Nippon Yusen Kabushik New

Thank you for waiting. Thank you for joining us despite your busy schedules. It is time to start. This is the NYK line fiscal year 2024 financial results briefing. I'll be acting as moderator. I am the head of IR group. My name is Okada. First, I'd like to introduce the presenters. President, Representative Director, President and Chief Executive Officer, Soga. Representative Director, Executive Vice President and CFO, Kono. And Chief Executive of Liner and Logistics Headquarters, Banno. President Soga will explain the fiscal 2024 full year results. After that, we will have time for questions and answers. I will explain how you can ask questions. The presentation materials are on our website. Please refer to them. This briefing will be provided in terms of on-demand streaming, including the Q&A session. We ask for your understanding. I'd like to now have the presentation. Mr. Soga, please. This is Soga, president of NYK Line. Thank you very much for taking time out of your busy schedules to attend today's briefing. Today, we will deviate slightly from the usual pattern and start with an update on the progress of our medium-term management plan. With the current plan covering fiscal years 2023 to 26 reaching its midpoint, I would like to take this opportunity to review the past two years and discuss revisions for the remaining two years. After that, I will present the overview of our fiscal 24 full-year financial results, followed by our earnings forecast for fiscal 25. After the presentation, we will have time for Q&A. The presentation materials will be displayed on the screen, but if you have downloaded them from our website, you can refer to that as well. First, the progress of our current medium-term management plan. Please turn to slide 4. The strategic foundation of this plan is ambidextrous management, based upon which we have advancement of existing core business and new growth business. Supporting these strategies are initiatives for talent and organizational transformation, climate change response, and digital transformation, DX. And we have undertaken various activities in the first two years. That will be fiscal 2023 and 2024, and the major initiatives are outlined here. For advancement of existing core business, we have made growth investments in the LNG fleet where demand growth is expected, and we secured new contracts. Also, by acquiring Eneos Ocean, we expanded our fleet and personnel in areas where we had relatively small share. such as the LPG and chemical tanker segments. Also, we have expanded our logistics business mainly through USEN logistics. In terms of new growth business, we have completed a demonstration vessel that runs on ammonia deemed to be the next generation marine fuel and demonstrated 95% CO2 reduction and technical safety paving the way for future fuel transition. We've also deepened our concrete activities, such as delivering crew transfer vessels, CTVs, for offshore wind projects and opening a training center for crew members. Also, we consolidated one of Europe's largest CTV operators, aiming to enhance our global knowledge and technological capabilities. Also, in CX, one of our supporting strategies, we are re-examining what it means to be a global organization where all 35,000 employees around the world can work vibrantly toward enhancing the corporate value of the group, and we're implementing action plans to achieve this goal. In EX, our climate change countermeasures and decarbonization strategy, we have published the NYK group decarbonization story, an advanced and ambitious plan, and the progress report outlining our decarbonization initiatives, roadmap, and progress. Additionally, we published our first TNFD report last year, which focuses on maintaining and improving natural capital, particularly marine ecosystems, and we plan to deepen these activities going forward. In DX, we are achieving results in applying 3D models in ship design, and maintaining and enhancing safety technology through the use of high-frequency data communication between ships and the shore. Next, I will explain the other key component of the medium-term management plan, that is our capital policy. In terms of our profit planning, recurring profit target for the final year Fiscal 26 is 270 billion yen. Actual was 261.3 billion in fiscal 23. And last year in fiscal 24, it was 450.8 billion. Looking ahead, we forecast 255 billion for fiscal 25, 270 billion for fiscal 26. Further out in fiscal 2030, we are forecasting 440 billion yen in recurring profit. Next, cash flow. Investments are progressing steadily. And we increased the four-year planned investment from the initially planned 1.2 trillion to 1.4 trillion yen. Let's go to slide 24. So you see the four quadrants. So these are the investment plans that we presented when we put together this plan. But near the bottom, you see our progress rate and the latest progress. numbers in terms of how much investment we will make to where. And we see steady progress in all areas. And for enhancing LNG fleet and others, we have seen increase in investment. Let's go to slide 26, cash allocation. So operating cash flow, because of higher performance, From $820 billion over four years, it has now increased significantly to $1.6 trillion. And toward the target of optimizing equity ratio, we will use debt. And also, we have the management allocation. and we are increasing investment and we are acquiring our own shares and increasing returns to shareholders and we are enhancing efficiency. In terms of returns, 430 billion over four years is increasing to 890 billion yen. Page 26. shareholder return progress and adjustments or revisions. So from 2025 payout ratio, we are going to raise from 30 to 40%. And also minimum dividend, we are going to raise from 100 yen to 200 yen. Also fiscal 2025 Well, it was until end of April, 2026, we will conduct a share buyback of 150 billion yen. And despite the forecast of lower year-on-year profits for fiscal 25 and heightened sense of uncertainty in the external environment like tariffs, we have determined that the strengths of each business, the profit level, and our confidence in future growth have all been raised compared to when we first formulated the medium-term plan We therefore will raise both the payout ratio and the minimum dividend, hoping to enhance the predictability of shareholder returns. Going back to slide seven, this summarizes our latest financial forecasts. We expect, well, this also includes our forecast for fiscal 2030. And we see strength compared to the initial forecast. And there will be an increase of $100 billion to $440 billion. And ROE, we expect 10.3%. So these will be the fruits of the growth investments that we are conducting. And also we have strengthened the foundation of non-ONE business, and that has led to stronger business. And also we are seeing stability in the performance of ONE, and that will all contribute to this. So slide eight, toward 2030, this is the image that we have. Next slide. like to talk about the full year results for fiscal 24. In summary, despite various challenges such as lower yen, sometimes rapidly rising yen, the Red Sea issue, and uncertain interest rate situation, rising material and labor costs, and also Red Sea issue and large fires and earthquakes, other natural disasters. With all of that, we were able to close the year with results significantly exceeding our initial forecast. The main reason for the significant upward revision was a strong performance of O&E, but also significant for the strong and stable performance of businesses other than O&E. PLEASE TURN TO THE TABLE ON PAGE 13. THE BLUE COLUMN IN THE CENTER SHOWS THE RESULTS FOR FISCAL 24. REVENUE INCREASED BY 201.4 BILLION YEAR ON YEAR TO 2 TRILLION 587.7 BILLION YEN. RECURRING PROFIT INCREASED BY 229.5 BILLION TO 490.8 BILLION. NET INCOME ROSE BY 249.4 249.1 billion to 477.7 billion with all metrics showing year-on-year increases. However, I would note that this is the third best results following the record-breaking over 1 trillion yen earnings in the previous two years. During fiscal 24, O&E, our container shipping business, saw much higher than expected earnings. Automotive Business also maintains strong performance, and we managed to maintain last year's profit level for dry bulk business despite market fluctuations. These factors led to the higher than expected results. Also, as special factors such as the logistics disruptions during COVID-19 subsided, we believe that we have steadily strengthened our profitability, particularly in our bulk shipping business.

Next, please refer to the table on page 14 for the results by segment. Here too, the blue columns are the results for FY2024. The recurring profit of the liner and logistics business, which consists of liner trade, air cargo transportation and logistics, increased by 206.4 billion yen year-on-year to 274.3 billion yen for liner trade, increased by 15.3 billion yen year-on-year to 21 billion yen for air cargo transportation, and decreased by 4.6 billion yen year-on-year to 21.2 billion yen for logistics. All of these results are due to the strong cargo movement from Asia, and rising freight rates due to tired demand and supply conditions because of the situation in the Red Sea. The profit level of the contract logistics in the logistics segment was slightly lower than the previous year due to the temporary expenses associated with gross investments made in the previous year. The equity method earnings from O&E was 247.1 billion yen. Recurring profit of the automotive segment increased by 7.5 billion yen year-on-year to 113.3 billion yen. Recurring profit of the dry bark segment was the same level as last year at 18.1 billion yen. Recurring profit in the energy segment was 46.1 billion yen down 0.2 billion yen from the previous year. In the automotive business, despite continued port congestion and rut changes due to the situation in the Red Sea, we were able to improve vessel utilization rates and capture solid transportation demand. In the dry bark business, although market conditions differed slightly from each vessel type, the results were roughly at the same level as the previous year. In the energy business, market conditions declined for VLCC due to a decreasing demand from China and for VLGC, market conditions declined with an increasing shipping capacity due to the easing of the Panama Canal route. However, all in all, the segment performed at roughly the same level as the previous year with the LNG career business, which did well with long and medium-term contract supporting the segment. Please go to page 10. To repeat, the recurring profit was 490.8 billion yen up to 129.5 billion yen year-on-year, and net income was 477.7 billion yen, including extraordinary profit, and tax. Based on these results, we plan to increase the dividend by 15 yen per share from the previous forecast to 195 yen. Combined with the interim dividend of 130 yen per share that has already been paid, the annual dividend will be 325 yen per share. The additional share repurchase worth 130 billion yen was completed on April the 4th, and all the shares repurchased will be retired as of May the 30th. Please look at page 15. As shown in the table on the left, about 17 billion yen in recurring profit increase of 229.5 billion yen a year was due to the weaker yen. So much for the overview of the financial results of the FY2024. Next, I would like to explain the full year forecast for the current fiscal year 2025. Please look at page 16 of the material. FY2025 full year forecast is for revenue to be 2,380 billion yen down 208.7 billion yen year on year, recurring profit to be 255 billion yen down 235.8 billion yen year on year, and net income to be 250 billion yen down 227.7 billion yen year on year. We expect a decrease year on year in revenue and profits on each buying item. As for dividend focus based on this forecast, we have decided, as I mentioned earlier, to raise the dividend payout ratio from 30% to 40% from this fiscal year and to raise the minimum dividend from 100 yen to 200 yen. For now, we plan to pay an interim dividend of 115 yen and the year-end dividend of 120 yen for a total annual dividend of 235 yen. In addition, following on from the last year, we will repurchase our shares for a total of 150 yen this fiscal year. Please note that these business performance forecasts do not include much of the impact coming from changes in the external environment, such as tariff measures in various countries and US maritime policy. For example, with regard to the issue of tariffs, it is virtually impossible to predict at this point how much and for how long the cargo movements of which customers and which vessel types will be affected by the escalation of the tariff war or whether they will decrease or increase or how severe the economic stagnation in each country will be due to the decline in cargo movements. There are too many parameters. Therefore, we will not incorporate these factors into our earnings forecast this time. That said, we have estimated the maximum negative impact for each business, that is for each vessel type, and have inserted it as nodes by segment. Since there is a possibility that there will be almost no impact in some cases or for some segments, we have estimated the impact to be 0 to minus 45 billion yen for liner trade, 0 to minus 5 billion yen for logistics, 0 to minus 20 billion yen for automotive, 0 to minus 20 billion yen for dry bulk, and 0 to minus 10 billion yen for energy. So for each segment, because each segment has different assumptions, we showed some estimates. Adding these together, we get zero to minus 100 billion yen. But at this point, we do not know whether this will affect all segments and all vessel types at the same time, or only certain vessels for a certain period of time. Depending on the type of vessel, things may actually move in a positive direction. Taking these factors into consideration, we have noted the estimated range of amounts at risk faced by each segment on pages 16, 17, and 18. With this premise, please look at slide 20. I will explain the full-year forecast for each business segment. The blue column on the right shows the forecast for FY2025. First, for liner trade, we expect recurring profits to decrease by 193.3 billion yen year-on-year to 81 billion yen. The environment surrounding container ships is said to have peaked last fiscal year, but we expect the delivery of new container ships to continue this year, softening the supply and demand for shipping capacity. As for air cargo transportation, the transfer of all shares of Nippon Cargo Airlines to Anna Holdings is scheduled for May 23rd of this year, so it is not included in this full-year forecast. Next, in the logistics, we expect recurring profit to be 18 billion yen down 3.2 billion yen year on year. In the forwarding business, we expect the volume of both ocean and air freight to increase, but freight rates will decline slightly. In the contract logistics, we expect a temporary increase in expenses due to gross investment as in the previous year. Next, In the automotive transportation, we expect recurring profit to be 96 billion yen down 17.3 billion yen year-on-year. Transport demand will be strong, but we expect a slight softening of demand and supply conditions due to the delivery of new ships. For the dry bark, we expect recurring profit to be 17 billion yen down 1.1 billion yen year-on-year. we expect the supply demand environment to remain largely unchanged for all vessel sizes with market conditions roughly at the same level as fiscal of 2024. In the energy business, we expect recurring profit to be 48 billion yen up 1.9 billion yen year on year. Regarding market conditions, we expect VLCCs to be slightly better than last year, while VLGCs are expected to be worse, depending on cargo movements from North America to China and in Asia, which is, of course, related to the tariff situation. We expect stable earnings from energy carriers with medium to long-term contracts. Finally, please look at slide 21. Here is the factor analysis. of the 235.8 billion yen decrease in recurring profit compared to last fiscal year, and so much for the full year forecast for 2025. From slide 23 onwards in the materials, there is a supplementary explanation on the progress of the medium-term management plan. I touched upon it slightly. We would like to refer to those pages if necessary during Q&A session. That concludes my presentation. Thank you.

Thank you very much. So that was the fiscal 24 full year results presentation. Next, we will have the Q&A session. So anyone with a question, please. We see a hand. Please. Three questions about shareholder returns. So during the medium-term management plan, you made some change. What's the background to that? And you changed the payout ratio from 30% to 40% with a minimum to 200%. So what's the background for how you decided on these numbers? Second question, impact of tariffs. you have calculated for each segment. So what are the assumptions upon which you came up with these numbers, if you can briefly explain? Number three, progress, well, page 23, progress of the medium-term management plan. So let's go 26. And on another page, there was a progress number. So shareholders' equity ratio in ROE, a little bit lower than the initial projection, especially for ROE, next year will be lower, maybe impact of O&E, and the rate of equity ratio coming down, maybe slower. How do you look at that and how are you going to manage these things? If you have some ideas, please share them. Thank you for the question. For the first two questions, I would like to address them. The third question about the fiscal 26 financial indicators, CFO, Senior Vice President Kono will respond. Your first question. We have two years remaining, so we're at the midpoint of the Million-Term Management Plan. And during this time, we have changed the policy about shareholder return. What's the background to that? That was the question. For one thing, past two years and a year before that, so past three years, we have looked at a non-ONE business and we have conducted various measures to strengthen those businesses. And if you look at the actual results, we have seen that those measures have been very effective and we have a stable and strong earning power of these businesses. And so growth investments are being made in those areas as well. And by making those growth investments, we can expect that shrinks to lead to fruits that we can harvest. So we're more confident about that. That is one thing. The other thing is From shareholders perspective, there is this level expectation that we are hearing from the shareholders and for dividends, they're looking for predictability and the stability for dividends. So quite a large number of comments we received on that front. And so in terms of payout ratio, we have always said that we will look into this and 30%, is not the median in the market. So we decided to raise that. And also to enhance predictability, visibility, we have set 200 yen minimum dividend. By setting that level, well, what is the grounds for 200 yen? That is, well, 4% of the dividend yield. And that is why we have decided to raise the minimum dividend. And also, another thing is inclusive of dividends, shareholder returns. But not only that, but we have the operating cash flow. And what comes out of that there is the growth investment that should be made and we have to plan for the future and we've done various simulations about the future investments. And so we can maintain the necessary funding for the investment. And so we checked on that and then we looked at the several factors and we decided that we can expand the shareholder return. So we've been able to make those calculations. And that is why we have decided to change the shareholder return policy. And we want to minimize the impact on the share price. And so although it's during the medium term management plan, we decided to implement this change. Your second question about the impact of tariffs. For each business, it's a little bit different, but for the container business, O&E, O&E has made the announcement that, well, $1,100 million, that will be the annual profit at the steady state. If there's an impact, that will be lowered to $200 million if there's an impact of tariffs. So two scenarios are presented. And so the risk that we have, L&L minus $45 billion, that is the risk. And the there's 250 million worse scenario for O&E. So we calculated the risk based on that. For automotive, the maximum risk is 20 billion is how we phrase it. So this is simply for the North American route, the number that will be shipped may fall. So we set that assumption and made this calculation. So for the automotives, Those for North America, the number of vessels, is about 25% of total. So from Asia, Japan to North America, that's about 20%. And Europe to North America, that's about 5%. So together, it's 25%. And the impact of tariffs may lower that number. And with that assumption, we say maximum 20 billion impact. And USTR has announced, well, this was a surprise, that for automotive carriers, regardless of whether it's registered in China, for those automotive carriers, they're going to charge a fee for using the port. And so we are making various studies about this for the automotive carriers. But the number of vessels that call on the U.S. ports and the number that is being carried, if we simply calculate, that will be about $10 billion that will need to be paid for the additional port fees. And this, well, the shipping company will pay, will it be borne by a shipping company? That's not certain. And whether this will be levied is uncertain. There's a lot of lobbying activity conducted. So it's unclear. So for this part, perhaps this may be something that will be passed on to the customer. So we're saying this is maybe more than 10 billion, but this may actually be zero or maybe several billion. So those two things together, we're saying maximum 20 billion. For LNG and bulkers, so how much less vessels or How many shipments? That's not what we're looking at. But we're looking at the overall economic condition. We expect that to worsen a bit. So market condition should deteriorate a bit. And we calculate that and we reflect that in this number. So for energy, that will be 10 billion max. And dry bulk, minus 20 billion. So those are the numbers that we came up with. But those two numbers, energy and dry bulk numbers, the probability of these things happening, we think, is very low. And as we said at the outset, the maximum negative risk to happen simultaneously at a certain time the probability of that is very minimal. Probably won't happen. So it's minus 100 billion just by adding it all up. But this is really the theoretical maximum. So that will be the response to your second question. Third, about the financial indicators, I'd like to have the CFO respond. Thank you for the question about these indicators. As you pointed out, ROE, and shareholders' equity ratio compared with fiscal 25. Fiscal 26, it's a little lower. And when we announced the medium-term plan at the end of fiscal 26, so March 27, we showed these numbers. That was sort of a projection rather than a target. And the 57% is what we had for shareholders' equity ratio. and 49%, including charter liabilities. And so for shareholders' equity ratio, compared to the number in the medium-term plan, we have a better number. I don't know if it's suitable to say if it's better or the larger is better, but the number is higher. ROE compared to the medium-term plan is lower. That is because during this time, we have bigger shareholders' equity, and we have made a lot of investment, and the balance sheet total assets increased. That is the reason for this. So fiscal 26, if you look at that single year as of now, this will be sort of provisional numbers. So this is not detailed calculation in budget. It's just a review at this point of time. So there is room for further change or revision. But as of now, 270 billion recurring profit. Based on that, we will have these numbers. So fiscal 27 onwards toward fiscal 2030, we have these numbers indicators for 2030. So there's upfront investment. And the management allocation, maybe this will come up later again, but as the president explained, management allocation, there's still about $200 billion that we have secured. And so for future investments, well, if there is no investment, then that could perhaps be used for shareholder returns. growth investment for the future, if that should bear fruit, then for fiscal 2030, ROIC and ROE numbers should improve. That's how we see it. That will be my response. Thank you very much.

Thank you for the question. Next question. It's somebody who raised his hand. Thank you. I have two questions. First, as you were referring to, management directed allocation, 200 billion yen. Would it be fluctuating depending on incoming cash? And what is your assumption? What is the timeline that you have in your mind for the settlement? That's my first question. Second question, especially for container ship and the automotive carriers, the current cargo movements and the operation, what is happening there? Of course, it will be difficult to talk about what will happen in six months, but what is likely to happen, say, in one month? If you have any thoughts on that, please share it with me. Thank you for the questions. So as to the first question, to Conor-san, please. Thank you for the question. As to management-directed allocation, the current assumptions operating cash flow, the current operating cash flow is being used. And if it decreases significantly in 2025 or 2026, and there will be some impact But there are many other factors. So we believe that we have already secured at least at a certain level. So what is the timing for us to make judgments? It's difficult to say at this moment. It's difficult to talk about it at this moment. But if there are any good opportunities for investment, that will be our priority to make investment for growth. during the current mid-term plan period, what we can see during this mid-term plan period might not be necessarily implemented. That doesn't necessarily mean that we are going to use all the earmarked money for this plan period. It might go into the next plan period, if that do sound more reasonable. And we might also make some additional the shareholders return. I know that I have not answered your question completely, but that is our thought, how to use this management-directed allocation. This management allocation, how much will be presented to you? going forward. As to your second question, container ships and the automotive carriers, the current situation, freight rates, and it's likely to happen in one month. So Banda-san is going to answer about the container ships, and I'm going to talk about the automotive. Thank you for the question. So container ships, current situation is as follows. So for the North America in April, the cargo volume decreased, especially for Chinese market to avoid tariffs. There's some disruption. So part of the other shipments were canceled. But all in all, some companies decreased the deployment of vessels. So, from April through the May, we are not seeing any significant decrease in utilization. So, and as a result, freight rates from mid-April that it had it stopped to decrease and some companies that tried to do some things like GRI and actually in some cases rates went up. That's the current situation. In the US, the inventory of various consumables to what extent it has decreased. We cannot get timely information about it. It's always come with some one month, two months time lag. Based on that, we are not hearing that the products were gone from the shelves or the materials are gone from the market. We are not hearing it from This April, there's some other movements to contain the volume. So the inventory has been decreasing. The retailers like Walmart, such companies from April end, end of April, they resumed placing orders to China. So In one month, the moves for the resumption of placing orders might be more active. And then the space is tight to some extent already, so we do not expect the freight rates to go down further. And some of the shipment companies, especially for the West Coast of the US, The market is likely to be tough. So some companies have replaced their vessels with smaller ones. And the vessels built in China, to what extent that could be the source of the more problems? But some of the companies delivering the vessels to the U.S. companies, some U.S. companies might replace those Chinese shipbuilding companies with other countries' companies. So in one month or so, we I do not expect the market to decline, go down significantly. And that is my thoughts. As to automotive, the current situation and what is likely to happen in one. Here is Soga speaking. As to automotive, our clients are the automobile companies, not only Japanese, but also European companies. They have very strong status. And our customers, our clients, who have strong status, have contracts with us, long-term contracts. And based on information that we get from them, we develop a plan for vessel deployment. The vessels to the US, they are not saying that they are going to reduce the volume to the US market. Some of the automobile companies said that they are going to stop the shipment in April, but already in May, they resumed the shipments. There's no change there. And the Japanese customers, automobile customers, have not reduced their shipments at all. So the current bookings present no impact. And in the case of automotive, like two months before the shipment, there will be some booking. And in three weeks before the shipment, the contractor will be confirmed. So, so far, we have not seen any drops, and we will not see any drops in the shipment. That is our thought. So my answer is that we are not seeing any changes. Thank you very much for your very detailed answers.

Thank you for the question. Next question. Then next, we see a hand raised. Please. Can you hear? Yes. Thank you for today. three questions. First, about the shareholder return issue. So you responded by saying you're more confident there's the request from shareholders, but the impact of tariffs, so unpredictable, good things, bad things, it's very unclear what will happen. So at this timing, you changed the policy for shareholder returns. Can I ask once again, why at this timing, with so much uncertainty, you have made the decision to change the shareholder return policy? That's the first question. Now, container and automotive, the recent developments, and also the use in air cargo. I want to ask about the air cargo situation. And profit of logistics, it has been declining since it hit its peak. So I know there's one time impact, but what's the timing of the reversal? What needs to happen for this to rebound? That's the second question. Third question, page 20 is three. So investment cash flow minus 680 billion. That means quite a large investment cash flow negative figure. So investment is increasing substantially here. If you can explain why that is so, please. Thank you for the questions. So first question, I would like to respond. Second question about logistics and air cargo, Mr. Banno will explain. And fiscal 25, investment cash flow background. Mr. Kono, CFO, will answer. So why at this timing have we changed and strengthened the shareholder returns? Well, especially since this fiscal year, we're projecting lower profits. I mean, we're making it clear that we're seeing lower profits. And as you pointed out, there is the tariff impact. tariff and other issues bringing up heightened uncertainty. But we made the decision now. Some companies may say it's so uncertain, so we should withhold and use it for rainy day. But as we explained, based on the profit plan for the future, we made various calculations, various simulations, and the amount to be used for investment, we will be able to secure. And at the same time, we are able to distinguish the amount that we can use for shareholder return. And we decided that we can do this. Now, this is something that's difficult to say, but shareholder returns, capacity-wise, we have more. But there is uncertainty. And so we cannot deplete that. So we have secured a certain amount as sort of reserves. And so this is the maximum that we can do in terms of changing our shareholder return policy after doing multiple simulations. With quite a big uncertainty, dividend predictability, that we are able to show that shows the strengths of our company. And so this is something that we would like to publicize. And so that is the motivation for changing at this time. That's the answer to your first question. Second question about the air cargo situation. Banno, please. Yes. So for air freight, we skipped over, but compared with containers, it's impacted more. And from NCA perspective, from a carrier perspective, let me explain. So especially e-commerce from China, there's the de minimis rule changed or will change. And in April, it has suddenly stopped. So as you see in newspapers, CNN, Temu, so movement for that has really stopped. And charter flights, they had flown quite a large number. And they were absorbing the capacity or supply from the market in the past six years, but that has suddenly stopped. And so the market environment or the supply-demand balance has really deteriorated. And so air freight has been impacted. And so charter flights were prepared, and so they were completely canceled. That's happening in many cases. And so air carriers are having a difficult time for charters. So sometimes forwarder receives the booking and that is wholly canceled. That's happening in large numbers. That's what is happening now. Concerning NCA, it has a unique characteristic that it has a large aircraft. So what it is carrying is a little different from others. And so it's not that there has been huge impact. So compared with the last fiscal year, it was full capacity. So it's a little laxed since then, but it's not flying empty. And for Europe and for Asia, for those destinations, well, we are rerouting to those destinations. So for NCA, it's a holding firm. But centered around China, forwarders and carriers who are based around the Chinese market, I think they are in a very tough situation. And months from now, I don't see a big change from the current situation. Third question. So fiscal 2025 investment cash flow, It's a very large number. What's the background to that? So CFO, Mr. Kono will explain about that. Thank you for the question. So this fiscal year investments, LNG carrier related is relatively large. And also in energy business, From NAOS Ocean, we have LPG and chemical tankers that we have acquired. This fiscal year, it's being booked. And so that has pushed up the number from ordinary level. In addition to that, although not fixed, there will be some future investment projects that is also included. And so this is up to negotiation. And so it could change. But for fiscal year, this fiscal year, we've included those numbers. So mainly around the energy business, we're making a concentrated investment in ship completions. So that is what's pushing up this number. That would be my response. Thank you very much. For the second question about China, I can understand very well. But you said there was talk about last-minute demand. You're not seeing that happen? So last-minute demand, there was some in February and March. That has ended. So no, we don't see that last-minute demand now. So the negotiation for tariffs, we don't know how it will evolve. And if it should be concluded early, well, people are continuing production and stopping the shipment. So we hear many entities doing that. So on the Chinese side, inventory is being built up, we hear. So between U.S. and China, if there is an agreement, that volume will all of a sudden will start to move again. So there is that possibility that remains. Also about the logistics, you asked about that and I forgot to talk about that. So profit for that has been declining constantly. When will it start to increase? For fiscal 25, outlook compared with fiscal 24, has deteriorated. So that may attract your attention. But the fiscal 24 was worse than 23. That was a one-time impact. Various costs were incurred. And at that timing, we deliberately booked some costs. And so that was a one-time effect. So 24 numbers were low. Now 25, how can it be even lower than that, you might ask. So in various places, not just limited to M and A, but also in other parts, for various assets, we have been making investments, large warehouses. And in fiscal 25, It's timing that that's going to arise and there will be a cause for moving to the new warehouses. and there's some initial costs. So not capex, but there are some expenses and that's being concentrated and happening in various countries in a concentrated manner during 25. So it's another one-time impact that's different from the impact in 24. After we overcome that, then the large warehouses that will have started up will generate profit. So we should see improvement 26 onward. For forwarding, no big change in the circumstances. And fiscal 24 compared to 23, especially in Japan, there was more movement in 25. Well, we don't know what will be the extent of the tariffs, but if there is no, then there should be the same level or slightly higher movement. And so the logistics is negatively impacting the numbers. Thank you very much.

So the next question is going to be the last question. So I'd like to call on the next person to ask a question who has raised his hand. Thank you. I have two questions. First, on a short run, I have a question about the dividend. So 100 billion yen impact coming from tariffs will not be realized, he said. But if it does, and if the actual profit would go down significantly, then the dividend level will go down as the profit goes down, or the GDPS of 235 yen will be maintained. The second question is about automotive business. Profit is expected to go down minus 17.3 billion yen. But why? Because the export, the condition is expected to remain unchanged. Thank you for the question. So from the second question, Adesoka is going to answer your question. As you can see in the materials for FI2024, the actual number of units transported and the other 25, the forecast, are equal, 4.4 million or so. 4.44 is going to be 4.46 million, so only the difference of 20,000. It's an increase even, but still the recurring profit is going to go down. It's expected to go down. One of the reasons is, of course, FX, because of the yen appreciation. And in the automotive area from 2025 and onward, the new vessels are expected to increase, especially the vessels from China. So the demand and supply has been very tight, but there will be some softening from 2025. As I mentioned earlier, we are doing business with very strong customers with mid to long-term contracts. That's how we operate. So in that sense, we will not be exposed to big impacts. But in some cases, there are some spot freight cargoes, like the power shovel and high-end heavy equipment. So in a very tight space, the rates tend to be very high. And so those we also the built with the such the products as well, but in 2025 with some more new vessels, so the demand and supply is expected to soften, then such a spot the cargo freight is likely to go down. we don't know whether we will get such the cargo or not. And if other companies will get such a cargo, then the freight will go down and then that will not bring us the expected level of revenue. That's why the recurring profit decline is expected here. So it is not linked up with the number of units transported, but it is related rather to the quality of the cargo and the freight associated with it. Going back to your first question, This time, the payout ratio is going to be raised to 40%. In addition, the minimum, the dividend is raised to 200 yen. So if, what will be the level to hit 200 yen? Net income, 200 billion yen as minimum. And if it is lower than 200 billion, that will hit the 200 yen. We would like to avoid that, meaning that we'd like to earn at least 200 billion yen. That is the target that we impose on ourselves. But if that situation comes around, then 235 yen for this fiscal year, will not be maintained by raising payout ratio rather we are going to maintain the minimum 200 yen. I think that's the way that we need to, you need to understand. But the background, as I mentioned earlier, is as follows. That we'd like to avoid fluctuation of the dividend amount as much as possible and the dividend yield that should be maintained on certain level so that the predictability of the dividend will be raised for each shareholder. So that is how we are going to work on that with the current package that we have shown to you. Thank you very much. Thank you. With that, we would like to end our Q&A session. And with that, we conclude the financial results briefing for FI 2024. We would appreciate that if you fill in the form. Thank you very much for your participation.