TSUNEISHI Group FY2019 Consolidated Performance Report

Consolidated sales for TSUNEISHI HOLDINGS CORPORATION (HQ: 1083 Tsuneishi, Numakuma-cho, Fukuyama, Hiroshima, Japan; President: Hirotatsu Kambara), driven by our key businesses of shipbuilding and shipping, reached 228.7 billion yen (+9.4 billion yen YoY) in fiscal year 2019, achieving revenue growth for the third consecutive year.
By segment, the shipbuilding business earned 164.6 billion yen (+7.5% YoY) and the shipping business generated 46.9 billion yen (+19.6% YoY). By responding to the expansion of recycling needs, the environment business continues to show steady growth, attaining a record-high 12.5 billion yen (+5.0% YoY) in sales.
In FY2020, we will reinforce our business foundation and emphasize profitability and growth potential in our business development. However, we have voluntarily suspended some of our services, especially in the life & resorts business, to prevent the spread of COVID-19, and we are closely monitoring the impact of this suspension.

・Fiscal year 2019: January–December 2019
・Consolidated companies: 41 companies (20 in Japan, 21 abroad) including TSUNEISHI HOLDINGS

Shipbuilding Business
■ FY2019 Overview
The gradual recovery of the shipping market is restoring motivation to order new ships. We have introduced products that accurately capture market needs and, as a result, have received orders for 44 newbuildings. The number of ships built increased to 46 vs. 40 in the previous year, and sales reached 164.6 billion yen (+11.5 billion yen YoY). This is the third consecutive year of revenue growth.
・Sales: 164.6 billion yen (previous year 153.1 billion yen, +7.5% YoY)
・Number of ships built: 46 (+15% YoY)
　*TSUNEISHI SHIPBUILDING, TSUNEISHI HEAVY INDUSTRIES (CEBU), TSUNEISHI GROUP (ZHOUSHAN) SHIPBUILDING combined
・Number of ships ordered: 44 (+37.5% YoY)

■ Medium-Term Business Plan
By focusing business resources on our forte of medium-class ships (bulk carriers, container carriers, oil product carriers), we will boost added value and aim to become a top brand.
We will improve productivity by upgrading our production system which will enhance the features of our mother factory (TSUNEISHI Factory) as well as our cost-competetive overseas factories in the Philippines and China.
For development of environmental technologies, we will address market needs and set a product development target to reduce CO₂ emissions by 35% by the year 2024, which is earlier than the EEDI (Energy Efficiency Design Index) regulation, a CO₂ emission reduction standard that the International Maritime Organization (IMO) made mandatory for ships contracted to be built.

Comment from Kenji Kawano, President of TSUNEISHI SHIPBUILDING:
“To remain a global company that contributes to customers and reduces the environmental burden, we will provide high value-added ships with fuel efficiency and environmental performance.”

Shipping Business
■ FY2019 Overview
The number of feeder transport containers outsourced from major shipping companies increased in the container liner business. KAMBARA LOGISTICS, our logistics services provider, built a new tent warehouse that boosted the volume of handled cargo, contributing to sales of 46.9 billion yen (+7.7 billion yen YoY).
・Sales: 46.9 billion yen (previous year 39.2 billion yen, +19.6% YoY)
・Container transport volume: 156,000 TEU (previous year 150,000 TEU, +4% YoY)

■ Medium-Term Business Plan
Though the shipping industry fluctuates greatly, we aim to build a stable profit structure by consistently delivering added-value services to our customers.
We added a cutting-edge eco ship tanker (LR1, built by TSUNEISHI SHIPBUILDING) to our fleet in 2019 to diversify our ship types in an effort to reduce market fluctuation risk. We will enhance the competitiveness of our container liner services to Southeast Asia and the Changjiang shoreline by using the Port of Shanghai as our hub, and expand our transport volume by making good use of partnerships with other shipping companies.

Environment Business
■ FY2019 Overview
We increased the waste-disposal volume per day at TSUNEISHI KAMTECS Fukuyama Factory by upgrading the boiler water pipes of the No. 1 solid incinerator. Demand and the unit price per order also increased as regulations for plastic waste treatment were made stricter around the world, resulting in record high sales of 12.5 billion yen (+600 million yen YoY).
・Sales: 12.5 billion yen (previous year 11.9 billion yen, +5.0% YoY)

■ Medium-Term Business Plan
We will further enhance our disposal capacity for industrial waste and strengthen our business foundation by stepping up sales activities in the Kanto area, as well as expanding our bases and our overseas business. We will also boost our new non-industrial waste disposal business and research & development of recyclable products to respond the wide range of recycling needs of our customers by seizing any growth opportunities.

Energy Business
TSUNEISHI C VALUES offers full support for car users and responds to local energy demands with a comprehensive lineup of services.

■ FY2019 Topics
・Fifty-one used cars were collected from Osakikamijima in Hiroshima. This was the 16th collection done as part of the Remote Islands Support Project.
・Non-utility power generators were placed at seven service stations that sell oil products to prepare a stable supply system in case of disaster.

Life & Resorts Business
We are enriching services with the aim of revitalizing the region by making efforts to attract repeat customers and cope with inbound visits in our core facilities, such as Bella Vista SPA & MARINA ONOMICHI, MIROKU-NO-SATO, and ONOMICHI U2, etc.

■ FY2019 Topics
・Highly popular initiatives, such as “The Spookiest Haunted House in Chugoku-Shikoku”, an attraction that debuted in the summer at MIROKU-NO-SATO, drove annual attendance to a record-breaking level.
・The cruiseship, guntû, the “little hotel floating in the Seto Inland Sea” that was named one of the World’s 100 Greatest Places by Time Magazine published in the United States, is attracting a significant number of international travelers.
　
Impact of COVID-19
The TSUNEISHI Group has set up a COVID-19 task force to quickly share information, determine action guidelines, and raise awareness of the guidelines.

■Key Countermeasures
・Overall Group
Measures include having employees take their temperature before coming to work, having visitors take their temperature, prohibiting business travel by employees, prohibiting meetings of 11 people or more (utilizing video conferences), disinfecting surfaces and improving air ventilation in the office, and wearing masks during work.

・Shipbuilding Business
TSUNEISHI GROUP (ZHOUSHAN) SHIPBUILDING, our shipyards in China, was scheduled to start up after the Chinese New Year on February 3, but was delayed until February 10. After resuming operations, we adjusted the production processes while raising the operation rate gradually and the factory is now fully operational.
At TSUNEISHI HEAVY INDUSTRIES (CEBU), Inc., our shipyard in the Philippines, and at Tsuneishi Factory in Japan, the arrival of some equipment has been delayed, but there is no significant impact at the present time. However, we are carefully watching the situation as entry restrictions for foreign travelers that certain countries have implemented may impact schedules for the delivery and setting sail of newly-built ships.

・Shipping Business
Cargo volume decreased because some Japan-China container liner services were stopped after the Chinese New Year, but all the ships are now back in service.

・Life & Resorts Business
To prevent the widespread of the virus infection, the facilities operated by our companies are taking precautionary measures, such as shutting down for a limited time.

For further information, please contact:
Communication Dept.
TSUNEISHI HOLDINGS CORPORATION
+81-84-987-4915
pr@tsuneishi.com