More Than Shipping Grow with Asia, Expand across the Globe - March 31, 2011

Transcription

1 More Than Shipping Grow with Asia, Expand across the Globe - March 31, 2011

2 Table of Contents More Than Shipping 2013 Grow with Asia, Expand across the Globe (Summary) P.2 Business Environment P.5 Review of Previous Mid-Term Management Plan P.9 More Than Shipping 2013 Grow with Asia, Expand across the Globe P.12 Fleet in Operation P.13 Investment Plan P.14 Financial Targets P.15 Financial Targets: Breakdown by Region and Business Segment P.16 More Than Shipping: Strategic Pillars of New Mid-Term Management Plan P.17 More Than Shipping 1: General Cargo P.18 More Than Shipping 2: Automobiles P.19 More Than Shipping 3: Energy / Natural Resources 1 P.20 More Than Shipping 4: Energy / Natural Resources 2 P.21 Detailed Financial Targets P.22 Supplementary Material P.26 Note: financial forecasts and assumptions included in this presentation are based on fiscal year-end projections as of Q3. 1

3 More Than Shipping Grow with Asia, Expand across the Globe - (Summary)

4 More Than Shipping 2013: Summary Capture the Growth in Asia by Combining Traditional Shipping with Value Added Strategies Growth in Asia More Than Shipping Strategic Investments High Value Added Business with Stable Freight Rates More Than Shipping = Combine Traditional Shipping with Value Added Strategies 3

5 More Than Shipping 2013: Background Background of More Than Shipping 2013 Business Environment (Trend) Review Significant Increase in Cargo Volume Vessel Size: Specialization and Capacity Expansion # Pre-Lehman Shock Phenomenon Continuation of Trend 1 Production shift to emerging markets (= globalization) 2 3 US and European overconsumption (= excessive exporting by export-driven countries) Growing demand in emerging market including China (= increase in exports for natural resource-rich countries) 4 Increase in population Specialized and Capacity Expanded Vessel Types Car Carrier, LNG Carrier, VLCC, Capesize, Containership Less flexibility Capesize vessels: Strategy focused on Long-Term stability was correct. However, fleet management was not implemented effectively. Containerships: Fleet portfolio (burdened by owned and Long-Term chartered vessels) More Than Shipping 2013 Our Stance Shift towards Long-Term (Stable) Contracts, Minimize Volatility SHOULD LEAD TO Vessel Type Capesize Containerships Currently 2 Anomalies Exist: Characteristics Extreme high freight rates between 03~ 08 due to higher than expected demand from China Normally, market exposure would be 10~30% Originally Low Volatility Characteristics differ from other vessel types (consumer goods, Short -Term contracts) Specialization/Capacity expansion lowering of volatility Customers create cargo movement. (Ship Operator cannot control the demand) We are majorly Ship Operator. (Ship Operator > Ship Owner) Owning assets ensure high quality and stable services. Value added strategies come up with the first choice for customers 4

6 Business Environment

7 Business Environment: Shipping Volumes and Energy Demand (Volume) Shipping volumes are on the rise General Cargo: Global Container Volume CAGR: 11.5% CAGR: 7% (TEU, millions) volume: 105% of pre-lehman Shock levels Source: Drewry Automobiles: Global Passenger Car Shipments Natural Resources: Drybulk Volume CAGR: 5.0% 4,500 CAGR: 2.6% (tons, millions) 4,000 Minor マイナーハ ルク Bulk 3,500 3,000 Grains 穀物 Coal 石炭 Iron 鉄鉱石 Ore 2,500 2,000 1,500 1, Source: Clarkson, NYK Research s Energy: Oil and Natural Gas Consumption 20,000 CAGR: 8% CAGR: 5% (vehicles, 1,000) CAGR: 1.6% CAGR: 0.6% 4,500 (tons (oil converted), millions) 18,000 4,000 16,000 14,000 12,000 10,000 volume: 87% of pre-lehman Shock levels 3,500 3,000 2,500 CAGR: 2.7% CAGR: 2.2% Oil Natural Gas 8, , Source: NYK Research s Source: IEA, NYK Research s 6

8 Business Environment: Shipping Volumes and Energy Demand (Changes) Key Growth Drivers: Asia and LNG/deepwater oil production General Cargo: Container Volumes Asia -> N. America Asia -> Europe (TEU, millions) Intra-Asia Source: Drewry, NYK Research s General Cargo: Air Cargo Volumes CAGR ( 99-09) (CAGR, %) CAGR ( 09-29) Asia -> N. America 0.8% 6.6% Asia -> Europe 3.9% 6.5% Source: Boeing Cars: Export Volumes by Region Ex Japan Ex Korea Ex Asia (Thai, China, India) (vehicles, million) Source: FOURIN, NYK Research s Intra-Asia Volumes to Increase Asian Out-Bound Volumes to Grow Significant Growth Projected in Asia Natural Resources: Iron Ore Shipping Volumes Japan China Global ,218 Percentage from China 42% 63% 64% Source: Clarkson, NYK Research s Chinese Dependence on the Rise (tons, millions) Energy: Global Demand CAGR ( 00-07) CAGR ( 08-20) Oil 1.6% 0.6% Natural Gas 2.7% 2.2% Source: IEA, NYK Research s LNG Demand Projected to Increase (CAGR, %) Energy: Deepwater Oil Production Strong Growth Projected in Deepwater Oil Production (barrels, millions) Source: EnergyFiles 7

9 Business Environment: Market Condition 12,000 10,000 8,000 6,000 4,000 2, BDI Supply Pricing is determined by global shipping supply/demand balance Bulkship (Capesize) Market Correlation between Bulkship Supply/Demand and Market Condition Bulkship Supply/Demand Balance Demand Note: BDI Supply and demand are both indexed to 100 at the base year (2000) 4T/C (Monthly Average) 8 (Supply/ Demand Gap) Source: The Baltic Exchange Supply/Demand Gap BDI , ,136 Bulkship Supply/Demand Gap and Market Conditions US$ per day 3, , , , ,000 80,000 40,000 (BDI) 8,000 6,000 4,000 2,000 Note: Supply/Demand gap is the difference between supply and demand figures in the graph on the left Source: Fearnleys, Clarkson, NYK Research 0 0

10 Review of Previous Mid-Term Management Plan

11 Review of Previous Mid-Term Management Plan(New Horizon 2010) Achieved financial targets and effectively executed strategic initiatives 1. Financial Targets (JPY, billions) Planned (as of October 2009) Recurring Profit Results ( Forecast) Differences FY NYK s Strategy after New Horizon 2010 Revision Offensive Strategy Strategic Outline Further Advance the global logistics business Strengthen all automobile transport supply chain business Expand natural resources, energy transportation business and pursue new business opportunities Achievements Integrated NYK Logistics and Yusen Air & Sea Services Made strategic investments in auto logistics in China and Thailand Obtained long-term contracts in emerging markets including China Expanded business in the Atlantic Region through NYK Bulkship Atlantic Invested in Knutsen Offshore Tankers ASA, world s No. 2 shuttle tanker company Defensive Strategy Move toward light-asset business model for containership fleet Fundamentally review air cargo business Implement drastic cost reduction measures Reduced owned and long-term chartered fleets Centralized liner management in Singapore Lowered operational break-even point through drastic cost reductions Expanded chartering and leasing business Achieved cost reductions exceeding JPY 100 billion 10

12 Review of Previous Mid-Term Management Plan ( Yosoro Project) Focus on minimizing impact of market volatility Containership and Forwarding Business Transition to light-asset business model Expand forwarding business Air Cargo Transportation Expansion of chartering and leasing business Revenues by business 0.8% 7.5% 14.9% (# of Vessels) (Lifting Volume, millions) 99.2% 92.5% 85.1% Volume from Owned and Long-Term Chartered Vessels Volume from Forwarding Volume from Short-Term Chartered Vessels # of vessels (operating fleet) # of vessels (owned and LT chartered) FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY FY2008 Regular flight Maintain Long-Term Contract Ratio Operating Fleet Size (vessels) Chartering & Leasing Long-Term Contract Ratio Capesize % Panamax 84 55% Woodchip 50 80% VLCC 35 85% FY2016 Bulk & Energy Transportation LNG % Note: Operating fleet size as of March 2011 / Ratio of contracts that exceed 3 years. LNG vessel numbers include ships under joint ownership. 11

13 More Than Shipping Grow with Asia, Expand across the Globe -

14 More Than Shipping 2013: Fleet in Operation Expand operational fleet with a focus on car carriers, small/mid-size bulkers and LNG/off-shore business segments Consolidated Forecast FY2013 FY2016 Vessel Types (Dry Bulk by Vessel Size) Containerships (# of vessels owned and LT charter) Car Carrier Capesize Post-Panamax / Panamax Handysize (incl. Boxshape Vessel) Woodchip Carriers Tanker LNG Carrier Others Total Operating Vessels 93 (83) Operating Vessels 110 (80) Operating Vessels 110 (63) Non-Consolidated Major vessels held under equity method affiliates LNG Carriers (under joint ownership) Shuttle Tankers (KNOT*) * KNOT: Knutsen NYK Offshore Tankers 13

15 Investment Plan Focus of strategic investments will be on car carriers, small/mid-size bulkers and LNG/off-shore business segments Investment Plan (FY2011 FY2016 Completion) (JPY, billions) 2,000 1,800 1,600 1,400 1,200 1, Note: 0 1,300 Current Investment Plan 500 Additional Investments 1,800 Total Car Carrier Large-size Bulkers (Capesize) Small to Midsize Bulkers Tanker Consolidated subsidiaries only (excluding investment by equity-method affiliates) Total investment amount is indicated at time of completion Figures include only chartered/leased vessels of over 5 years LNG, Offshore Business Containership Logistics Other shipping Other nonshipping businesses Shipping Non- Shipping Breakdown (FY2011 FY2016 Completion) Current Investment Plan Additional Investments Major scheduled investments by an equity-method affiliate not included above: Shuttle Tanker (KNOT) investment = 50 billion+ Total Containership Car Carrier Dry Liquid (JPY, billions) (1) (2) (1) + (2) Large-size Bulk Carriers Small/Mid-size Bulk Carriers Tanker LNG, Offshore Business Other shipping Logistics Other Non-Shipping Investments Total 1, ,

16 Financial Targets FY2013 Target: JPY2,300 billion in revenues and JPY130 billion in recurring profit Revenues (by Segment) Recurring Profit (by Segment) (JPY, billions) 3,000 2,700 (JPY, billions) ,500 2,000 1,930 2, , , (Forecast) FY2013 () FY2016 (Target) (Forecast) FY2013 () FY2016 (Target) Segments: Logistics Air Cargo Terminal Liner Bulk Shipping Other Segments: Logistics Air Cargo Terminal Liner Bulk Shipping Other 15

17 Financial Targets: Breakdown by Region and Business Segment Expand franchise in Asia and stable freight rate business (JPY, billions) Revenues Breakdown (by Region) Recurring Profit Breakdown (by Segment) (JPY, billions) FY2013 FY2016 FY2009 FY2013 FY % 1,930 2,300 2,700 28% 30% 34% 1% 2% 3% 15% 16% 12% 13% 36% 1% 2% 3% 15% 16% 14% 13% 31% 1% 2% 3% 16% 19% 15% 13% CAGR 10% CAGR 10% * Bold Figures: Percentage Contribution from Asia (including China and excluding Japan) Regional Breakdown: Asia (excl. China) China Europe N. America S. America Oceania Africa Japan -100 Business with stable freight rates Other Businesses Calculation: Revenues breakdown based on origin and destination. However, sales for drybulk and energy transportation business segments are attributed solely to destination. Note: Business with stable freight rates businesses that NYK can leverage competitive strengths including Logistics, Bulk Shipping (excluding short-term COA, Spot), etc. 16

18 More Than Shipping: Strategic Pillars of New Mid-Term Management Plan More Than Shipping: Expand beyond traditional shipping Cargo More Than Shipping (Combine Traditional Shipping with Value Added Strategies) Strategic Investments Target Regions General Cargo 1) Leverage Logistics Capabilities Effectively capture Asia s growing transportation needs Logistics Asia Automobiles 2) Utilize Auto Logistics Capabilities Actively respond to all auto transport supply chain needs in Asia Car Carriers Auto Logistics Car Terminals Asia Energy / Natural Resources 3) Employ Technological Capabilities Secure highly advanced energy transportation business 4) Leverage Global Network Proactively expand overseas natural resources and energy transport business LNG Offshore Business Small/Mid-Size Bulkers Asia (including Australia) Northern Europe (North Sea, etc.) South America (Brazil, etc.) Asia Pacific Region South America (Brazil, etc.) 17

19 More Than Shipping 1: General Cargo More Than Shipping: Capitalize on contract logistics Business environment for Containers Customers: Growing demand for one-stop shop capabilities Customer Usage of Forwarders (%): Growing trend Shipping Companies Use of forwarders Present Containers/ Direct Pickups Customers Contract Logistics (Warehouse/Delivery/ Customs Clearance) Ocean Forwarding Air Forwarding Legend: Container/Direct Pickup: Ocean Forwarding: Air Forwarding: Contract Logistics: NYK Yusen Logistics Yusen Logistics (strength of ex-yas) Yusen Logistics (strength of ex-nyk Logistics) Differentiating Factor NYK Group Business Strategy Volume from Forwarding Volume from Short-term Chartered Vessels 2 50 Volume from Owned and 1 Long-Term Chartered Vessels 0 0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 More Than Shipping Sales Strategy Focusing on Contract Logistics Yusen Logistics (as of September 2010) Container business is growing. However, approach is changing: 1. Expansion of forwarding 2. Diversification of shipping space procurement Comprehensively capture customers transportation needs across the entire or part of their supply chain over the long-term Employees: Approx. 16,600 # of Locations: 412 Warehouse Area: 2,130,000 m 2 Presence in: 36 countries Internally Develop Cross-Trained Employees 18 Operational Focus: Ocean Forwarding Become one of the world s leading competitors by FY2013 Type Target Region: Asia Cross-Regional Expansion of Successful Business Models in Thailand/Malaysia Logistics Operators in Thailand/Malaysia Size Thailand Malaysia No.1 DHL DHL No.2 NYK Schenker No.3 Schenker NYK Forecast Logistics: Revenues in Asia (JPY billion) FY2013 FY2013 FY2016 vs. Ocean 440,000 TEU 1,000,000 TEU 2.3x Air 360,000 ton 500,000 ton 1.4x

20 More Than Shipping 2: Automobiles 1. Hub & Spoke More Than Shipping: Hub & spoke and automobile transportation Production Hub Ports Markets Japan Thailand India China Malaysia Indonesia Australia Asian Hub & Spoke Singapore Handling Volume: 800,000 (2010) SAL* Shipment Volume: 80,000 (2010) *SAL: Intra-Asia focused shipping subsidiary of NYK Group Europe Middle East 2. Full-Service Transportation Capabilities - Save T.T.** - Higher Frequency - Lower Inventory Production Hub Ports Markets Asia Europe European Hub & Spoke Zeebrugge / Antwerp (Belgium) Handling Volume: 1,230,000 (2010) Gioia Tauro (Italy) Handling Volume: 120,000 (2010) **T.T: Transit Time ***UECC: Intra-Europe focused shipping subsidiary of NYK Group Nordic, UK, European Continent Mediterranean North Africa UECC*** Shipment Volume: 1,120,000 (2010) Production Automobile Terminals / PDI in Asia Local Dealer Local Plant Japan US/Europe China (Dalian, Tianjin, Shanghai, Guangzhou) Handling Volume: 1,700,000 (2010) Markets Japan Asia US/Europe Thailand Handling Volume: 160,000 (2010) Malaysia Philippines Indonesia India Handling Volume: 300,000 (2010) Scale of NYK Inland Transport Operations China Thailand Asia (Others) # of Car Carrier Trucks Inland Auto Transport Volumes 800, , ,000 19

21 More Than Shipping 3: Energy / Natural Resources 1 More Than Shipping: NYK Group s technology, safety and trust Strategic Investment (i.e. Shuttle Tanker) Variable Pitch Propeller: Propellers with angle-adjustable blades DPS Azimuth Thruster: Propellers attached to a pod that can rotate 360 degrees horizontally Bow Loading System NYK Group Technology (i.e. DPS Bow Loading System) DPS (Dynamic Positioning System): System capable of retrieving accurate positioning data using GPS and maintaining the vessel at the programmed location. System utilized on NYK s deepwater drilling vessel Chikyu Bow Loading System: System is designed to allow loading at the bow of two vessels in tandem. Retain and develop outstanding seafarers to further strengthen NYK Group s technology, safety and trust Shipping industry lacks competent seafarers NYK-TDG Maritime Academy in the Philippines Established in 2007 ahead of our competitors Highly competent graduates onboard NYK vessels Core personnel provided to ensure safe operation 20

22 More Than Shipping 4: Energy / Natural Resources 2 More Than Shipping: Establish presence close to our customers Global Network of Natural Resources and Energy Transportation Business Knutsen NYK Offshore Tankers Shuttle Tanker Business (30 vessels) NYK LNG Atlantic LNG Business in Atlantic Region (10 vessels) NYK Bulkship Atlantic Dry Bulk Business in Atlantic Region (50 vessels) London Norway Antwerp TATA NYK Shipping India Dry Bulk Business including Tata Group Cargo (20 vessels) Stockholm Mumbai SAGA Shipholding Boxshape Ship Business (30 vessels) NYK CooI AB Stockholm NYK Reefers Ltd. Reefer Business (30 vessels) NYK Bulkship Korea Korea Dry Bulk Business (10 vessels) Beijing Shanghai Guangzhou Jakarta Seoul Kolkata Hong Kong Singapore Tokyo Stolt NYK Asia Pacific Service Chemical Tanker Business (5 vessels) NYK Line Tokyo NYK Bulkship China China Dry Bulk Business NYK Bulkship Asia Tanker (MR/AFRAMAX) Dry Bulk Business within Intra-Asia region (Total 50 vessels) New York Houston Business Segments : Dry & Liquid : Dry : Liquid Rio de Janeiro Figures in parentheses are FY2016 operating vessel numbers NYK Bulkship Atlantic 21

23 Detailed Financial Targets

24 Financial Targets (Earnings and Financial Targets) Achieve average ROE of 10% (FY11-13) and payout stable dividends (JPY, billions) Forecast FY2011 FY2012 FY2013 FY2016 Target Revenues 1,930 2,000 2,100 2,300 2,700 Operating Income Recurring Profit Net Income Depreciation and Amortization Operating Cash Flow Investing Cash Flow Interest-bearing Debt Shareholders Equity D/E Ratio Shareholders Equity Ratio ROE Payout Ratio x 31% 11% 25% ,030 1, x 1.36x 1.24x 32% 32% 32% 7% 10% 12% Target: 25% consolidated payout ratio 23

25 Financial Targets (Segment Breakdown) Logistics and bulk shipping are the key growth drivers Global Logistics Total (JPY, billions) Forecast FY2011 FY2012 FY2013 FY2016 Target Revenues 1,065 1,135 1,210 1,325 1,670 Recurring Profit Liner Trade (JPY, billions) Forecast FY2011 FY2012 FY2013 FY2016 Target Revenues Recurring Profit Bulk Shipping Total (JPY, billions) Forecast FY2011 FY2012 FY2013 FY2016 Target Revenues ,040 Recurring Profit Terminal and Harbor Transport (JPY, billions) Forecast FY2011 FY2012 FY2013 FY2016 Target Revenues Recurring Profit Other Total (JPY, billions) Forecast FY2011 FY2012 FY2013 FY2016 Target Revenues Recurring Profit Air Cargo Transportation (JPY, billions) Forecast FY2011 FY2012 FY2013 FY2016 Target Revenues Recurring Profit (JPY, billions) Forecast FY2011 FY2012 FY2013 FY2016 Target Logistics Revenues Recurring Profit

26 Mid-Term Management Plan Market Assumptions Shipping industry is expected to remain relatively weak for the near term, but the market is projected to recover steadily in the medium to long-term Market Conditions Fuel Oil Container (Freight Rates) Container (Transport Volume) Bulk and Energy Carrier Car Carrier Air Cargo Currency Exchange Rate Sensitivity against Recurring Profit Asia -> North America* Asia -> Europe* Asia -> North America (1,000TEU) Asia -> Europe (1,000TEU) Capesize (4TC) Panamax (Pac) Handymax (Pac) Handy (Pac) VLCC Transport Volume (1,000 vehicles) YIELD* Capable Weight (1,000 ton) Bunker Fuel MOPS (Jet Fuel) Yen/$ Per $1/MT increase in bunker price Per JPY1 Appreciation to US$ FY2011 FY2012 FY2013 FY $27,054 $25,000 $25,000 $30,000 $30,000 $18,709 $20,000 $20,000 $20,000 $20,000 $16,468 $16,000 $16,000 $16,000 $16,000 $13,517 $13,000 $13,000 $12,000 $12,000 $31,222 $35,000 $40,000 $50,000 $50,000 3,070 3,080 3,350 3,530 3, $491 $650 $650 $650 $650 $94 $100 $100 $100 $ million million million million million billion billion billion billion billion * Figures are indexed, FY2008Q1 =

27 Supplementary Material

28 Cost Reduction Initiatives Continuing to implement cost reduction initiatives (JPY, billions) Forecast 28 Expense Reduction: Fuel Expense (excl. Liner) Liner Related JPY10 billion JPY13 billion etc. (JPY, billions) Major cost reduction initiatives including slow-steaming and lowering of Containership fixed costs will be completed during FY2011 FY2012 FY2013 Total Further Expense Reduction: Fuel Expense Liner Related JPY6 billion/year etc. 27

29 Environmental Initiatives (Maximizing Fuel Economy) Goal: Achieve 10% improvement in fuel efficiency by FY2015 from levels Hardware: Proactive Technology Development Aligned with Long-Term Vision Introduction of Air-Lubrication System : Initiative Aligned with Long-Term Vision Technology Element Technology Test Vessel shape Lower friction Propulsion system Control Ship power saving Gigacell Energy saving hull appendage development / installation Application of airlubrication system to heavy load ships Discussions on energy saving developments Energy saving fan development Early Test/Application Stage System Experimentation Stage - Development of optimal vessel shape - Propulsion efficiency improvement - Introduction of energy saving equipment Twin-screw BC development Application of air-lubrication system to coal ships Air-lubrication system air recovery NYK Super Eco Ship 2030 Twin-screw vessel Larger secondary battery capacity Lower friction resistance Non-ballast water ship (NOBS) Lower wind pressure resistance Lightweight body Time line Software: Ongoing Challenge to Improve Safety Standards and Maximize Fuel Economy 1. Real-time information sharing between vessel and on-shore operations (actively communicate weather, operational schedule, operational status [position, vessel speed, fuel, etc.]) 2. Optimize vessel operations to maximize fuel economy Operations Broadbandization Vessels A) Advance monitoring mechanisms of vessel operations (NYK emissions) Goal: Closely monitor vessel NYK emissions operations, such as operating schedule, fuel economy, position and weather information Increase communication between vessel and on-shore operations B) Link Weather Routing and Ship's information Management System (SIMS) to support optimal route selection and vessel operations Weather Routing SIMS 28