NS United Kaiun Kaisha,Ltd. FY2027 Q1 Earnings Report

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Executive Summary

Q1 was characterized by substantial increases in revenue and earnings, driven by improvements in freight rates and vessel utilization in the ocean-going shipping business, as well as a significant improvement in the operating margin from the previous year. Revenue was ¥673.3B (+22.8% YoY), Operating Income was ¥73.2B (+96.6%), and Ordinary Income was ¥72.0B (+147.4%), clearly demonstrating improved profitability in the core business. Meanwhile, Net Income attributable to owners of the parent was limited to ¥61.1B (+2.6%), primarily because Profit Before Tax decreased 5.8% YoY due to the reversal of the gain on the sale of fixed assets, recorded as an extraordinary gain of ¥47.7B in the same period of the previous year.

Factors Driving Performance Changes

【Revenue】 The ocean-going shipping business (87.8% of revenue) led the Company, with revenue increasing to ¥591.3B (+26.1%) owing to improved freight rates and utilization, driving total Revenue up +22.8%. The coastal shipping business (12.2% of revenue) posted a modest increase to ¥82.0B (+3.1%), resulting in a substantial difference in growth rates between segments.

【Profit and Loss】 Operating Income in the ocean-going shipping business was ¥69.0B (+140.7%), and its operating margin improved to 11.7% from 6.1% in the previous year, an improvement of +5.6pt, driving enhanced profitability. In contrast, the coastal shipping business posted Operating Income of ¥4.3B (-52.2%), with its operating margin declining to 5.2% from 11.2%, a decrease of -6.0pt, as profitability deteriorated due to factors believed to include higher costs and delays in passing on freight-rate increases. The Company-wide operating margin improved to 10.9% from 6.8%, an improvement of +4.1pt. Ordinary Income was ¥72.0B (+147.4%), with non-operating income and expenses nearly neutral, as foreign exchange gains of ¥3.1B largely offset interest expense of ¥3.0B. However, Profit Before Tax decreased 5.8% YoY to ¥72.3B due to the reversal of the ¥47.7B gain on the sale of fixed assets, recorded as an extraordinary gain in the same period of the previous year, limiting the increase in Net Income to ¥61.1B (+2.6%). In conclusion, the Company achieved higher revenue and higher earnings.

Segment Analysis

The ocean-going shipping business is the core business, generating Revenue of ¥591.3B (87.8% of total revenue, YoY +26.1%) and Operating Income of ¥69.0B (YoY +140.7%, operating margin 11.7%), accounting for 94.2% of total segment profit of ¥73.2B. In contrast, the coastal shipping business posted Revenue of ¥82.0B (12.2% of total revenue, YoY +3.1%) and Operating Income of ¥4.3B (YoY -52.2%, operating margin 5.2%), reflecting deteriorating profitability and a widening profitability gap between the segments. Other businesses, including information services, were immaterial in scale, with Revenue of ¥1.2B.

Key Financial Indicators

【Profitability】 The operating margin improved to 10.9% from 6.8% in the previous year, an improvement of +4.1pt, while the gross margin also improved to 14.2% from 10.5%, an improvement of +3.7pt, indicating stronger earnings power in the core business. Meanwhile, the net profit margin declined to 9.1% from 10.9%, a decrease of -1.8pt. This was an accounting effect resulting from the absence of the extraordinary gain recorded in the same period of the previous year, and it should be noted that the net profit margin moved in the opposite direction from the Company’s underlying performance at the Operating Income and Ordinary Income levels. 【Cash Flow Quality】 Extraordinary gains were immaterial at ¥0.3B, and dependence on one-time factors declined substantially from ¥47.7B in the previous year. Accordingly, current-period profit more accurately reflects the Company’s underlying earnings power at the Ordinary Income level. 【Investment Efficiency】 ROE was 3.2% (based on the cumulative 3-month period of Q1), decomposed into a net profit margin of 9.1% × total asset turnover of 0.226 × financial leverage of 1.57. Total asset turnover improved from 0.185 in the previous year, while the decline in the net profit margin was a factor weighing on ROE. 【Financial Soundness】 The Equity Ratio was 63.6%, a modest increase from 63.2% in the previous year, while the Company maintained substantial liquidity, with a current ratio of 287.0% and a quick ratio of 253.9%. Interest-bearing debt was ¥604.4B, the Debt/Capital ratio was 24.2%, and interest coverage was 24.6x, indicating a high level of financial resilience even in an environment of rising interest rates.

Cash Flow Analysis

As individual figures from the cash flow statement are not explicitly disclosed in this report, cash flow trends are analyzed based on changes in the balance sheet. Cash and deposits increased to ¥465.1B from ¥416.5B in the same period of the previous year, an increase of +¥48.6B (+11.7%), indicating an increase in liquidity. Meanwhile, short-term investment securities decreased to ¥179.7B from ¥239.7B in the previous year, a decrease of ▲¥60.1B (▲25.1%), suggesting a shift of funds from securities to cash. Long-term borrowings decreased to ¥449.2B from ¥480.1B in the previous year, a decrease of ▲¥30.9B (▲6.4%), indicating ongoing deleveraging. Construction in progress increased to ¥172.5B from ¥154.0B in the previous year, an increase of +¥18.5B, indicating progress in fleet renewal and efficiency investments. Contract liabilities increased to ¥67.4B from ¥51.2B in the previous year, an increase of +¥16.1B (+31.5%), also suggesting short-term cash inflows from the accumulation of advance receipts. Overall, the Company is simultaneously increasing cash and deposits and reducing interest-bearing debt, confirming a strengthening financial foundation.

Earnings Quality

Ordinary Income increased substantially by +147.4% YoY to ¥72.0B, while non-operating income and expenses were nearly neutral, with total interest and dividend income and foreign exchange gains of ¥8.3B approximately balancing non-operating expenses of ¥9.5B. Accordingly, the primary driver of the earnings increase was improved profitability in the core business. Extraordinary gains consisted solely of a ¥0.3B gain on the sale of fixed assets, a significant reduction from ¥47.7B in the same period of the previous year, substantially reducing dependence on one-time factors. As a result, Profit Before Tax decreased 5.8% YoY to ¥72.3B, moving in the opposite direction from the growth in Ordinary Income. This was an accounting-specific factor resulting from the reversal of the prior-year one-time gain, and the quality of earnings in terms of underlying business performance can instead be assessed as improving. Comprehensive Income was ¥67.3B, exceeding Net Income of ¥61.1B by +¥6.2B. Deferred hedge gains and losses of +¥8.7B contributed positively, while valuation difference on available-for-sale securities of -¥2.1B contributed negatively. The difference between Net Income and Comprehensive Income was therefore primarily attributable to fair-value changes, including hedge valuation effects.

Earnings Forecasts and Guidance

Progress against the full-year Company forecasts of Revenue of ¥2,420.0B, Operating Income of ¥265.0B, Ordinary Income of ¥253.0B, and Net Income of ¥250.0B was 27.8% for Revenue, 27.6% for Operating Income, 28.5% for Ordinary Income, and 24.4% for Net Income. Revenue, Operating Income, and Ordinary Income are therefore progressing faster than the simple quarterly linear progression rate of 25%. The full-year forecasts anticipate YoY increases of +5.3% in Revenue, +29.1% in Operating Income, and +20.2% in Ordinary Income. The actual growth rates in Q1—Revenue +22.8%, Operating Income +96.6%, and Ordinary Income +147.4%—are progressing at a pace exceeding the full-year outlook. It should also be noted that the Company revised its earnings and dividend forecasts during the quarter, reflecting a review based on market conditions and foreign exchange trends.

Shareholder Returns

The full-year dividend forecast was disclosed as ¥0.00, and the Company indicated that it had revised its dividend forecast during the quarter. The dividend paid in the same period of the previous year was ¥105 per share. Given the strong financial foundation, including an Equity Ratio of 63.6% and a current ratio of 287.0%, the Company appears to retain sufficient internal funding capacity to pay dividends. However, because the annual dividend forecast cannot be confirmed from this report, the Payout Ratio is not calculated.

Risk Factors

1. Concentration in the ocean-going shipping business: The ocean-going shipping business accounts for 87.8% of Revenue and 94.2% of segment profit, creating a structure in which fluctuations in freight-market conditions, such as the BDI, and fuel prices can have a substantial impact on performance.

2. Deteriorating profitability in the coastal shipping business: Operating Income decreased 52.2% from the same period of the previous year to ¥4.3B, while the operating margin declined to 5.2% from 11.2%, a decrease of -6.0pt. Continued cost increases or delays in passing through price increases could become a factor weighing on the Company-wide profit margin.

3. Interest-rate and foreign-exchange fluctuations: The Company has ¥604.4B in interest-bearing debt, primarily consisting of ¥449.2B in long-term borrowings, and interest expense was ¥3.0B. In Q1, foreign exchange gains of ¥3.1B exceeded interest expense and contributed to earnings; however, a reversal in foreign exchange trends could become a source of earnings volatility.

Industry Benchmark (Reference; Compiled by the Company)

Profitability and Returns

The Company’s Operating Margin and Net Profit Margin both exceeded the industry median, placing it at a high level within the transportation industry.

Growth and Capital Efficiency

The Revenue growth rate substantially exceeded the industry median, demonstrating high growth within the industry against the backdrop of improved market conditions for ocean-going shipping.

※Source: Compiled by the Company

Key Points in the Financial Results

1. The Operating Margin of 10.9% (6.8% in the previous year) and Net Profit Margin of 9.1% exceeded the industry medians by +3.8pt and +4.1pt, respectively, indicating ongoing profitability improvements driven by better freight rates and utilization in ocean-going shipping.

2. Net Income growth of +2.6% was substantially below the growth rates in Operating Income and Ordinary Income (+96.6%/+147.4%). This was an accounting effect resulting from the absence of the ¥47.7B extraordinary gain recorded in the same period of the previous year, while the underlying earnings power of the business excluding extraordinary income and expenses was improving.

3. Operating Income in the coastal shipping business decreased -52.2%, further increasing dependence on earnings from ocean-going shipping. This is an important point when assessing portfolio balance between the segments.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson type, explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥8,847–¥9,399 at ±1% for the cost of equity, and ¥9,088–¥9,160 at ±0.1 for ω.

Notes:

• Net assets as of the end of the quarter are used (there is a timing difference from the full-year forecast).
• As net assets include non-controlling interests, the theoretical value may be calculated somewhat higher.

(Model: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value does not predict or guarantee the future share price.)

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This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. Industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting with a professional as necessary.

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