IINO President's 2025 New Year's Greetings

January 6, 2025
IINO Kaiun Kaisha, Ltd. (IINO Lines)

Yusuke Otani, President and Representative Director of IINO Kaiun Kaisha, Ltd. delivered his New Year's greetings for 2025 to all executives and employees of the IINO Group on January 6.

New Year's Greetings 2025

Happy New Year to everyone. As we begin work in 2025, I would like to extend my New Year's greetings to all of our executives and employees.

First of all, both the shipping and real estate businesses have been very good over the past year, with no major accidents, and our business performance has exceeded our mid-term management plan projections. I think that our efforts to 'ensure safety as our top priority' and 'take on the challenge of growth' in each of our fields, both on land and at sea, have been successful.

Last year, in Japan, the Nikkei Stock Average hit a record high for the first time in 34 years, surpassing the previous record set during the bubble economy, reaching 40,000 yen for the first time in history, and the yen exchange rate also reached 160 yen per dollar for the first time in 34 years. In
addition, the Bank of Japan decided to lift its negative interest rate policy for the first time in 17 years, saying that it was now possible to achieve its 2% inflation target in a stable manner.

Meanwhile, in the US, the Republican Party's Mr. Donald Trump won the US presidential election in November, returning to the White House.

Furthermore, the Russian invasion of Ukraine, which began in 2022, still has no end in sight.
Furthermore, the fighting between Israel and the Islamic militant group Hamas in Gaza has also worsened, and our vessels have been continuing to detour around the Cape of Good Hope rather than sailing through the Red Sea since the beginning of 2024. In December last year, the Assad
regime collapsed in Syria, and it is becoming increasingly necessary to pay close attention to the situation in the Middle East. We are worried about the crew members of our vessels sailing in the area and their families, and we can only pray for an early end to the situation.

Amidst this unstable and increasingly uncertain situation, the IINO Group is about to complete the second year of its current mid-term management plan, 'The Adventure to Our Sustainable Future', which was launched in 2023. Here, I would like to review the progress made last year in three key
areas: 'numerical targets for business performance', 'promotion of business portfolio management', and 'efforts to achieve carbon neutrality'.

Let's look at the first point, 'numerical targets.' In FY 2024, we expect to achieve all of our financial targets, as the market conditions for our mainstay chemical tankers continued to remain at a high level , and oil tankers, gas tankers and dry bulk carriers have also performed almost in line with plans, as well as the contribution of the real estate division as a stable source of revenue.
Next, I will talk about the second point, 'promotion of business portfolio management,' and the third point, 'initiatives for achieving carbon neutrality.'

First, let's review business portfolio management. We evaluate each of our businesses on two axes: growth potential and return on capital, and position them as growth businesses, core businesses, and stable mature businesses. We have planned to invest a total of 100 billion yen in each of these business portfolios over the next three years. Of this 100 billion yen, 60 billion yen will be invested in environmentally friendly initiatives, such as ships and real estate properties that contribute to reducing fuel consumption and greenhouse gas (GHG) emissions, with the aim of achieving a decarbonized society.

As a result of this business portfolio management and initiatives aimed at achieving carbon neutrality, we have seen the completion of the ammonia carrier 'Gas Innovator' in February last year, the acquisition of the office building '111 Strand' in March, which has the second highest rating for energy efficiency under the EPC (Energy Performance Certificate) index in London, in June, we signed a contract to build an Ice Class VLGC, which will be our third LPG dual-fuel main engine, in October we signed a contract to build Japan's first VLCC equipped with a methanol dualfuel main engine and in November, we have completed installing rotor sails on the VLGC 'Oceanus Aurora.' We are also on track to complete construction of two VLECs with dual-fuel ethane engines by the end of fiscal 2025, and we are in a situation where investments are progressing well.

In addition to the investments in ships, we have changed the ship management of the LPG dual fuel VLGC 'Calluna Gas' to IINO Marine Service (IMS), our in-house ship management company from outsourcing, and have started to assign Japanese crew with the aim of acquiring new technologies. In the future, we hope to be involved in the ship management of a wide variety of dual-fuel ships, and by assigning Japanese and other crew members of our company to these ships, we hope to acquire new knowledge and skills, and to pass on the maritime skills that are necessary for our company. In order to achieve this, the efforts of all of our crew members and everyone involved in ship management will be needed.

However, not everything is going smoothly, and due to the weak yen, rising prices, and the soaring cost of materials and equipment, as well as the additional equipment needed to respond to the environment with new technology, ship and real estate prices remain at unprecedented high levels.
In particular, we are still unable to find a fundamental solution to environmental measures for the vessels operated by ourselves, such as chemical tankers, which are classified as Scope 1 GHG emissions directly emitted by the company. While we continue to seek the understanding of our clients, we are also researching the introduction of an internal carbon price (ICP) to promote decarbonization investment.

Another key strategy is to strengthen our human capital. In one book, the following was written about human capital. It says that ・The ultimate goal of corporate management is to 'earn money and make a profit over the long term'.

・In a normal competitive environment, long-term profits are the most honest indicator of customer
satisfaction, and are proof that you are creating unique value for your customers.
・Human capital is the source of long-term profits. Even if you invest in production facilities, there
is a limit to how much you can improve productivity, but with people, it is possible to improve
performance by 5 or 10 times. However, it is also possible to reduce performance by a tenth, so the
impact on long-term profits is significant.
・Managers invest in human capital in order to create and grow profitable businesses.

In our mid-term management plan, we stated that we would improve the workplace and working environment, secure and develop a diverse workforce, provide opportunities for them to demonstrate their abilities, and evaluate their achievements, thereby not only improving the company's performance but also enabling employees to achieve self-fulfillment and grow together. I found it very relevant, so I thought I would share it with you.

Now, I think that feeling a sense of 'job satisfaction' is also important for improving performance.
When you hear the phrase 'job satisfaction,' does it conjure up a concrete image for you? It seems that this phrase can also refer to a situation that is both 'comfortable to work' and 'rewarding'. As part of the company's efforts to make the workplace more comfortable, we are regularly hiring new
employees and recruiting mid-career professionals for highly specialized work, and we are also introducing a system that allows employees to work from home and a hot-desking system that allows employees to choose their own desk in the office, as well as increasing the size of office floors and
making major changes to the office layout.

How do you feel about the meaning of 'rewarding'? Do you feel it when you gain new knowledge about your work and improve your skills? Do you feel it when you gain the trust of your customers and as a result win a contract? Do you feel it when you are continuously involved in various projects
and take on challenges? Or do you feel it when you become the person you envisioned for yourself in your career vision?

I think that the 'rewarding' that each individual feels can be many things, such as a sense of achievement in their day-to-day work or enjoying the process of approaching their goals. I think that companies that have these 'rewards' and 'job satisfaction' will ultimately lead to an increase in
corporate value, and will also lead to the creation of economic and social value.

This year is the final year of our current mid-term management plan, and also the year in which we will formulate a new mid-term management plan starting from FY 2026.
Let's actively think and discuss - individually, in each department, in each company, and in each generation how we can improve corporate value with a sense of "rewarding."

In closing,
I would like to express my wishes for the safe operation of all the Group's vessels, the safe and accident-free operation of the buildings we own, the further prosperity of the Group's companies, and the good health and happiness of all the Group's executives and employees and their families.

End