Maintenance and renewal of coastal shipping capacity and replacement of aging vessels

「Regarding the construction of the company-owned vessel “HKL KikusuI” in the shipping business that was planned at the end of the previous fiscal year, construction was completed with an investment of ¥811 million and the vessel entered service in June 2026. Following the entry into service of the new company-owned vessel “HKL KikusuI,” the previously owned company vessel “HKL Himegami” was sold in May 2026.」

「The 499-ton company-owned vessel currently under construction will begin operations at the end of June 2026, while we will also examine the possibility of introducing new vessel types in order to expand our business areas.」

「¥47 million increase in construction in progress related to vessel construction」

「In the coastal shipping business, the Company continued negotiations to revise ocean freight rates to improve rising operating costs. It also worked to improve charter rates and develop new chartering customers in order to maintain the number of vessels in its fleet and fulfill its transportation responsibilities.」

「In the coastal shipping business, the Company entered into partnerships with new chartering customers to maintain the number of vessels in its fleet and secure transportation capacity. It also revised rates for existing chartering customers and promoted management in close cooperation with shipowners. In addition, the Company efficiently scheduled trip vessels with short voyage periods and actively used barges and lighter barges according to cargo type and transportation route, applying transportation methods that combine various vessel types.」

「To this end, the Company plans to continue providing high-quality transportation by replacing aging vessels. Establishing good relationships with chartered-vessel owners is also essential, and to strengthen the shipowners' management, the Company launched a new system of joint management. 七洋船舶管理株式会社, established by the Company and the shipowners, is responsible for this function.」

「To this end, the Company plans to continue providing high-quality transportation by replacing aging vessels. Establishing good relationships with chartered-vessel owners is also essential, and to strengthen the shipowners' management, the Company launched a new system of joint management. 七洋船舶管理株式会社, established by the Company and the shipowners, is responsible for this function.」

「The Company needs to explore ways to restructure its fleet in response to challenging times, including selling aging vessels, building replacement vessels and accommodating the decisions of aging shipowners to leave the business. Generational changes among chartered-vessel owners are also under way. With the HKL series fleet being built with new vessels, the Company will focus first on maintaining and securing a safe and stable transportation system while striving to continue the business and generate appropriate profits.」

「In the coastal shipping business, transportation volumes for steel products, the principal cargo, increased as steelmakers raised production in response to firm domestic demand, resulting in revenue of ¥4,949 million, up 18.9% year on year. Although costs also increased due to revised charter rates and persistently high fuel oil prices, the growth in transportation volumes led to more efficient allocation of controlled vessels. Operating profit therefore rose 158.5% to ¥203 million.」

「In line with this, the Company sought to increase cargo volume handled by improving utilization through the restructuring of company-owned and controlled vessels.」

「This was mainly attributable to a ¥677 million increase in property, plant and equipment, including new vessel construction, and a ¥413 million increase in investment securities due to higher fair values and other factors, partly offset by an ¥800 million decrease due to the sale of property, plant and equipment and a ¥425 million decrease due to depreciation and other factors.」

「This was mainly attributable to a ¥224 million increase due to higher fair values of investment securities and other factors and a ¥175 million increase in construction in progress related to the construction of company-owned vessels, partly offset by a ¥312 million decrease in property, plant and equipment due to asset sales and a ¥218 million decrease due to depreciation and other factors.」

「This was mainly attributable to a ¥1,219 million increase in construction in progress related to the construction of a new warehouse and a ¥93 million increase in vessels due to the construction of a barge, partly offset by a ¥245 million decrease in property, plant and equipment due to depreciation and other factors.」

「To this end, the Company plans to continue providing high-quality transportation by replacing aging vessels. Establishing good relationships with chartered-vessel owners is also essential, and the Company is considering a new system of joint management to strengthen the shipowners' management.」

「To this end, the Company plans to continue providing high-quality transportation by replacing aging vessels. Establishing good relationships with chartered-vessel owners is also essential, and the Company is considering a new system of joint management to strengthen the shipowners' management.」

「Although marine fuel prices remained stable, the Company also faced higher costs for fleet reinforcement and management expenses to maintain and improve the business,」

「Maintaining and renewing the fleet has become necessary. To this end, under the spirit of coexistence and mutual prosperity with each shipowner and based on the basic principle of safe and stable operations, securing reliable earnings and replacing aging vessels are key challenges.」