumptions behind these figures. As noted on the slide, we do not anticipate the resumption of transit through the Suez Canal before the end of this fiscal year. And therefore, our forecast assumes no use of the Suez Canal.

Details of the tariff impact will be explained on the next slide, but the effects are mainly related to Containership business and car carrier business. We have incorporated a certain level of impact into our estimates based on our internal calculations. The port entry fees being imposed by the office of the United States Trade Representative, USTR, as part of U.S. trade measures against China are scheduled to begin in October, but we have not yet factored them into our forecast. We have set the dollar-yen exchange rate at JPY 141.73, with forecasts from this month onward based on JPY 140. The bunker price is set at $566. Assumptions regarding market conditions, including for dry bulk are outlined in the appendix. There have been a few changes to these assumptions since the beginning of the fiscal year.

Based on these assumptions for our updated full year forecast for fiscal 2025, operating revenues are JPY 968 billion, operating income is JPY 90 billion, and ordinary income is JPY 120 billion, while net income attributable to owners of parent is JPY 115 billion. These figures represent an upward revision compared to the forecast announced in May. Specifically, operating income has increased by JPY 10 billion, and both ordinary income and net income attributable to owners of parent have increased by JPY 15 billion each. A JPY 1 change in the yen-dollar exchange rate is estimated to affect profit by plus or minus JPY 1.6 billion, while a $10 change in the bunker price is estimated to impact profit by plus or minus JPY 20 million. Although shareholder return and related information will be explained later, there are no changes from what was announced in May.

B-2, comparison of income and loss for fiscal year 2025 compared to the May 2025 announcement. This slide shows a comparison of the changes in our performance forecast since the beginning of the fiscal year with a focus on tariff impacts. As shown on the far left of the slide, at the beginning of the fiscal year, our performance outlook before considering tariff impacts pointed to ordinary income of JPY 135 billion. Based on our estimate that tariffs could have a JPY 30 billion total impact, JPY 13.5 billion on "K" LINE's own businesses, mainly Car Carrier business and JPY 16.5 billion on Containership business, we disclosed an initial ordinary income forecast of JPY 105 billion. As I will explain in more detail later, Car Carrier business has so far seen limited actual impact.

So we have now decided to revise the tariff impact upward by JPY 10 billion. Based on forecasts from ONE, we have revised our assumptions for Containership business using a full year net income forecast of $700 million, resulting in a JPY 2 billion improvement. In addition, mainly due to exchange rate factors, we expect a further JPY 3 billion improvement in ordinary income from "K" LINE's owned businesses. As a result, we now forecast full year ordinary income of JPY 120 billion, an upward revision of JPY 15 billion from the initial forecast at the beginning of the fiscal year.

B-3, forecast for fiscal year 2025 by segment. Turning now to the full year performance forecast by segment. Our market assumptions for dry bulk and tankers for the second quarter onward remain unchanged from May. For the Dry Bulk segment, major factors include the significant impact of exchange rates compared to the previous fiscal year as well as market conditions affecting the first quarter. Additionally, accidents and disputes at loading ports in the first quarter, particularly disruptions in vessel deployment around Guinea also had an impact. As a result, we now expect a decrease in profit compared to the initial forecast. As for the Energy Resource Transport segment, due to the large share of medium- to long-term contracts, earnings remained stable. While there were onetime losses in the previous fiscal year, those factors are now gone, and we, therefore, expect profit to increase this year.

Next, I would like to discuss the Car Carrier business, which is part of the Product Logistics segment. While U.S. tariffs were initially set at 25%, they have ultimately settled at 15%, and we revised the projected tariff impacts accordingly. At the beginning of the fiscal year, we had anticipated a decline of about 30% in cargo volume to the U.S. But as of now, the actual impact has been minimal. For the first half, we expect only a very slight impact. For the second half, we revised our previous 30% decline estimate to a 15% drop. As a result, we have revised our initial forecast for Car Carrier business upward by JPY 12 billion. For Containership business, please refer to the later slides concerning ONE.

We have revised our estimate of equity method income from ONE. At the beginning of the fiscal year, ONE had projected net profit of approximately $1,100 million without considering tariff impacts. However, "K" LINE later forecasted just under $700 million, taking into account cargo volume reductions and a deterioration in freight market conditions. ONE has now updated its full year forecast to $700 million, and we have also revised our anticipated share of equity method income accordingly. As for the other businesses within Product Logistics, there have been no significant changes from the announcement we made in May.

C, status and progress of the medium-term management plan. C-1, capital policy, capital policy progress and corporate value improvement. I will now go over the current status and progress for our medium-term management plan. There have been no major changes since the briefing at the beginning of the fiscal year. However, with respect to "K" LINE's earning power, our full year ordinary income forecast has increased by JPY 15 billion from the initial outlook, reaching JPY 120 billion. Regarding operating and investment cash flows, as explained at the beginning of the fiscal year, we are projecting operating cash flow of JPY 1.5 trillion and investment cash flow of JPY 610 billion. These figures remain unchanged. As for shareholder return, our goal in this policy is still to always remain aware of our optimal capital structure, ensure the investments necessary to improve corporate value and maintain financial soundness. Using any capital in excess of the appropriate level, our policy is to consider distributing shareholder returns in a proactive manner based on the cash flow situation.

We will continue to follow this approach going forward. As of May, we indicated a total shareholder return of JPY 800 billion or more during the medium-term management plan period. For this fiscal year, we have announced a dividend of JPY 120 per share. And for the next fiscal year, it will be JPY 100 per share. This outlook remains unchanged. In May, we also mentioned the flexible additional shareholder return totaling JPY 50 billion or more on top of the previously announced figure. We are continuing to consider this in light of the current business environment. Please note that the method and timing of such returns are still under review. One key challenge in enhancing corporate value is our current PB ratio, which remains around 0.8. We recognize that improving our PB ratio is the most important issue in terms of our capital policy. We are currently reviewing measures to clearly demonstrate a growth trajectory that leverages "K" LINE's strengths.

C-2, capital policy, shareholders' return policy. For our shareholder return policy, we plan to pay an annual dividend of JPY 120 per share for the current fiscal year and JPY 100 per share for the next fiscal year. These figures remain unchanged. Regarding the flexible additional shareholder return of JPY 50 billion or more, we are reviewing this measure and aim to provide an update as soon as possible. C-3, changes in the business environment. Regarding changes in the business environment, we recognize that particularly within geopolitics and the global economy, events affecting our business are occurring at the same time. Specifically, U.S. trade and tariff policies, economic concerns regarding China and tensions in the Middle East are all factors that overall are exerting downward pressure on "K" LINE's business performance. Moreover, the outlook for these issues remains highly uncertain and unclear, and we believe it is essential to closely monitor the situation and make timely and appropriate responses.

As for energy and environmental policies, we believe that the broad trend toward decarbonization remains unchanged. However, as some signs of pushback or temporary reversals are also emerging, we recognize the need to move forward while taking a realistic approach that aligns with the practical aspects of our business. C-4, shipping industry environment. This slide summarizes the environment surrounding the shipping industry from 3 perspectives: U.S. tariff policy, USTR measures and the security situation near the Suez Canal and Strait of Hormuz. With respect to its tariff policy, the U.S. is still negotiating with China. Given this, we believe it is important to closely monitor the extent and nature of any impacts on trade patterns and the real economy. We will continue to assess how U.S. tariffs and USTR measures may affect our business.

As for the USTR measures, port entry fees are scheduled to take effect on October 14 this year, and we are currently in the process of clearly explaining to our customers what we know. Although the potential financial impact of these measures has not been factored into the figures presented today, we are committed to taking all the necessary actions that we can. Regarding our return to the Suez Canal, due partly to recent reports of shipping attacks by the Houthis, we have determined that use of the canal is not yet feasible. Accordingly, our earnings forecast for this fiscal year assumes that we will continue to avoid the Suez Canal. While this situation is having a certain impact on supply and demand, we intend to continue developing our business while taking these circumstances into account.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]