Summary of press conference by our president

We inform you of our president’s comments made at the press conference held on Monday, July 13, 2020.

1. Review of FY2019 and Outlook of FY2020:
The trend of newbuilding prices remained low in FY2019 due to a sluggish world economy due to the U.S. and China trade friction and British Brexit and so on.And, to make matters worse, since outbreak of the new coronavirus in the end of 2019, demand for newbuildings has almost lost because of economic turmoil around the world. However, while we were affected by COVID-19, we could deliver 97 new ships including large containerships, bulk carriers to result in the achievement of record-high 5.25 million gross tons of building quantity. Sales amount of FY2019 was only 380.6 billion yen for low-value contracts of the ships delivered , which led to a drop in both revenue and profit. Although various sizes of bulk carriers and containerships continue to be constructed in FY2020, we will do our best efforts for profit improvement.

2.The current situation and prospect of new ship market:
The ships we contracted are mostly middle and small size bulk carriers and VLCC, MR Tankers and we have purposely refrained from receiving orders of large-size ships, as the prices do not fit us. As the shipping market of 2019 continued being sluggish and orders have largely decreased under the influence of COVID-19 since the beginning of this year, the number of ships ordered in FY 2019 ended up with only 26. However, we are going to restart trying to get orders including large-size ships, as freight and charter rate of capesize bulkers are coming back to normal in the latter half of this year.

3.Earnings Forecasts and Business Challenges:
Building of VLCC and large-size containerships begins this year shifting from bulk carriers.We will try to get profit as we target with construction process and ship quality being stabilized. On the other hand,new ships complying with new rules are going to be enquired from now on.The problem is that the buying price-level required for those is not good enough to sustain building costs.However, we intend to get some orders in order to secure a certain amount of work.

4.Measures to strengthen competitiveness:
We signed on capital and business alliance agreement with JMU this March. Nihon Shipyard Co., Ltd. (NSY) is born in autumn as a joint business and design company at the time. Both companies will develop the most eco-friendly and cutting-edge ships together and construct them earlier ahead of other companies.

5.Implementation Plan and Current Process of Capital Investment:
Reclamation work at Shin-Kasado Dockyard was completed last year. There is no big investments planned this year. We are only doing necessary works to update facilities in each factory.

6.Working on Technology Development and New Product Development:
Aiming at reducing GHG , we think that development of new-fuel ships is imperative and we are already being engaged in building or design-testing LNG, LPG or Ammonia fueled-ships. As for LNG-fueled ships, a PCC is now under construction at Tadotsu Shipyard, which was designed based on knowledge and experience accumulated from having constructed LNG Carriers at Saijo Shipyard.As to LPG-fueled ships, we already finished design-testing of 180,000 tons type bulk carrier and have won AiP from Nippon Kaiji Kyokai this April. As for Ammonia fueled-ships, we have participated in a consortium formed of 6 companies working in a wide scope for developing from main engine to ammonia supply facilities. The type of ship to be applied is not yet decided, but we will take on the lead role of developing the main ship design.

7.The number of employees (Current & New Recruitment Status)
78 new employees joined the company this year to become 1,660 people in total.The average age of all employees becomes 36.2years old this year. We plan to have around 60 new employees next year and would like to increase local people in particular next year.

8.Opinion about trend of the Chinese & Korean shipbuilding industry
Now, huge shipbuilding companies are rising up in the world.The two large state-run shipyards have been merged in China and the purchase of Daewoo Shipbuilding by Hyundai Heavy Industries is now under way in Korea.I would like fair competition in the world without any governmental supports. However, if current circumstances continue, there may be a possibility that Japanese shipbuilders will not be able to keep standing up anymore. 99% of Japanese trade depends on sea transportation, therefore, in order to protect this logistics system, I think that some form of support from Japanese Government and/or some associations will be vital.

From the left Managing Director Watabe,Executive Senior Managing Director Kiyoshi Higaki, President Yukito Higaki, Executive Senior Managing Director Kazuyuki Higaki, Senior Managing Director Fujita.
President Yukito Higaki