Maintaining Newbuilding Competitiveness Centered on Quality, Cost and Environmental Performance

「In the new shipbuilding businesses of our company and 函館どつく株式会社, we began major capital investment in production facilities for zero-emission vessels and other products, supported by the government's assistance for the development and introduction of production facilities using Green Transformation (GX) Economic Transition Bonds.」

「In addition to the benefits of cost-reduction initiatives involving all relevant parties, including design, manufacturing and procurement, the continued trend of yen depreciation enabled us to achieve higher revenue and higher profit year on year.」

「In addition to the tailwind from the weaker yen, we absorbed soaring prices for materials and equipment, including steel, and rising labor costs through consecutive construction of handy-size bulk carriers, which have a low steel-cost ratio in manufacturing costs, expanded operating volumes, stronger bargaining power from bulk purchases of materials and equipment through our international procurement network, and coordinated cost reduction activities across design, manufacturing and procurement. As a result, we achieved substantial increases in revenue and profit.」

「In the core new shipbuilding business, we will strengthen shipbuilding capacity to expand production in anticipation of future demand growth. To capture demand in the new growth phase for the new shipbuilding business and drive the Group's progress, we will pursue proactive capital investment and digital transformation (DX).」

「As domestic prices for materials and equipment, which account for more than half of manufacturing costs, continued to rise and the gap between domestic and overseas prices widened, the effects of Group-wide cost reduction activities, including supply chain restructuring and internationalization, value-engineered design and improvements in production management, began to emerge.」

「The VLGC is the first vessel of its type to be built and completed by us through a technical alliance with 三菱造船株式会社, based on our knowledge and experience in building small- and medium-sized LPG carriers. We expect it to grow into one of our core products.」

「In terms of earnings, although materials costs, which account for more than half of manufacturing costs, rose substantially due to soaring prices for materials and equipment, including steel, we secured operating profit of ¥2,819 million through the results of Group-wide cost reduction activities.」

「We will position our Imari facility as our main plant, promote optimization of production sites and expand shipbuilding capacity using digital technologies, and, through collaboration with 函館どつく株式会社, achieve cost reductions in design, procurement and manufacturing while improving performance, quality and after-sales service.」

「Although soaring prices for materials and equipment, including steel, forced a substantial increase in manufacturing costs, the results of Group-wide cost reduction activities and the weaker yen substantially improved the profitability of uncompleted low-price vessels ordered during the recession. The resulting ¥9,430 million decrease in the construction loss provision from the end of the previous consolidated fiscal year also contributed to operating profit of ¥10,049 million, up ¥14,228 million year on year.」

「As a result of the effects of cost reductions from consecutive construction of vessels of the same type and Group-wide cost reduction activities, increased revenue due to the weaker yen, and a ¥9,248 million decrease in the construction loss provision at the end of the second quarter of the current consolidated fiscal year from the end of the previous fiscal year, operating profit was ¥9,527 million, compared with an operating loss of ¥6,254 million in the same period of the previous year.」

「The construction loss provision at the end of the current fiscal year decreased by ¥8,156 million from the end of the previous fiscal year, due to cost reductions from consecutive construction of vessels of the same type and the continuing depreciation of the yen,」

「This vessel is an advanced environmentally conscious ship equipped with a dual-fuel main engine that can use LPG in addition to conventional heavy fuel oil, as well as optimized propulsion efficiency. When using LPG as fuel, sulfur oxides (SOx) are expected to be reduced by approximately 90%, carbon dioxide (CO2) by approximately 20% and nitrogen oxides (NOx) by approximately 20% compared with conventional heavy-fuel-oil vessels. The vessel is also designed to carry ammonia, which is attracting attention as a next-generation clean fuel.」

「Within the Group, we suspended the new shipbuilding business of 佐世保重工業株式会社 in January 2022. Through integrated operation with our Imari plant, we will develop and strengthen a product-mix shipbuilding structure centered on large bulk carriers and combined with high-value-added vessels such as VLCCs, VLGCs (large LPG carriers) and LNG-fueled vessels, as well as environmentally responsive vessels, to differentiate ourselves from other companies.」

「We will work to improve performance by securing orders for technically advanced vessel types that are not exposed to price competition, further strengthening the profitability of non-shipbuilding businesses such as ship repairs, steel structures and machinery, procuring materials and equipment at lower prices, and implementing thorough cost reductions without protected areas.」

「Revenue for the first nine months of the current consolidated fiscal year was ¥20,809 million, down 17.0% year on year, while the operating loss was ¥1,713 million, compared with an operating loss of ¥5,322 million in the same period of the previous year. Manufacturing costs improved substantially year on year as the construction process for new vessels at 佐世保重工業株式会社 stabilized. As part of the Group's further cost rationalization plan, full-scale production of large blocks for 佐世保重工業株式会社 at our Imari facility began in April this year.」

「In the new shipbuilding business, we are accelerating the integrated operation of the Group's 3 companies, optimizing order-taking, manufacturing, design, quality assurance, materials procurement, organizational structures and staffing. By reviewing production plans, we are working with an uncompromising commitment to achieve cost rationalization and improve profitability.」

「To eliminate these obstacles to cost reduction, we will accelerate the rebuilding of competitiveness through a fundamental review and optimization of the Group-wide manufacturing, design, quality assurance and materials procurement systems, including 函館どつく株式会社. With an uncompromising commitment to achieving the cost rationalization plan, we will work to improve Group-wide profitability and strengthen the business structure.」

「Going forward, while closely monitoring market trends and flexibly adjusting the operating rate, we will leverage the strengths of our 3-company alliance to conduct detailed sales activities that meet customers' diverse needs, improve production capabilities, technological development capabilities and quality, promote the development of cost-competitive products, and expand high-value-added products with superior fuel efficiency, including LNG-fueled vessels, for the next generation. We will also proactively pursue a growth strategy for the future and work to improve vessel prices at order intake.」

「We will improve productivity, technological development capabilities and quality, promote the development of cost-competitive products, expand high-value-added products with superior fuel efficiency for the next generation, and further improve customer satisfaction.」

「As demand for new vessels with superior fuel efficiency increases alongside replacement demand for older vessels, we will improve technological development capabilities, strengthen production management, review materials procurement, further improve cost competitiveness, productivity and quality, and conduct proactive sales activities to improve customer satisfaction.」

「We will improve cost competitiveness, productivity and technological development capabilities by strengthening production management and reviewing materials procurement, while working to improve customer satisfaction through further quality improvements.」

「We will improve cost competitiveness, productivity and technological development capabilities through an appropriate operating structure and process management, while working to improve customer satisfaction through further quality improvements.」

「We will work to improve cost competitiveness, productivity and technological development capabilities with the aim of achieving manufacturing costs that secure profitability even at current newbuilding price levels, while also pursuing further quality improvements and better customer satisfaction.」

「As regulations on ship emissions are being tightened internationally, Tohoku Electric Power Company,Incorporated, 株式会社商船三井 and we have been conducting joint research on a new LNG-fueled coal carrier. In December 2017, we obtained approval in principle for the design from Lloyd's Register.」

「Although the challenging market environment continues, we will continue strategic and proactive product development and order-taking activities across the Group, secure an appropriate operating rate, improve cost competitiveness, productivity, technological development capabilities and quality, and work to further improve customer satisfaction.」

「Although the market environment is challenging, we will pursue strategic and proactive product development and order-taking activities across the Group, secure an appropriate operating rate, improve cost competitiveness, productivity, technological development capabilities and quality, and work to further improve customer satisfaction.」

「In the new shipbuilding business, we view the challenging market environment as an opportunity to differentiate ourselves from competitors. Across the Group, we will pursue strategic and proactive product development and order-taking activities, maintain an appropriate operating rate, improve cost competitiveness, productivity, technological development capabilities and quality, and work to further improve customer satisfaction.」

「By developing new vessel types that are competitive in both performance and cost and meet customer needs, we will generally seek to secure approximately 3 years' worth of work in hand.」

「The order environment remains challenging. To win orders and secure an appropriate level of operations in these conditions, we need to continuously improve existing products and launch competitive new products on the market.」

「We will make operations more efficient and enhance competitiveness, launch medium-sized low-temperature LPG carriers and very large crude carriers (VLCCs) as new strategic products, and work to improve the performance of existing products. We will continue working to quickly develop and supply the vessels demanded by the market.」

「In addition to thoroughly pursuing cost reductions while maintaining appropriate quality, we will maintain industry-leading performance, including environmental performance, and work to improve customer satisfaction.」