IINO KAIUN KAISHA,LTD. Q4 FY2025 earnings call

• Overall FY2024 Results • Full year total revenue was 141.87 billion yen, operating profit 17.1 billion yen, ordinary profit 17.37 billion yen, net profit 18.37 billion yen. The company reported year-over-year revenue growth and profit declines, but results remain at high levels following 2022 and 2023's record performance. Higher net profit was driven by recognized gains from ship and investment securities sales. • All 2024 financial metrics exceeded the targets set in the current mid-term management plan. Non-financial targets were also met: zero major safety incidents for two consecutive years, and 100% completion rate for human rights training. • End-of-period equity stood at 145.5 billion yen, interest-bearing debt 120.65 billion yen, for a debt-to-equity ratio of 0.84x.

• Mid-Term Management Plan Progress • The current 3-year mid-term plan entered its final year in FY2025. 85% of the planned 100 billion yen total business investment has already been committed, and management will pursue additional investments to hit the full target in the remaining year.

• Shareholder Return • For FY2024, a 5 yen per share special dividend was approved on top of a 4 yen increase to the ordinary year-end dividend, resulting in a 33 yen per share year-end dividend and 58 yen per share full year dividend. • The dividend payout ratio target for the mid-term plan's final FY2025 (ending March 2026) has been raised from 30% to 40%. A full year dividend of 44 yen per share (22 yen interim, 22 yen year-end) is planned for FY2025. The payout ratio change applies only to FY2025, and will be reevaluated alongside the next mid-term plan in May 2026.

• Updated Cash Allocation • Reflecting the FY2024 upside earnings surprise and higher shareholder return, projected operating cash flow for 2023-2025 is 3 billion yen lower than prior guidance, while investment recovery is 3.5 billion yen higher, and total shareholder return is 1 billion yen higher.

Overall company FY2024 total operating profit was 17.1 billion yen, a 2 billion yen decrease year-over-year. 1. Chemical Tanker: A 1.24 billion yen operating profit decrease year-over-year. While 70% of the fleet is on stable COA contracts that secured high profitability via adding high-rate spot cargo, reduced operating vessels from expired contract returns and drydocking, plus rising costs drove the decline. 2. Large LPG Carriers: A 1.57 billion yen operating profit decrease year-over-year. Softening market rates after 2023's Panama Canal congestion-driven spike, plus new vessel entry, and exposure to market rates on some contracts caused the decline. 3. Dry Bulk Carriers: A 0.76 billion yen operating profit decrease year-over-year. Firm performance through H1 on strong demand softened after summer on slowing Chinese economic growth, with narrowing margins despite efficient operations. 4. Real Estate: A 0.05 billion yen operating profit decrease year-over-year. Domestic Tokyo properties maintained full occupancy and stable revenue, but the decline came from upfront acquisition costs for the second UK rental property, and reduced tenant rental income from expanding in-house usage at Iino Building. 5. Other: A 9 yen year-over-year depreciation of the yen against the U.S. dollar contributed positively to overall profit.

FY2025 full year guidance calls for total revenue of 134 billion yen, operating profit of 11.4 billion yen, and ordinary profit/net profit of 11.5 billion yen, representing a projected decline in both revenue and profit compared to FY2024. Key segment guidance includes:

• Chemical Tankers: Profit is projected to decline, with continued soft market conditions from Chinese demand contraction and product tanker inflows into the chemical tanker market, plus expected rate declines on some COA contract renewals.
• Large LPG Carriers: Profit is projected to decline by ~1.2 billion yen, driven by the loss of profit from vessels sold at the end of FY2024 and expected further market softening amid uncertain trade volumes from U.S. tariff policy.
• Dry Bulk Carriers: Profit is projected to increase year-over-year. While Chinese economic stagnation is a concern, limited new vessel supply is expected to support a gradual market recovery from current weak levels.
• Real Estate: Domestic Tokyo office market conditions are expected to remain steady, with continuing improvement in vacancy rates and rising average rents, and the company's owned properties are nearly fully occupied with a vacancy rate well below the market average.
• Foreign exchange: A full-year average assumption of 140 JPY/USD (year-over-year yen appreciation), with a 180 million yen impact on annual ordinary profit per 1 yen of movement (positive for yen depreciation, negative for yen appreciation). A 21 billion yen profit impact from the year-over-year assumed yen appreciation is already incorporated into guidance.

• Geopolitical risks: Ongoing instability in the Red Sea, Ukraine, and the Middle East creates uncertainty for shipping routes, supply/demand balances, and market rates. While continued diversion around the Cape of Good Hope is currently expected to tighten vessel supply, a rapid resolution of Red Sea tensions would alter this dynamic.
• Macroeconomic risks: Slowing economic growth in China has already weakened demand for dry bulk and chemical cargo transport, and further stagnation could create additional downward pressure on shipping market rates.
• Trade policy risks: U.S. tariff policy creates high uncertainty for LPG trade flows between the U.S. and China, which could shift trade routes and change vessel supply-demand balances in unforeseen ways.
• Shipping market competition: Weak demand for product tankers has driven excess tonnage to flow into the chemical tanker market, putting downward pressure on chemical tanker rates, and this dynamic is expected to continue into FY2025.
• External forecasting uncertainty: Multiple volatile external factors make accurate forecasting difficult, and management will promptly revise and disclose guidance if material changes in conditions occur.

The Q&A section is not included in the provided earning call transcript.