Financial Highlights Brief Report for Third Quarter Fiscal Year 2022. A: Financial Highlights for Third Quarter Fiscal Year 2022. A-1: Financial Results for Third Quarter Fiscal Year 2022. Looking at the third quarter results, Operating Revenues were JPY 728.8 billion. Operating Income was JPY 80.6 billion. Ordinary Income was JPY 641.9 billion, and Net Income Attributable to Owners of Parent was JPY 638.2 billion. As for the main financial indicators, Equity Capital improved by JPY 592.8 billion from the end of the previous fiscal year to JPY 1,477.4 billion, and Interest-Bearing Liability decreased by JPY 47.8 billion to JPY 375.7 billion. Meanwhile, debt-to-equity ratio improved by 23 points to 25%. The equity ratio increased by 15 points to 71%. A- 2: Financial Results for Third Quarter Fiscal Year 2022 by Segment. Let's go over the ordinary income figures for the third quarter by segment. For dry bulk, ordinary income was JPY 23.1 billion, representing an improvement of JPY 8.3 billion compared to the same period last year. The Energy Resource Transport segment posted JPY 9.3 billion, an improvement of JPY 7.2 billion year-on-year. Product logistics overall posted JPY 615.9 billion, an improvement of JPY 190.6 billion. Containership business recorded JPY 564.6 billion, an improvement of JPY 148.7 billion year-on-year. For the product logistics segment, excluding containership business, ordinary income was JPY 51.3 billion, an improvement of JPY 41.9 billion year-on-year. We will cover the market conditions and general conditions later on. B: Forecast and Initiatives for Fiscal Year 2022. B-1: Forecasts for Fiscal Year 2022 and Key Factors. Looking at the fiscal 2022 full year forecast, operating revenues are expected to be JPY 940 billion. Operating income will be JPY 85 billion. Ordinary income will be JPY 660 billion, and net income attributable to owners of parent will be JPY 650 billion. An exchange rate of JPY 134.17 to the U.S. dollar is assumed for the full year, along with a bunker price of $772 per metric ton. The operating revenues forecast of JPY 940 billion represents an increase of JPY 183 billion year-on-year, and operating income is expected to increase by JPY 67.4 billion year-on-year to JPY 85 billion. The high levels of these two figures stem from the fact that sales and profits in "K" Line's own businesses have been increasing. "K" Line's record for operating revenues is JPY 1,352.4 billion in the fiscal year ended 31 March 2015, and the operating income record is JPY 129.6 billion for the fiscal year ended 31 March 2008. Ideally, the aim is to continue growing our own businesses under the medium-term management plan and break those records. The forecasted ordinary income figure of JPY 660 billion and net income figure of JPY 650 billion have been revised downward, but they are still records. Both ordinary and net income have been revised downward by JPY 50 billion compared to the figures announced in the second quarter. This is due to three factors, as described in the last line of the key factors in forecasts for fiscal year 2022. The biggest factor is the downward revision of ONE's equity method profit forecast caused by a downturn in the containership market. Next, the assumed yen-dollar exchange rate at the end of the fiscal year was revised from JPY 130 to JPY 128 in light of the yen's current appreciation, so ordinary income has been revised downward. Due to the rapid appreciation of the yen from its low at around JPY 150 to the U.S. dollar in the third quarter, "K" Line has recorded temporary foreign exchange losses in the valuation of some of its foreign currency denominated assets. Since this has already been finalized, any further fluctuations in the yen-dollar exchange rate will not have an impact on this. Due to these three reasons, a total downward revision of JPY 50 billion has been made. Rather than declining, earnings from "K" Line's own businesses improved compared to the second quarter. Exchange rate volatility is still having a major impact, with ordinary income fluctuating by JPY 4.8 billion with a JPY 1 shift in the exchange rate. Bunker price fluctuations of JPY 10 will have no impact on ordinary income. Since the Bunker Adjustment Factor applies to all vessel types, "K" Line has positioned itself so that it is not affected by fluctuations in bunker fuel prices. Regarding shareholder returns, the previous year-end dividend forecast was JPY 100 per share. This time, however, the year-end dividend forecast has been increased by JPY 200 to JPY 300 per share. Since the interim dividend of JPY 100 has already been paid, the entire full-year dividend is expected to be JPY 400 per share on an after-stock split basis. On a before-stock split basis, the dividend will be JPY 1,200 per share. B-2: Forecasts for Fiscal Year 2022 by Segment. Here are the full year forecasts by segment. Ordinary income is expected to be JPY 24 billion for dry bulk, JPY 10 billion for Energy Resource Transport, and JPY 636 billion for product logistics overall. Of this, containership business is expected to achieve JPY 570 billion, and the product logistics segment, excluding containership business, is expected to reach JPY 66 billion in ordinary income. There are also negative seasonal factors at play for dry bulk, and market conditions are currently on a weakening trend. The medium-term future of steel demand in China remains uncertain. There are concerns that market conditions could worsen due to rising inflation in Europe and the United States as a negative factor. The impact of the Russia-Ukraine situation is having some favorable effects. A number of ton-miles for dry bulk ocean transport has increased since the war began. This is likely to be a positive factor for the dry bulk market. Next, on the supply side, only a limited number of vessels have been delivered. Shipping companies are refraining from placing orders. Accordingly, the supply and demand situation appears to be okay. As for the future outlook, the current seasonal factors and the extremely large decline due to uncertainty in the Chinese economy will likely disappear. The general view is that the outlook will strengthen toward the latter half of fiscal 2023. Recently, the IMF reviewed the world's GDP growth figures and revised China's upward by 0.8 percentage points to 5.2%. "K" Line's policy is to efficiently allocate existing fleets by managing exposure while keeping an eye on factors such as these. In the Energy Resource Transport segment, most of the vessels in operation are under medium and long-term contracts, and the impact of current market conditions remains extremely limited. Therefore, we believe that the priority is to maintain safe operations and avoid anything that might require a vessel to be taken out of service. A negative factor for car carrier business is the continuing global shortage of semiconductors and parts. As a result, vehicle production is not as high as it might otherwise be. In addition, concerns remain about sluggish sales, especially in Europe, due to the impact of the war in Ukraine. Please have a look at page 15 of the material. Given these circumstances, the forecasted number of vehicles transported by "K" Line car carriers for fiscal year 2022 is 3,252,000. This is higher than the 2,886,000 vehicles transported in fiscal 2021. The figure is not included in the material, in fiscal 2019, the annual number of vehicles transported before the pandemic was 3,328,000. The pre-pandemic level has not yet been reached. One positive factor for car carrier profitability is the general shortage of car carriers. Vessel supply is tighter than ever. From a supply and demand perspective, the predominant view is that the current firm market conditions will continue into fiscal 2023. Given the shortage of vessels, securing a fleet that can meet customer demand will be a major issue. In logistics and short sea and coastal businesses, performance has been solid as a result of the pandemic impact in the first half. With the waning of pandemic effects in the second half, we expect the forwarding in short sea and coastal businesses to soften slightly. I will explain the containership's outlook when I talk about ONE. B-3: Key Factors of Improvement for "K" Line's Own Businesses in Fiscal Year 2022. Here are the key factors for the improvement for "K" Line's own businesses in fiscal 2022. These are the factors that determine the degree of improvement for "K" Line's own businesses in the forecast for fiscal 2022 compared to fiscal 2021, and the reasons behind it. ordinary income from "K" Line's own businesses was JPY 45.5 billion in fiscal 2021. We expect it to increase to JPY 100 billion at the end of this fiscal year. Excluding the impact of exchange rate fluctuations, the improvement in earnings is expected to be JPY 40.6 billion or JPY 54.5 billion, including foreign exchange impact. This JPY 54.5 billion was predicted to be JPY 62.5 billion in the second quarter announcement material. It is slightly less than the previous forecast. A breakdown of the JPY 54.5 billion ordinary income increase is shown at the bottom of the page. The first factor is the impact of exchange rate fluctuation, which is JPY 13.9 billion, while the second is the improvement in "K" Line's own business' profitability, which is JPY 33.4 billion. The third is an improvement of JPY 7.2 billion due to improved market conditions and other reasons. The dry bulk market has deteriorated compared to the previous year, resulting in a decrease of JPY 13.7 billion. Even including that, the analysis shows the JPY 7.2 billion improvement, thanks to market conditions and other reasons as a whole. Looking at the reasons for improvement in each business area, the disposal of uneconomical vessels in dry bulk business was completed at the end of the previous fiscal year, which enabled us to achieve fleet optimization and cost reduction. In the Energy Resource Transport segment, withdrawal was completed from low profit areas such as the offshore support vessel and chemical tanker businesses. This allows us to now aim for stable earnings by accumulating medium and long-term contracts. In the car carriers business, we secured space supply capacity and fleet competitiveness, mainly by obtaining large-sized vessels. Given the current tight supply situation, we have been able to optimize and restore freight rates each time a contract is renewed. This is why profitability has been recovering. With regard to short sea and coastal business, we have just started to generate group synergies after making it a wholly owned subsidiary. The benefits of this are expected to steadily increase, and it should improve earnings going forward. C: Status and Progress of Medium-Term Management Plan. C-1: Shareholders Return Policy Update, Fiscal Year 2022. Next is the latest update on returns for shareholders. I explained the general situation earlier, and so far, "K" Line has announced an interim dividend of JPY 100 per share and a year-end dividend forecast of JPY 100. We now plan to increase the year-end dividend forecast by JPY 200 to JPY 300 per share for a full year dividend of JPY 400. This dividend increase is based on "K" Line's basic approach for shareholder returns outlined in its medium-term management plan. To secure cash inflow for the period covered by the medium-term management plan, which ends in fiscal 2026, we need to tackle issues such as enhancing corporate value and increasing investment in our strength areas through portfolio management. Therefore, our basic approach is to give top priority to investment in these areas and ensure financial stability before returning any surplus above appropriate capital levels to shareholders. Although this year is the first year of the new medium-term management plan, fortunately, the profit level and operating cash flow are significantly higher than the forecast at the beginning of the fiscal year. This led to the current announcement of an increase in dividends, with the aim of optimizing the capital structure and improving capital efficiency. We have also announced that we will acquire "K" Line's own shares, up to either a maximum value of JPY 100 billion or a total maximum of 35,236,000 shares. This is currently being carried out. As of January 31, 2023, "K" Line has completed acquisition of 31.79 million of its share, paying JPY 78.4 billion or 78.4% of the target value. As previously announced, in principle, the acquired shares will be canceled. C-2: External Environment Surrounding "K" Line Group. Please have a look at page 12 of the material. Regarding the broader business environment, we believe there are three main risks for our company. The first is fragmentation of the global economy, the second is soaring or volatile energy prices, and the third is the uncertain direction of the Chinese economy now that the Zero-COVID policy has ended. Fortunately, we have completed disposal of uneconomical vessels and have withdrawn from unprofitable businesses, which would have generated large losses if any of the three risks were to materialize. These measures were not taken just to mitigate the three risks, but as part of structural reforms to advance our management plan. Therefore, "K" Line is ready to withstand possible market turmoil to some extent. Based on portfolio strategy in our medium-term management plan, we will concentrate our management resources on competitive business areas, even if such risks were to materialize. There is no change in our policy to develop our business by capturing new demand in the shipping industry for low carbon and decarbonized transport. Ocean Network Express Financial Results for Fiscal Year 2022, Third Quarter. ONE posted an after-tax profit of $2.768 billion in the third quarter. This represents a decrease of $2.12 billion compared to the same period last year and is close to half of last year's figure. Compared to the amount forecasted in November 2022, the result represents an increase. To explain this, we need to begin with the demand situation. Lifting started to slow in the second quarter, which should have been the peak period, and the trend became more pronounced in the third quarter. The first reason behind this is that product inventory has been accumulating in North America and U.S. imports have been sluggish. Meanwhile, in Europe, inflation and soaring energy prices are causing a decline in consumer confidence. Cargo movements seem to be dropping as a result. Please refer to the table showing liftings and utilization rates by trades. The peak for Asia, North America, eastbound lifting is usually in the second quarter. Lifting in this period was 578,000 TEUs, mostly unchanged from 577,000 TEUs in the first quarter. No peak activity was seen. In the third quarter, the utilization rate fell to 80%. Looking at Asia, Europe, westbound lifting, however, in fiscal 2021, we were maintaining roughly 400,000 TEUs per quarter. From the second quarter of fiscal 2022, it dropped to 300,000 TEUs. The utilization rate itself remains above 90%. This is the figure due to changes in fleet capacity. Meanwhile, on the supply side, port congestion is dissipating worldwide and service frequency is increasing, resulting in a substantial increase in supply. About half a year ago, approximately 15% of the total fleet was waiting in a port, but that figure has now decreased to 2% or 3%. With this situation, average freight rates are now dropping. For example, the index for Asia, North America, eastbound freight peaked only recently in the second quarter of fiscal 2022. After reaching 389 in that period, it fell to 264 in the third quarter, which is a fairly fast decline. On the other hand, the index for Asia, Europe, westbound freight peaked at 552 in the fourth quarter of fiscal 2021. This remained at the same level for some time before falling sharply to 303 in the third quarter. The rate of decline in freight rates has slowed, and we believe that freight rates have likely bottomed out for major routes from Asia to North America and Europe. Regarding ONE's full year outlook, the company expects the after-tax profit for fiscal 2022 to be $14.728 billion. This is a downward revision of $542 million from the previous forecast in November. Please have a look at page five for information on the company's response to this situation. Whether transport volume will return or freight rates will rise again remains uncertain. What ONE can do now is to increase blank sailings, as shown in Operational Excellence in the table. We are also considering the option of increasing economic efficiency by sailing slowly around the Cape of Good Hope instead of passing through the costly Suez Canal. This is a rather preferable option to keeping ships waiting and idling, which causes vessel condition to deteriorate and costs to increase. Accordingly, slow steaming will be the way to go. Moreover, there is now a surplus of containers after being temporarily in short supply. Therefore, it is best to take steady steps now to return our surplus leased containers and bring empty containers back to China and other Asian ports from the consumption markets of Europe and America. There is a strong sense of uncertainty about the container ship market in fiscal 2023 and beyond, which will be a crucial period. Looking at supply and demand, we expect market growth of around 0%-3% in fiscal 2023. Looking only at new vessel delivery, supply is likely to grow by about 9%. When slow steaming and vessel scrapping is factored in, supply might only grow by 5%-7%. Assuming a fairly conservative demand growth of 0%, which is the same level as this year, the estimated supply demand gap is around 5%-7%. New container ships will be completed starting in 2024 or from around the end of fiscal 2023. We will need to review our approach to some extent at that stage.