Tsuneishi Group Business Activities in 2015~From Shipbuilding and Shipping to Environment and Energy Business, Entire Group Accelerating its Efforts in Globalization

April 23, 2015

TSUNEISHI HOLDINGS

[Notifications/employment] [Technology/development]

Tsuneishi Group Business Activities in 2015~From Shipbuilding and Shipping to Environment and Energy Business, Entire Group Accelerating its Efforts in Globalization

Group’s consolidated revenues

TSUNEISHI HOLDINGS CORPORATION (headquartered at 1083, Tsuneishi, Numakuma-cho, Fukuyama City, Hiroshima Prefecture in Japan. Chairman and President: Yasuharu Fushimi) announced that its consolidated revenues (29 companies including TSUNEISHI HOLDINGS) for the term ending December 2014 (January 1 to December 31, 2014) increased by 5.6 billion yen compared to the previous year to 289.9 billion yen (up 2% year-on-year). For revenues by segment: shipbuilding operations increased by 7.7 billion yen from the previous year to 223.6 billion yen (up 3.6% year-on-year); shipping operations increased by 10.2 billion yen from the previous year to 43.6 billion yen (up 30.5% year-on-year); and the environment/energy and service operations combined had a decrease of 5.6 billion yen from the previous year at 43.2 billion yen (down 11.5% year-on-year). Consolidated revenues for the term ending December 2015 are projected to be 237.7 billion yen.

In the shipping and shipbuilding operations, which are the core businesses of the TSUNEISHI Group, we seemed to see a heightened desire in the market for placing orders for new ships, arising from the fact that the shipping market and ship price seemed to have bottomed out from the effects of the weak yen. However, the overtonnage situation has still not been resolved, resulting in a continuously sluggish market. In the environment and energy operations segment, efforts are actively being made to expand operations to overseas sites, not only in the areas where the Group already has affiliates such as Paraguay, Philippines and China, but also in such places as Bangladesh, Thailand and Vietnam. The economy in Japan is showing signs of recovery, but its effects have yet to be felt strongly in the regional economy. Thus, each company in the TSUNEISHI Group will redouble our efforts to accelerate our globalization to strengthen our competitiveness and to further develop our business.

1. Shipbuilding Business

(1) Review of 2014
In the shipbuilding business, while there were visible activities towards placing orders—in response to such factors as the effect of the weakened yen, rise in freight charges from 2013 onwards, and to place orders before environmental regulations (noise regulations in residential areas) come into effect—the situation continues to be difficult due to the drop in freight charges from the beginning of 2014. At the end of December 2014, shares of Tadotsu Shipbuilding were transferred to Imabari Shipbuilding, and as a result, TSUNEISHI’s management resources were consolidated to one headquarter factory. TSUNEISHI also strengthened its efforts to organize its shipbuilding structure at its overseas factories in the Philippines (which welcomed its 20th anniversary since its establishment), China and Paraguay. The number of ships built at the four factories both in and outside of Japan during the year 2014 was 55 ships, which was an increase of 4 ships from the previous year. We also received 57 orders for new ships during 2014, although this was below the 63 orders that were received during 2013. TSUNEISHI continues to rank number one in the amount of shares that it has for the total number of Panamax and Handymax bulkers built since 2005*.
*According to our survey based on Clarkson’s research data

Furthermore, as part of our efforts to create a next-generational factory, TSUNEISHI signed a contract in October 2014 to conduct joint research on robotic technology with Carnegie Mellon University, a top-class university in the United States in the fields of robotics and information technology. TSUNEISHI IRON WORKS, which manufacture the rudder, shafts, and other structural parts of the stern, began unit production of stern structure components at its Wakamatsu Steel Factory as its new core business. The factory will utilize the advantages it has in possessing an electric furnace, which is not available at its competitors, to manufacture structural components of the stern that include raw materials and steel castings, thereby realizing the integrated production of stern units that combine such parts as the rudder and stern frame.

(2) Business activities in 2015
TSUNEISHI’s original 82,000-ton class bulk carrier, the KAMSARMAX bulker, had its 200th ship completed in January 2015—9 years and 11 months since its first ship was made. TSUNEISHI SHIPBUILDING has been promoting efforts to enhance the energy efficiency of its bulk carriers, including its main models of the KAMSARMAX and the TESS Series (spanning 30,000-tons to 60,000-ton class ships), and will also incorporate such technologies into other ship models such as containers and tankers.

In January 2015, Kenji Kawano who had been promoting TSUNEISHI’s overseas business, became the new President of TSUNEISHI SHIPBUILDING. In order to further strengthen TSUNEISHI’s manufacturing capabilities, especially at its overseas locations, the company is working closely with its Group companies in the Philippines and China, as well as in other areas overseas, not only to actively pursue efforts to nurture globally-oriented human resources, but also to continue investing towards the future, such as by making capital investments at the TSUNEISHI Factory. TSUNEISHI SHIPBUILDING renamed its Ship Repair Factory to After Service Division, and will continue to provide quality services. The various companies in the shipbuilding segment will work together to enter fully into the business of retrofitting work to install the Ballast Water Management System in order to take full advantage of the business opportunities in this area.

2.Shipping Business

(1) Review of 2014
In the liner department, while the movement of goods between Japan and China has been declining due to the slowdown of the Chinese economy and the slump in Japanese consumption, the traffic volume on our routes connecting Japan and China showed a 1% increase for both import and export combined, with a 3% increase for import alone, thus contributing to driving up our revenues. The non-liner business continued to experience difficulties, due to the stagnating movement of goods in the dry bulk market and the continuous oversupply of tonnage. Revenues in the shipping business was 43.6 billion yen, resulting from such factors as long-term time charters to shipping companies in and outside of Japan, and from gains on foreign exchange after corrections were made to the strong yen. KAMBARA KISEN has been continuing to place orders mainly for new mid-sized bulkers of the 80,000-ton class. The number of ships in its possession as of December 2014, including those owned by its overseas subsidiaries, increased to 36 ships from 34 for the same month of the previous year.

(2) Business activities in 2015
In January 2015, KAMBARA TUG & MARINE SERVICES was separated out of KAMBARA LOGISTICS and established as a separate company. KAMBARA LOGISTICS is conducting business as a Non-Vessel Operating Common Carrier (NVOCC) with its base at Fukuyama Port. In the liner business, efforts are being made to make Shanghai as our hub port by having signed a transshipment agreement with Regional Container Lines, a major shipping company in Thailand. In the non-liner business, we are working to make ourselves less likely to be affected by market conditions by dispersing the timing for renewing and revising the time charter contracts to various periods.

KAMBARA KISEN is planning to further expand its number of ships owned for the purpose of establishing an agile chartering system and is scheduled to possess three new bulk carriers within this fiscal year. For medium-term plans, the company is planning to increase its fleet while keeping an eye on trends in the market.

3. Environment/Energy Business

(1) Review of 2014
Although the sales figure declined sharply due to the reduction of oil-related revenues in Japan at TSUNEISHI C VALUES, we have strengthened our overseas initiatives, such as in the sales of solar panels, in addition to the export of used car parts to Paraguay which began for the first time last year.

TSUNEISHI KAMTECS has been strengthening its domestic sales base and enhancing its treatment facilities, and at the same time, it has also been actively developing its business overseas. The company established an affiliate in Bangladesh in June, and started a wastewater treatment business in Thailand. The company will utilize its model for recycling waste to answer the waste management needs in Asia, an area that is growing along with economic growth, and turn them into new business opportunities.

(2) Business activities in 2015
TSUNEISHI KAMTECS is accelerating its efforts to realize complete recycling of industrial waste, and to promote the creation of energy (generation of electricity). It is also working to establish a base for its industrial waste treatment business that is being rolled out in Asia.

TSUNEISHI C VALUES is making efforts this year in the business of selling electric three-wheeled taxis in the Philippines.

4. Service Business

(1) Review of 2014
The chapel at Bella Vista Sakaigahama came into full use from January 2014. In addition, the increased awareness of the hotel has resulted in improved average customer spending and contributed towards increased sales. Visitors to Miroku-no-sato exceeded 500,000 people, helped by the experience-based accommodation facility called Shimanami Village and the Shinshoji Spa Showa-no-yu, as well as from the commemorative events held to celebrate the 25th anniversary of the three-generational theme park Miroku-no-sato, and from the annual illumination event having become better known among the general public.

(2) Business activities in 2015
TSUNEISHI HUMAN SERVICE and TSUNEISHI SAKAIGAHAMA RESORT merged together on January 1, 2015 and became TSUNEISHI LR Inc. By this merger, all of the service-related business that had been dispersed amongst different companies, such as the hotel, experience-based accommodation, and leisure facilities, can now be operated comprehensively. The new company will also be involved in such activities as developing new products that make use of local resources, thus aiming to become a company that will answer the diverse needs of a wide range of customers.

■About TSUNEISHI HOLDINGS CORPORATION
 https://www.tsuneishi-g.jp/english/

Chairman and President: Yasuharu Fushimi
Head office: 1083 Tsuneishi, Numakuma-cho, Fukuyama City, Hiroshima Prefecture
Business: Since its founding in 1903, the Tsuneishi Group has been globally active in the Philippines, China, and elsewhere in four business segments: shipbuilding, shipping, environment & energy, and services; with products and services that contribute to global economic development and provide jobs in local communities.

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TSUNEISHI HOLDINGS CORPORATION
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Head Office (Fukuyama) TEL: +81-84-987-4915
Tokyo Office TEL: +81-3-3264-7733