November 2008
All readers of this message will be well aware of the “financial crisis” and the very negative effect that this has had on worldwide economic activity. I mentioned in my last message on this website that NYK had enjoyed very good financial results during the April to June quarter this year. However, I also pointed out that - already at that time, three months ago - NYK’s liner trades were under pressure arising from less than expected growth in cargo volumes and a consequent worsening supply/demand situation in all the major liner trades. Writing this now in November, I have to say that the economic downturn has started to affect adversely almost all parts of NYK’s business in parallel with the global trade decline.
Apart from our liner trades, the downturn is most marked on the dry bulk side of the business, where freight and charter rates have plunged from the high levels that prevailed earlier this year. In addition, car sales are down worldwide, which is obviously not good for our RORO activities, and on the Logistics side, reductions in sales in the automotive and retail sectors of the world economy are having a correspondingly adverse effect on the volume of business that is available to companies within our Logistics division. It is already noticeable that goods are remaining in warehouses operated by our Logistics companies for much longer than was previously the norm and, whilst this will not necessarily in the short term have a negative effect on revenue or profit, it is clear evidence of the reduction in retail sales that is occurring in almost all the markets in which NYK does business.
All in all, the immediate prospects for most of the businesses in which NYK is engaged globally are not very positive. However, NYK is a resilient company, and during its 123 years of history has seen and overcome many difficult trading circumstances. In the present downturn, NYK – partly because of the diversity of its involvement in different parts of the shipping and transport businesses, and partly because of the solidity of its financial foundations - is in a much better position than most of its competitors to weather the storm. Therefore, I remain very confident about NYK’s long term future.
In the short term, NYK is taking action to reduce expenditure wherever this can be done without jeopardising the standard of service that it provides to its customers. The Company is also taking action to minimise the risk of losses and reductions in service levels that might result from bankruptcies on the part of companies with whom it does business. I believe that these actions will help NYK to emerge from the present economic downturn as an even stronger corporate entity than it is at present.
August 2008
In this message, I would like to focus on two particular matters, as follows:
Financial Results: The NYK Group has recently issued a press statement showing its financial results for the first quarter of the Company’s financial year, i.e. the April-June period. The overall results are very positive, with profits at the highest level ever recorded by NYK for a single quarter. These good results are more than anything else the result of the favourable market conditions that generally prevailed during the April-June period in the Bulk Shipping markets. In particular, there was very strong demand in the dry bulk market for movement of such commodities as iron ore, coal and grain to emerging nations such as China and India.
However, the favourable results that the company enjoyed overall during the April-June quarter cannot disguise the deterioration that has been occurring in the liner shipping part of our business. Less than expected growth in cargo volumes this year in the main liner trades worldwide, including the Asia-Europe trade, has resulted in a worsening supply/demand situation, which in turn has led to our capacity not been fully utilised on the dominant legs of the major trades and to freight rate levels coming under pressure. At the same time the huge increases that have occurred in fuel prices during the last few months have resulted in a significant increase in our costs. In view of these adverse trends on the liner side of the business, we need as a company to revisit and review all cost items, as we have to do whatever we can to reduce our expenses by making savings in bunker costs, improving operational efficiency, reviewing our selection of vendors etc etc. Reducing our operational costs is a top priority for liner management in Europe.
Safety: Ensuring that we operate our vessels safely, and that all our landside operations are conducted with safety a paramount consideration are key points within the “New Horizon 2010” medium term Management Plan that the Company has recently adopted. Safety and the Environment are coupled together within that Management Plan as part of the Company’s “Commitment to the Earth and Society”. All NYK’s staff in Europe are reminded that they should ensure that all our operations are carried out with safety very much in mind.
May 2008
Welcome to our new Group Europe website, which has been launched to improve our communications and knowledge sharing with you. I plan to use this page to provide regular updates as seen from my position as NYK’s European Group CEO, a role I was appointed to in April 2007, having previously worked with the company in various assignments in Japan and North America since joining NYK in 1975.
To mark the launch of this CEO page and to highlight the breadth of NYK’s services in Europe and globally, I would like to focus on our new medium-term Management Plan – New Horizon 2010 – that will run between April 2008 and March 2011. This Management Plan provides a set of strategies for the Group that follows the New Horizon 2007 Management Plan that operated successfully between April 2005 and March 2008. By acting in accordance with the strategies contained in the new Plan, the Group intends to continue to expand its business and evolve into a global monohakobi (transportation) company that achieves regular increases in revenue and profits.
I summarise briefly below the three key strategies that are highlighted in the new Plan:
Growth: the Group intends to deepen the scope of its strategies for the global logistics business, to expand its involvement in energy and natural resource transport and to expand its business reach in growth regions - especially in Brazil, Russia, India and China (the so-called “BRIC” countries).
Stability: the Group will aim to reinforce its customer-oriented services, stabilize its profits by securing long-term contracts and, at the same time, maintain and strengthen its financial position.
Environment: the Group will continue to place a high priority on ensuring that its operations are safe, and will aim to score far ahead of its competitors as an environmentally progressive Group, as well as aggressively investing in environment friendly technologies.
There is a more extensive explanation of New Horizon 2010 contained on our Corporate site here, and I commend it to you.
Needless to say, New Horizon 2010 runs in parallel with, and is fully compatible with the global NYK Group Values of Integrity, Innovation and Intensity. It is by adopting these values that we seek to deliver ever greater benefits to all our stakeholders, customers, shareholders and investors, society and staff members.
I look forward to providing regular updates on our progress towards our goals via this page in the coming months. In the meantime, if you have any questions or comments about NYK in Europe, please do not hesitate to contact us.
Masamichi Morooka
CEO NYK Group Europe
