TOKYO: The “K” LINE Group Tuesday announces its first quarter financial year 2026 results.
Dry Bulk Business
In the Cape-size sector, market rates stayed firm, thanks to the active cargo movement of iron ore, bauxite, and others.
In the medium-small vessel sector, market rates were on an upward trend due to the growth in demand for coal transportation caused by the situation in the Middle East and the robust demand for grain transportation.
Under these circumstances, the Group focused on managing market exposure appropriately, reducing operating costs, and improving vessel operation efficiency.
The overall Dry Bulk segment recorded a year-on-year increase in revenue and returned to profitability.
(ii) Energy Resource Transport Segment
LNG Carrier Business, Crude Oil and LPG Carrier Business, Electricity Business, CCS Business and Offshore Wind Business
Concerning LNG carriers, LPG carriers, thermal coal carriers, large crude oil tankers (VLCCs), drillship, FPSO (Floating Production, Storage and Offloading system) and others, the business operated steadily under mid- and long-term charter contracts and contributed to securing stable profit.
The overall Energy Resource Transport segment recorded a year-on-year increase in both revenue and profit due to the impacts of market rates, exchange rates, and other related factors.
(iii)Product Logistics Segment
Car Carrier Business
In the car carrier business, due to port congestion in some areas and the tense situation in the Middle East, the Group was affected by the longer voyage distance and the decline in the fleet capacity utilization rate resulting from transportation through alternate routes, and the increase in fuel costs and other operating costs.
Logistics Business
In the domestic logistics and port business, the container terminal handling volume, the work volume in the towage business, and the handling volume in the warehousing business all stayed firm. As for the international logistics sector, while cargo movement in air transportation in the forwarding business was sluggish for some shipments, such as those related to automobiles, the transportation volume of semiconductors increased year-on-year. As a result, the overall business in this sector generally stayed firm. In the finished car transportation business, new car sales, a key factor influencing cargo volume at Australian ports, stayed at the same level as the previous year, and both transportation and storage volumes remained stable.
Short Sea and Coastal Business
In the short sea business, the overall transportation volume slightly decreased year-on-year, due to the decrease in the transportation of steel products and other cargoes canceling out the increase in the transportation of biomass fuel. In the coastal business, the volume of ferry transportation increased year-on-year for cars and passengers, resulting from the growth in travel demand. As for liner transportation, despite the decline in the number of voyages due to the docking of the vessels for the Shimizu route, the overall transportation volume increased year-on-year, thanks to the acquisition of new cargo on the Hokkaido route. The volume of tramp services remained almost unchanged from the same period of the previous fiscal year.
Containership Business
In the containership business, short-term freight rates increased as supply and demand tightened due to port congestion, in addition to front-loaded shipments and inventory buildup in consumer countries against the backdrop of the situations in the Middle East and rising fuel prices.
On the other hand, as operating costs increased due to factors such as rising fuel prices, the performance of ONE, an equity-method affiliate of the Company, recorded a year-on-year increase in revenue but a decrease in profit.
The overall Product Logistics segment recorded a year-on-year increase in revenue but a decrease in profit.
(iv)Other
The Other includes, but is not limited to, the ship management service, the travel agency business, the real estate rental and management business. The segment recorded a year-on-year decrease in revenue but returned to profitability.
(2)Description of Financial Position
Total assets at the end of the consolidated first quarter of this fiscal year were ¥2,289.9 billion, a decrease of ¥54.0 billion from the end of the previous fiscal year as a result of a decrease in cash and deposits and other factors.
Total liabilities increased by ¥10.8 billion to ¥512.8 billion as a result of an increase in other current liabilities and other factors compared to the end of the previous fiscal year.
Total net assets were ¥1,777.1 billion, a decrease of ¥64.8 billion compared to the end of the previous fiscal year as a result of an increase in treasury stock and other factors.
(3)Description of Information on Future Outlook, Including Forecast of Consolidated Financial Results
In the Dry Bulk segment, despite geopolitical risks, such as the situation in the Middle East, and uncertainty in the Chinese economy and other factors, the Group expects transportation demand to remain firm. Although the volume of new ship deliveries is limited for Cape-size vessels and slightly large for medium-small vessels, the Group expects that the overall vessel supply will be constrained, the supply-demand environment will remain favorable, and market rates will stay firm overall.
The Group will work on improving vessel operation efficiency and reducing costs, and amid the growing need to deal with environmental issues, taking advantage of its high-quality transportation, the Group will strive to enhance stable sources of revenue by increasing mid- and long-term contracts, and maximize profit, while maintaining appropriate and swift risk control.
In the Energy Resource Transport segment, despite uncertainties in the business environment, such as the situation in the Middle East, the Group expects steady profit growth with respect to LNG carriers, large crude oil tankers, LPG carriers, thermal coal carriers, drillship, FPSO, and others, supported by mid- and long-term contracts. The Group will continue efforts to secure stable profit.
As for the Product Logistics segment, in the car carrier business, the Group expects a continued increase in finished car movement, driven by the steady growth in global car sales. However, with the forecast that the tense situation in the Middle East will continue for some time, the Group will closely monitor the latest developments concerning the future changes in transportation demand and their impact on fleet deployment and continue efforts to optimize its fleet and further improve the efficiency of vessel operation and allocation.
In the logistics business, regarding the domestic logistics and port business, the container terminal handling volume, the work volume in the towage business and the handling volume in the warehousing business are expected to stay at the same level as the previous fiscal year. As for the international logistics sector, in the forwarding business, despite the continuing uncertainty in the demand for ocean and air transportation due to geopolitical risks, such as the situation in the Middle East, the handling volume is projected to stay flat year-on-year. In the finished car transportation business, both transportation and storage volumes are expected to remain stable.
In the short sea business, the Group expects a year-on-year increase in the overall transportation volume, driven by the increase in the transportation volume of biomass fuel. In the coastal business, the volume of ferry transportation is expected to stay flat year-on-year for trucks, cars, and passengers. As for liner transportation, despite the continuing decline in paper-related cargo on the Hokkaido route, the transportation volume is expected to be generally on par with the previous fiscal year, thanks to the steady growth in transportation of steel frames and construction materials. The transportation volume on the Shimizu-Oita route is also expected to be on par with the previous fiscal year. The volume of tramp services is expected to remain generally in line with the previous fiscal year, except for coal carriers.
In the containership business, the business environment remains uncertain due to factors such as the situation in the Middle East and U.S. trade policies. ONE will closely monitor changes in the situation, continue to provide flexible vessel allocation and efficient operations in line with demand, and strive to maintain stable business operations.
Our basic policy, positioning the maximization of shareholder value as a key management priority, is to improve corporate value and shareholder interests over the medium and long term by proactively promoting shareholder returns, including share buybacks. This is achieved by taking cash flow into consideration and actively promoting investments essential for enhancing corporate value while maintaining strict investment discipline, ensuring both capital efficiency and financial stability necessary to improve our corporate value while being conscious of optimal capital structure.
Based on this basic policy, regarding dividend for the fiscal year ending March 31, 2027, the Company plans for basic dividend of 40.00 yen and additional dividend of 80.00 yen per share, in total of annual dividend 120.00 yen per share (an interim dividend of 60.00 yen per share and a year-end dividend of 60.00 yen per share), as announced on Feb 3, 2026.
At the financial results announcement for the fiscal year ended March 31, 2026 held on May 8, 2026, we stated that, in preparation for the next Medium-Term Management Plan commencing in the fiscal year ending March 31, 2028, we will pursue both profit growth and capital efficiency improvement as twin pillars from the fiscal year ending March 31, 2027. As part of our capital policy, we have set a policy to optimize our capital structure in the short term with a target equity ratio, including off-balance-sheet items, of around 50%. Based on these policies, the Company resolved to repurchase its stock, with an upper limit of 130 billion yen, in accordance with paragraph 1 of Article 459 of the Companies Act of Japan and Article 38 of our Articles of Incorporation at the meeting of the Board of Directors held on May 29, 2026. For the status, please refer to “Notice Regarding the Status of Own Share Repurchase” as announced on Aug 3, 2026.
