■Growth Strategy
1. Mid-term Management Plan “The Adventure to Our Sustainable Future”
Iino Kaiun ＜9119 ＞ set the theme of “portfolio management and the challenge of carbon neutrality” in the medium-term management plan “The Adventure to Our Sustainable Future” (2023/4 to the end of 2026/3) formulated in 2023/5 to realize the long-term vision “IINO VISION for 2030.” When formulating the medium-term management plan, the philosophy system was organized, and the corporate philosophy (IINO PURPOSE) was defined as “giving top priority to ensuring safety, connecting people's feelings, and building a richer future.”
Financial indicators and numerical targets for the fiscal year ending 2024/3 include ordinary income of 11.1 billion yen, EBITDA (operating profit+depreciation and amortization expenses plus equity method investment profit and loss) 25.5 billion yen, ROE 9%, ROIC 4.5%, etc., ordinary income 11.5 to 12.5 billion yen, EBITDA of 270 to 28 billion yen, ROE 9 to 10%, etc. for the fiscal year ending 2026/3 They listed 100 million yen, ROE 9 to 10%, ROIC 4 to 5%, etc. In contrast to this, the fiscal year ending 2024/3, the first year of the medium-term management plan landed in a form that exceeded the planned value in most items, such as ordinary profit of 21.8 billion yen, EBITDA of 33.3 billion yen, ROE 16.3%, and ROIC 8.6%. Also, the fiscal year ending 2025/3, the second year of the medium-term management plan, is also expected to exceed the target in most items, such as ordinary profit of 14.5 billion yen, EBITDA of 30 billion yen, and ROE of 10%. Market conditions and exchange rates are also driving factors, and it can be said that the progress of the medium-term management plan is extremely smooth.
2. Priority strategies to build up stable revenue streams
The company's shipping business is unavoidable, but in order to reduce the risk of market fluctuations, it aims to build a rock-solid business foundation by promoting the accumulation of stable revenue sources. As priority strategies, we are promoting business portfolio management (allocation of management resources to growth businesses, expansion of global businesses, environmental initiatives and investment promotion) as “creation of economic value,” and overcoming materiality (formulation and execution of plans aimed at realizing a decarbonized society, strengthening human capital, and responding to respect for human rights) as “creation of social value.” As a cash allocation, we are planning an investment of 100 billion yen (of which 60 billion yen for environment-related investments) and a shareholder return of 13 billion yen, which is more than double that of the previous medium-term management plan for a total of 3 periods. The breakdown of investments is 50 billion yen for growth/new businesses (offshore gas carriers, strategic investments), 20 billion yen for main businesses (chemical ships, dry bulk carriers), and 30 billion yen for stable/mature businesses (oil tankers, domestic/offshore gas carriers, real estate).
Regarding business portfolio management, in allocating management resources to growth businesses, we will strengthen and expand the gas carrier business, which is expected to grow due to accelerated decarbonization, and promote the execution of strategic investments leading to improved competitiveness and the creation of synergies. In global business expansion, we will promote cross-sectional business development utilizing the existing networks of each business, and business expansion in areas where growth can be expected (especially Asia - Middle East - Europe). In environmental initiatives and investment promotion, we will continue to respond to sustainable cargo transportation, and promote investment in ships and real estate that contribute to reducing environmental load and the accumulation of management know-how.
As a result, the policy is to shift ocean-going gas carriers, which are currently positioned as growth business areas, to the main business, and use them as pillars along with chemical ships. In strategic investment, in order to improve the competitive advantage of the main business, it is a policy to work on investments in renewable energy-related businesses and startups in addition to unentered ship types and real estate properties where inter-business synergy can be expected. Furthermore, as an investment in startups, we invested in maritime venture capital (VC) of 2 overseas companies in 2023/6. Chemical tankers, the main business, increase the value of real estate, such as strengthening differentiated business with strong stainless steel fleets and COA renewals that appropriately reflect inflation/environmental response costs, dry bulk ships acquire medium- to long-term contracts and strengthen uniqueness and differentiation, etc.; oil tankers in stable and mature business areas respond to reducing environmental load on existing ships and enhance services; inland sea/offshore gas carriers respond to new demand such as ammonia transportation and LNG bunkering, etc. and promote strategic initiatives for overseas real estate.
Regarding overcoming materiality, a road map for achieving carbon neutrality (CN) by 2050 was newly formulated, and conventional reduction rate targets were raised for 2030 as well. It is a policy to further strengthen decarbonization efforts.
In the shipping industry, in addition to promoting full-scale conversion to next-generation fuels, including zero-emission fuels (hydrogen, ammonia), we are also working on installing propellability/fuel efficiency improvement equipment and systems, including wind power, stabilizing and phased introduction of biofuels, introducing shipboard CO2 capture and storage, and improving operation efficiency using AI. The investment amount for next-generation fuel carriers until 2030 is planned to be approximately 65 billion yen based on self-operated ships (mainly small and medium-sized chemical tankers, dry bulk carriers, domestic gas carriers) and 150 billion yen on a regular charter basis (mainly large oil tankers and ocean-going gas carriers). In the real estate business, decarbonization will be promoted by expanding the use of renewable energy, renovating old buildings and upgrading to high-efficiency equipment, expanding procurement of electricity with non-fossil certificates, and acquiring knowledge and ownership of next-generation office buildings, etc., and it will also lead to strengthening competitiveness.
(Author: FISCO Visiting Analyst Masashi Mizuta Exhibition)