Mitsui O.S.K. Lines, Ltd. (9101) Earnings Call Transcript & Summary

From now on, we would like to start the web conference on Ocean Network Express. Thank you very much for attending this web conference despite your busy schedules. Today I'll be serving as a moderator, I am Sanae Sonoda on behalf of the parent companies of Ocean Network Express. I am from Mitsui O.S.K. Lines, General Manager of Corporate Communications Division. I'd like to introduce today's presenters. First and foremost, from Ocean Network Express Holdings, Representative Director Chairman, Mr. Jotaro Tamura.

This is Tamura speaking. Thank you very much for today.

Next, Representative Director, Vice Chairman; Mr. Keiji Kubo.

This is Kubo here. Thank you very much.

Last but not least, Representative Director, Vice Chairman; Mr. Takuji Banno.

This is Banno speaking. Thank you very much.

Before we start the web conference, I'd like to make one housekeeping announcement. Today, both the moderator and presenters will be speaking in Japanese. And there will be a simultaneous interpreting into English. [Operator Instructions] Without further ado, over to you, Mr. Tamura.

Once again, good afternoon, ladies and gentlemen. I serve as the Chairman, Representative Director of Ocean Network Express Holdings, my name is Tamura. First of all, Ocean Network Express Holdings. I would like to briefly talk about our organization, it's comprised of 3 shareholders. MOL, K-Line and NYK made an investment into ONE Holdings. And currently, I am the Chair of the Board of the organization. And beneath that, as a business corporation, there is Ocean Network, headquartered in Singapore and CEO is Jeremy Nixon for that company. Ocean Network Express, we will be referring to it as ONE or ONE throughout the [ web conference ]. We have come up with a mid-term management plan ONE 2030. And the holdings company and the business company go together to formulate this medium-term management plan, ONE 2030. We're taking this opportunity to explain about the plan today. So for the next 15 to 20 minutes, according to the presentation material, I would like to explain the content of our plan. If we could please go to the next page. So here are the contents. This shows what I'm about to present. There are 3 parts roughly. First of all, I would like to provide an image of the overall ONE 2030 to provide you with image. The 2 others. #2, just ONE 2030, the main business strategy. In our business plan that we have formulated this time, what is going to be the gist or the core of the plan. In July of last year, the business corporation, in Singapore, made an announcement. And so what I'm about to explain. And #2, it's based on that. And back in July last year, Jeremy Nixon explained it. So our basic plan and business strategy based on that, other Holding Co., and the business so go together to decide on the investments and finance strategy. That's point 3. So inclusive of that, we are having this plan called ONE 2030. So I will be covering all these 3 points. The business image of ONE 2030, just briefly, there are 3 concentric circles. The outer perimeter is in a dotted line. ONE's business, the Container Shipping business, our core business and Container Shipping Value Chain affiliated business. So these are part of our core business that we have been running. And in this plan that we have put together this time, we're going to expand it further to a larger circle, that is one of the main points. And as I will explain later, the key phrase first is the sustainable growth. So in order to achieve sustainable growth based on this plan, we're going to grow our business, grow our company. As we look to achieve the plan, there are 3, 4 elements, which are described on the left-hand side, operational efficiency, economy of scale and sustainability. So these are the 3 most important key elements in achieving the objectives, and I would like to elaborate on each of the elements as we go forward. Next, please. So the second part is what I said earlier, in July last year our business corporation explains the idea, and we're providing a summary of that once again. But first of all, ONE is better positioned for the future, what is going to be its thinking that's being summarized. And what is this key highlight. Point #2, as highlighted in the agenda, sustainable growth. So from this point forward, into the future, as organization, this is going to be the most important key phrase. And as is described at the bottom of the page, there are 6 areas, 6 items listed. We will realize these and through that, we would like to make long-term contributions to a broader range of stakeholders. Next, please. I talked about our current standing or current position. The 3 shareholders businesses were to be consolidated. That [ was started back ] in 2016. And the slide plots our history since then up until 2022. Looking back between 2016 and 2022, and I think we can include 2023, we can call it Phase 1 that's how we have defined this phase. So what was Phase 1 about. It was a period of integration and establishment. So from this point onward, what is it that we're aiming for and that is described in the plan that we have drawn up. It's at the core of our plan going forward. Regarding Phase 1, [indiscernible] we're going to embark on Phase 2, we just achieved sustainable growth. And I would like to provide the specifics of Phase 2 more concretely. In the title include the word sustainability, in the diagram, I showed earlier, there are 3 most important key elements: operational efficiency, economy of scale and sustainability. All these 3 must be multiplied with each other. And to do that, we would like to realize sustainable growth in Phase 2, that's the thinking here. So 3 key components, key elements. For the Container Shipping business and Container Shipping Value Chain there are 2 businesses separately described and by applying all these 3 key elements to each, we would like to operate our business in Phase 2, that's the plan. To realize sustainable growth through 3 key elements, more specifically in terms of strategy, as described from 1 through 5, Green Strategy, Digital Strategy, Talent Strategy, Finance Strategy and Global Strategy. These are the 5 strategic pillars we will be building. So let me explain these. The first one, Green Strategy. At ONE, this is going to be one of the most important objectives that we must achieve in Phase 2, we have to respond to the needs of the environment. I think it's obvious. So under the banner of Green Strategy, we would like to pursue ONE's vision, Green Mission and Green Vision. We're going to implement specific initiatives to achieve decarbonization. We have set targets as described here and we're going step by step to achieve this. And in terms of environmental compliance, ship recycling and environmental conservation initiatives are also pursued. Next, please. So in the Green Strategy, especially what we should emphasize would be a decarbonization of our fleet. So as of 2030 and at the point of 2050, we are making a comparison, there will be a transition in between. And this page explains that transition. As you can see at this point in time in 2030, current fleet and also we have some orders in place already and these ships will be our main ships, so these will operate with conventional fuel. Going forward, we'd like to introduce zero-emission capable vessels. And in 2050, we will use some carbon offset as well. And by doing so, we're trying to realize our target of net-zero emissions, and we're trying to push for initiatives to this end, that's our thinking. The next page, please. So the second one is Digital Strategy. In the shipping industry, especially Container Shipping business has a high affinity with digitalization. It is a segment and ONE, ever since its launch has been making all sorts of efforts and initiatives are ready to a great extent, all sorts of operations, a great deal of operations have been digitalized to push up efficiency. At the same time, going forward, we would like to strengthen and advance such initiatives and efforts even more and through digital solutions, we try to realize competitiveness. This is our basic thinking here. The next page, please. Third point is a talent strategy, which is about human resources. So ONE currently has about 12,000 employees across the globe, and we are leveraging our talents and unlocking the full maximum potential of our talent will be the source of our competitiveness. So to this end, we have initiatives and ever since our foundation, we have been taking most of the initiatives. But as part of our 2030 plan, taking this opportunity, we would like to revise some of our actions. So this page is a summary of such actions. Next page, please. The fourth pillar is Finance Strategy. As for the details of our Finance Strategy, in the third part, we will be featuring this point. But one key point will be, on the left-hand side, you see solid and diversified funding base in the first box, plus financial stability, which is in the second box, these are our key pillars and Container Shipping business is highly volatile as a business in nature, and we are engaged in such a business. So solid and diversified funding base is very important. And while realizing such a funding base, going forward, in terms of our financing activities as well, we would like to deploy diverse measures and actions. And as you can see at the very bottom of this slide, it says a long-term ROE target of 10% or more, and we'd like to make these compatible. The next page, please. Last but not least, we have a #5 Global Strategy pillar. So as a global container shipping company already, we enjoy [ international standing ]. And already, we have this, but we try to grow this global strategy even more, our main pillar, which continues to be our main pillar, our Container Shipping business we'd like to pursue even better quality in various ways, especially we have a global network. In terms of our service, also our service resources when sourcing such resources, we should leverage our global standing network. Okay. The next page, please. So from here on, I said the third part, and this time around the holding company and a business company put together this investment and finance strategy. So I'd like to cover that area from this point on. Next, please. So first and foremost, ONE profit plan. From 2024 through 2030, this is a position as a Phase 2, and we are executing or we've compiled this plan. And at the beginning of the plan for the first 2 years or so, this is for the entire industry because of also where we will be on a low profit level for a while. Having said that, what's currently happening, for example, Red Sea situation or other geopolitical factors, we tend to be affected by such developments to a great deal. So at this point in time, it's very difficult for us to come up with the prospects. There is not much visibility against this backdrop, first and foremost, in FY 2024. This is business as usual based up on our conventional cycles from the end of April through the beginning of May, 3J financial results will be published. So when they do so, we would like to talk about a specific outlook in terms of numbers for FY 2024. After that initial period, the overall supply-demand situation will improve in the market, so we believe our profit level will recover as well. And based upon this thinking or our plan, there will be some benefits from our investment. And 2030 will be the final year of the plan and our profit level prospect will be USD 3.8 billion. That is the target profit level at FY 2030. Next, please. So next one is ONE investment and financing. First, in our plan, the target appearing in this target period, the total amount will be USD 25 billion in terms of our investment or more, that much investment is planned for our main business, Container Shipping business. In addition, we will consider maximum USD 10 billion towards further expansion of Container Shipping Value Chain. So this is our investment plan and the most important part of the plan, highlights, if you like. And as I said earlier, in our management plans, important point would be sustainable growth. So 3J, 3 shareholders in the shipping business. The segment of Container Shipping is a sort of a segment where growth is expected. It's a growth segment and as such sustainable growth is what we uphold. As such, based upon this thinking, we came up with this investment program. Under this banner, in this plan, we are upholding the direction of our business expansion, which I just explained. And as a result, by the end of the final year of this plan, our scale will be 3 million TEU level, that is our expansion target. At the same time, we need to finance ourselves for the investment plan we have. So 6 to 4 will be the ratio we will maintain. We will keep in mind and ONE will take some borrowings and also we'll leverage equity and by combining both, we would like to cover our investment activities. Next, please. So the 3J, 3 shareholders have an idea about the capital management policy. So to compile this plan as ONE, what sort of profit level should be pursued? That was the question; and to reach a certain level, what sort of an investment will be necessary? We explored these questions. And as 3 shareholders, 3J what will be required of ONE. So as shareholders, mid- to long-term return target would be ROE 10% or more for ONE. And in accordance with this as shareholders, we'd like to execute the capital management policy for ONE. So ONE's equity ratio is exposed to volatility, but while considering that we have to have a solid equity ratio for the company. At the same time, once ONE's equity ratio has to be normalized or has to be adjusted, so from 2024 through 2026 for the span of 3 years, we'd like to make a gradual adjustment. The next page, please. This is the final slide. So shareholders dividend direction, as I said earlier, as shareholders, we have ONE capital allocation policy. And based upon what sort of specific actions are being taken, on a gradual basis and through phases, we try to normalize or adjust equity ratio, and this is basically return to 3 shareholders. And every year, dividend or payout ratio should be 30% of the net profit of a given year. In addition, as I said earlier, for those 3 years, at this point in time, USD 3 billion. It's a sort of size we keep in mind for special dividend. And in 2024, out of these 3 years going forward after necessary resolutions, in June, at least $1 billion -- USD 1 billion of payout is being planned. And then after that, FY '25 and '26, we will look at the progress of the investment plan as well as the financing situation. We will be monitoring these indicators. And well, this is really the overall progress up to 2030, but while monitoring all these points, we try to make a decision or judgment. So for these 3 years, special dividend amount is USD 3 billion. That is a number we keep in mind at this point in time. Going forward, depending on the progress, of course, there could be some fluctuation in terms of the special dividend amount that is quite possible. But to compile this ONE 2030 plan, the holding company, meaning 3J, 3 shareholders and business company had discussions to compile this plan. That's all for my presentation. Thank you very much. I'm looking forward to your questions from the participants and I'd like to respond as much as possible as time permits. Thank you.

I would like to move on to the Q&A session, questions and answers, just repeat with the questions. [Operator Instructions] We're going to take questions at this moment. So the first question, Hirokane-san has asked the question.

I'd like to ask 3 questions in sequence, one by one. So my first question, fleet capacity to be set at 3 million TEU. What was the rationale behind that, why, if you could please explain? Number two, the DE ratio target is 6 to 4. If you could please explain the background to that as well? And lastly, about shareholder return, $3 billion of special dividends that you'll be returning to the shareholders, the payout ratio of 30% or more. What were the premises or assumptions behind this? If you could please explain that as well.

Thank you for the questions. So there are 3 questions. So let me answer one by one. First of all, your first question regarding the fleet scale, well, ONE, currently in [ East-West ] route, we belong to THE Alliance. So as a member of THE Alliance, we provide services. And for other ocean routes, we work with various partners individually to provide services. So that's what we do currently. And going forward, by FY 2030, if we are to look at the potential competitive landscape, and of course, the situation differs from one route to another, but the future outlook for all the routes is put together and looked into various assumptions and expectations. And so it's based on that. And of course, in terms of the route, we basically intend to continue with our membership in Alliance for other routes. As ONE, what we envision as an ideal, well, we have not been able to achieve our ideal route. In other words, we see more potential for growth that we can tap into. And still we have growth expectations for ourselves. And given that as well, for each route, how much presence would we like to achieve, we consider that as well. So with all this combined, we have come up with this number at the end of this plan period. And your second question about the DE ratio with respect to funding. Well, going forward, as we see with our investments overall, our balance sheet will change. And on the other hand, I talked about bringing the numbers to appropriate levels, we will be doing that in parallel. As we make those adjustments, what should be the best balance? What is the most realistic balance? We've had a number of discussions on that. And at this moment, as we look toward FY 2030, we consider this scale of investment. And as we try to raise funding for that, we have to be realistic. And as we make adjustments, what should be the most appropriate ratio, we discussed. And as a result of such discussions, we came up with this ratio of 6 to 4. So that's the answer to the second question. And lastly, about special dividend. It was a question about the size of the special dividend payment as I understood it. Well, basically, in each fiscal year, you could bear with me for a moment. The net profit for each year, 30% or more of the payout. That's the principle. So it has not changed from ONE's basic idea from before. In the past, in a year where profits were particularly good, we paid out more than 30%. But in principle, 30% or higher. And so with that principle in place, as I said earlier, and based on the outlook up until FY '2030, as we bring our equity ratio to an appropriate level in the first 3 years. What should be the size for a basic plan? We concluded that it should be USD 3 billion. That's the conclusion. So as we implement our plan, the profit level of each year and progress in funding, and of course, progress in investments, all these variables, and of course, we have our own assumptions and outlook for all of them, but there are such variables. And as they become more certain year after year, what should be time line under which we should bring the ratio to an appropriate level. We will be checking on that periodically. It's not a single one-off exercise. So I said that in FY '24, '25, we will review it and check. So based on the current outlook that we have, in view of the basic thinking, we came up with this $3 billion number. So those are my answers. Thank you.

About my question #3. So when profit overachieved the plan. Well, in the first [ couple of years ], things are going to be tough, you said. So payout ratio of 30% as special dividend payout depending on the accumulation of capital that could change. At this moment, your judgment was to have a special dividend of USD 3 billion. Is that correct?

Let me answer basically based on the long-term outlook, we're going to bring the equity ratio to an appropriate level. That is the objective. So more so than our current outlook, the profits may increase more than the plan, and we may have to review the plan. So it could go higher or either lower than the planned number that we have in mind. So that is how it's defined.

Thank you very much, Hirokane-san from Nomura Securities. We responded to 3 questions asked by him. Okay. The next question, please. So Himeno-san. So please unmute yourself and ask your question. So please state your name and affiliation before you ask your question once again. Thank you.

JPMorgan, Himeno is my name. I have 2 questions. My first question is that in the investment plan, from last time, there have been some changes in terms of the monetary amount of Container USD 25 billion and then other USD 10 billion. So in 2022, more than USD 20 billion was the amount you were talking about. So I believe that you increased the amount of investment. Is my understanding correct? So what sort of factors went into this change? My second question would be that maybe this is overlapping with my first question. But when you formulated the plan, THE Alliance reorganization and Red Sea issue and so on have happened, which increased uncertainties. So against this backdrop in response to these developments, for example, dividend and fleet capacity investment and leverage, did you have to review all these KPIs or regardless of this reorganization of THE Alliance, were you able to maintain your KPIs? These are my 2 questions.

I believe you asked 2 questions. So let me answer. To respond to your first question about the size of investment. Last time compared with our last plan -- previous plan, there has been some increase in terms of investment amount. You're absolutely right. So this time around, we reviewed this and the factors we considered were twofold. The first one is the tonnage, your cargo trends themselves. From our viewpoint, in a way, conservative but because of the inflation, the surprise. So ship building market has been quite solid. So I believe our last outlook was somewhat naive. So we reviewed this factor. That is the first point. And as for the second point, this is again about the ships. So green investment. We did factor this into the thinking, what about the trends of alternative fuels, if we bring this forward about the vessel prices for our future orders, perhaps it's better for us to reflect this in our thinking. So ONE, this time around, in this plan on a regular basis will order our mainstay vessels or ships. So from 3J, currently, we lease ships or vessels. And the life span of such vessels is up to 2030 needs to be replaced to a great deal. We will reach such a phase. So at such a timing, we'd like to replace those ships with our own vessels. So we factored this into our planning more. And in the end, we ended up with a larger amount of investment. This is in the background. That was my response to your first question. To respond to your second question, the current situation and developments have affected our plan this time around or [ have they ] affected our plan this time around at all. Most recently, as you rightly pointed out, there have been 2 major developments. The first one is the Red Sea situation. Attacks against the ships and so on have happened. As a result, some shipping companies didn't want to navigate to that area anymore. So overall, there is more need and demand for container ships. So currently, freight rates are rising. The rates are on the rise. And in 2024 -- FY 2024, this is surely going to affect our performance in that particular year. But considering the time span up to 2030, in regards to our plan with that time horizon, FY '24 profit level is incorporated into this overall plan, of course, but we don't believe it's going to affect our overall situation. And also, you asked about THE Alliance. In January, Hapag-Lloyd decided to withdraw itself from THE Alliance and this -- THE Alliance is trying to come up with new services, which will start in February '25. They are preparing to [ descend ] as ONE based upon our fleet capacity. The size of capacity or space we can provide to our customers will remain the same. But because THE Alliance services will be reorganized, so the variation of the services will change. So based upon our planning or from the viewpoint of our planning towards 2030 in the mid- to long-term, of course, we will be providing services based upon the structure of THE Alliance. So from '24 through '25, the impact of reorganization is not 0, but still overall, we will be able to provide solid and stable services, and we are certain of it. So in that sense, ONE 2030 -- when formulating ONE 2030, the current reorganization situation of THE Alliance didn't affect us or bring about a large impact for us. I don't believe that too much consideration was needed for this point. These are my responses.

Let us continue. From Tokai Tokyo Intelligence Lab, Katou-san. Once you're allowed to unmute and start your questions. Thank you.

Tokai Tokyo Intelligence Lab, my name is Katou. I have one question. In the final year of the plan, USD 3.8 billion profit and ROE of 10%. So equity ratio as of 2030 will be $38 billion. Is that assumption correct? And about the equity ratio level right now, if there's any comment that you can make, I'd appreciate it. That's my question.

First of all, the equity ratio level right now, there is an actual number that's posted on ONE's website. If you could please refer to that. So in the final year of the plan, the profit levels for 2030, we have planned the number to be $3.8 billion. Now what is going to be the size of the balance sheet. We're refraining from announcing specific numbers about that at this moment. But as I said earlier, we'd scale. Well, there are a number of factors that we have to consider about that at ONE. We are currently leasing vessels, many of our vessels have [ big ] shareholders, that ratio is quite high. So we're going to place orders for new ships, new vessels. And the vessels we are ordering are going to be larger in size, more environmental friendly. We're going to make such investments and such new vessels once built will be posted as assets for ONE. And so considering that effect, I think, the balance sheet in the future will be larger, relatively speaking, we believe. Over the medium to long term, we want to achieve an ROE of 10% or more. That's our target. So in fiscal year 2030, 10% or more of ROE to be achieved, and that is the target that we have in line. So that's my answer. Thank you.

Thank you very much. As you are ready to unmute yourself, please state your name and your company name once again before you ask your question.

Morgan Stanley, Osaka. So I have 3 questions. My first question would be for the special dividend for FY '24 at least $1 billion. That's the plan. And in FY '23, this is a disposal of the profit of that year. That's $1 billion above ground? That's my first question. The second one is the capital expenditure, $25 billion for fleet that is rather than chartered ships. It is more of your own facility or equipment and how much has been decided for that amount? And $10 billion additional capital expenditure, what sort of plans do you have for that portion? Could you talk about the contents of it? That's my second question. The third one, as ONE, you have a target equity. Do you have an equity ratio target and how much is that? So the parent company saying 50%. But as ONE, do you have any number in terms of equity ratio target, please?

So I'd like to respond to these 3 questions one by one. The first question was about a special dividend in June '2024, $1 billion is the amount. So in FY '23, there will be profit, and is this a dividend coming from the profit? Actually, it's not the case. In FY '23, in the first half of the year, there is profit and the dividend has already been paid out. And as for the second half of the year, first and foremost, the payment has to be made and then separately from that. There is an overall capital normalization, we need to make the capital level appropriate. So that's my response to your first question. And the second question is about fleet capacity development, our own vessels will be included here, but on top of our own ships, also chartered ships from 3J would be also included. So both of them will be on ONE's balance sheet. So what will be the combination of these 2, that is one issue. Depending on the situation at the time, we like to source ships in an optimum manner. And then the second question was about $10 billion investment and content of this $10 billion. This is for expanding our business and we need to have an investment of this size and one example would be for our terminal business, ONE up to this point has been using the container terminals used by 3J, but also at the same time, we are Los Angeles' Long Beach, an important hub of ports have been leveraging these as well. And as part of the global strategy. As I mentioned earlier, we'd like to enhance our -- quality of our offerings. So in terms of the terminals, we try to make investment so that we can embed them into our own value chain. This is an important topic for us. So we will keep this in mind, bearing this in mind, we are having discussions and making considerations. Finally, your third question. What was your third question. Once again, could you please repeat your third question?

Sure, ONE, equity ratio target, what is the target equity ratio for ONE?

Thank you very much for repeating the question. So as ONE, container ships stand-alone business, we are specialized player for the Container Shipping. So we are exposed to a high level of volatility. So Container Shipping Value Chain is the sort of area we are looking into so that we can expand our portfolio. And the flip side of that is this kind of investment. So to address this volatility to withstand this kind of volatility, we should have an equity ratio and 3J, 3 shareholders are also thinking that this is appropriate. So what is the specific target? What is the percentage point? I'd like to refrain from making a comment about that, but as 3 shareholders to ONE, they will be [ finding ] themselves going forward. So that leverage would be possible so that they can make profit so that they can exercise leverage. This is an important point. Thank you very much.

In regards to your second response, $25 billion, how much investment has already been decided? And also as for the $10 billion portion, you'll be mainly making investment in terminals like other companies, non-shipping or [ forwarding ], those sort of business areas, you are not much interested in, is that so?

My apologies. Sorry, I didn't cover that part of the question. First, out of $25 billion, what are the actual contents? Well, going forward, we will be making investments in the future. We call it business expansion, the part, forwarding, aviation, some people may think that we are talking about such areas, but as ONE, we are not thinking of making inroads into those areas.

I'll move on to the next question. [indiscernible] [Operator Instructions]

It's [indiscernible] from Citigroup here. Just 2 very quick questions. Number one, shorter term. Would you be able to guide the range of transpacific contracts for this upcoming year? And what will be the percentage of coverage that we can expect? That's number one. And number two, on a follow-up question on the change of THE Alliance with the departure of Hapag-Lloyd. Should we expect both ONE and Alliance member to plugging in, let's say, services on Atlantic and North-South, for example. How should we think about it? Thank you very much.

So two questions. I would like to answer in Japanese, to be translated by the interpreters. So your first question, transpacific cargo contract, the trends that [indiscernible]. I believe that is a question regarding short-term trends going forward. So transpacific contracts from Asia to North America, [ east bound ] shipping contracts. The core of it is negotiated in May of [ each ] year. So that is the industry practice. So therefore, in a normal year, in around March and April, contract renewal will take place between the shipping companies and the providers of the ships. And of course, it will have an impact on the profit and loss outlook of each shipping company. So between the consignors and the consignees, so this year, as you know, the current spot market conditions are such that they are unstable. And that is because of the Red Sea situation and others that I mentioned. So the timing of the conclusion of the contract seems to be pushed down, it's going to be later than usual. So at this moment, we're not in a position to say anything certain at this moment, at least. That's going to be my answer. But as container shipping companies, if we look at the current situation, the services that we provide, that could be a little unstable, but we have to spend our cost so that we can maintain the level of service ports. So the freight that is in, commensurate with the quality of the service that we provide, we do strongly hope that, that is accepted by our customers. Secondly, with respect to THE Alliance and it's changed, as I may be repeating what I said. Hapag-Lloyd, it's official withdrawal will be in February 2025. So in FY '24, the current services, according to the agreement, will continue to be provided. So with the current service menu, the customers need not be worried, and that will be continued up until the official withdrawal. But what's going to happen after that is actually being negotiated and discussed among the members as we speak. And the scope of THE Alliance; Asia -- North America, Asia, Europe and Transatlantic routes. So for each route, there could be a different level of impact as a result of their withdrawal. But we're considering all those factors and numbers in order to provide services next year onward. We are discussing. So at an appropriate timing, more specifics will be announced as I understand it. So those are my answers.

Thank you very much. Now it is time to conclude, and I don't see any more questions. So we'd like to conclude this conference call for Ocean Network Express. So after you leave the room, there will be a survey on the screen, so please take a moment to respond to that survey. Thank you very much for participating in this meeting despite your busy schedules. Thank you for your continued support. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]