Japanese shipping company Kawasaki Kisen Kaisha (K Line) revealed plans to make investments totaling JPY 80 billion (around 718 million) over the next three years, excluding the containership business.
As explained, the investments are part of K Line’s “Revival for Greater Strides” plan as the company approaches its centenary of operations.
A total of JPY 35 billion will be used for fleet restructuring, including replacements. In addition, the company will invest JPY 15 billion in environment-related areas. As for strategic investments, K Line is to spend JPY 30 billion, which will be used to improve income stability and develop next-generation core businesses, including the energy value chain business, according to the company.
“Placing top priority on improving our financial position, we will invest JPY 35 billion in our fleets, with a policy of meticulous selection and substitution,” the company said in its annual report.
Under the fleet planning and investment plans, K Line will reduce the dry bulk fleet by 31 bulk carriers until 2019. What is more, car carrier fleet will be decreased by 11 vessels and short sea/coastal fleet by 1 vessel.
On the other hand, K Line intends to increase LNG carrier fleet by 8 ships.
In response to a severe business environment which negatively affected K Line’s financial results in fiscal 2015 and 2016, the company has taken various measures to improve its future performance. These include a structural reform of the dry bulk carrier business and an integration of the containership business, among others.
In its outlook for fiscal 2017, K Line said that the group-wide efforts are expected to return the company to profitability.
“We forecast that our own efforts will have a JPY 44.3 billion positive effect on ordinary income, including JPY 20.3 billion from the provision for losses in the containership business and JPY 19.2 billion from cost reductions and other efforts,” Eizo Murakami, President and CEO of K Line, commented.
“In addition, we anticipate a further JPY 29.1 billion improvement, thanks to external factors such as moderate recovery trends in the containership and dry bulk markets. Together with our own efforts, this should translate into a JPY 73.4 billion overall improvement in ordinary income,” Murakami concluded.