KYOEI TANKER CO.,LTD.

Business Details

The Group consists of a single segment for ocean-going shipping business. Its core operations are long-term chartering contracts (time charters) centered on Very Large Crude Carriers (VLCC), Very Large Gas Carriers (VLGC), Small Gas Carriers (SGC), and bulk carriers. The Group operates from bases in Japan and Singapore, and continued to develop its fleet, including the acquisition of the LPG carrier "JOSEPH" in FY2026 (ending March 2026). Revenue consists 100% of chartering fees. The corporate group comprises the Company, nine subsidiaries (including overseas ship-owning subsidiaries), and one other affiliated company (Nippon Yusen Kabushiki Kaisha).

Recent Overview

Revenue increased slightly, but net income fell 91.9% year on year, hit hard by extraordinary losses and tax burden

In FY2026 (ending March 2026), shipping business revenue rose slightly to ¥15,509 million (up 2.3% year on year), driven by charter contract renewals and the operational contribution of two LPG carriers. On the other hand, due to increased crew costs and other factors, operating profit declined to ¥1,243 million (down 9.4% year on year) and ordinary profit fell to ¥886 million (down 13.9% year on year). Profit attributable to owners of parent declined sharply to ¥414 million (down 91.9% year on year). The main causes were the absence of the ¥5,800 million gain on vessel sales recorded in the prior fiscal year, the recording of an extraordinary loss of ¥349 million related to the denial of departure clearance for the petroleum products carrier "CHALLENGE PROCYON" by Mexican authorities, and a sharp increase in corporate, resident, and enterprise taxes to ¥2,083 million, despite recording a deferred tax adjustment gain of ¥1,961 million from the reversal of deferred tax liabilities related to retained earnings of overseas subsidiaries. In investing activities, ¥5,440 million was spent on vessel construction payments, and cash and cash equivalents decreased to ¥5,808 million at fiscal year-end.

Key Products

Growth Drivers

• Full operational contribution throughout the year from the two LPG carriers "JOSEPH" (acquired in FY2026, ending March 2026) and "PAUL" (acquired in FY2025, ending March 2025), with performance contribution becoming fully realized
• Increased demand for crude oil transportation to the Middle East and Western countries and rising WS index for VLCC, against the backdrop of intensified sanctions against Russia and increased OPEC+ production (WS recorded a historic high of over 400 in March)
• Record-high charter rates for Very Large Gas Carriers (VLGC) (temporarily reaching the $90,000 range), driven by expanding U.S. LPG transportation demand, increased demand from India, and substitute demand amid heightened tensions in the Middle East
• Gain on sale of the bulk carrier "KT BIRDIE" (approximately ¥1.8 billion) scheduled to be recorded in the first quarter of FY2027 (ending March 2027), supporting next fiscal year's performance
• Full-scale contribution to earnings from newly built vessels (already factored into the full-year outlook for FY2027, ending March 2027)
• Securing stable chartering revenue through continuous renewal of charter contracts

Risks

• Risk of fluctuations in shipping market conditions: VLCC, VLGC, and bulk carrier market conditions fluctuate significantly due to geopolitical risk, OPEC+ policy, tariff policy, and other factors, and revenue levels are affected by the timing of long-term charter contract renewals
• Middle East situation and Strait of Hormuz risk: The Strait of Hormuz remains effectively blockaded, with unusual events such as the suspension of contract conclusions within the Gulf occurring. The significant impact on energy supply networks and international logistics is heightening uncertainty in the global economy
• Risk of vessel departure denial: The denial of departure clearance for the petroleum products carrier "CHALLENGE PROCYON" by Mexican authorities continues, resulting in an extraordinary loss of ¥349 million recorded in FY2026 (ending March 2026); an extraordinary loss is also expected to be recorded in FY2027 (ending March 2027)
• Cost inflation risk: Increased crew costs (vessel operating costs in FY2026, ending March 2026, were ¥12,468 million, up ¥317 million year on year), rising capital expenditure costs due to sustained high newbuilding prices, and increased vessel operating costs due to continued inflation
• VLCC major repair risk: In FY2027 (ending March 2027), one VLCC is expected to undergo major repairs, resulting in off-hire time and increased costs, putting pressure on performance through decreased revenue and increased expenses
• Tariff and trade friction risk: Market volatility due to the trade policy of the Trump administration in the U.S., and decreased cargo movement and worsening sentiment due to intensified U.S.-China tariffs
• Interest rate increase risk: Increased interest expense (¥555 million in FY2026, ending March 2026, up ¥62 million year on year) on interest-bearing debt balance of ¥44,014 million (short-term borrowings of ¥10,760 million plus long-term borrowings of ¥33,254 million as of the end of March 2026)
• Foreign exchange risk: Increased yen-denominated costs from dollar-denominated vessel expenses (such as crew costs) and impact on foreign currency translation adjustments for overseas subsidiaries