Review of OperationsKAWASAKI HEAVY INDUSTRIES, LTD.ShipbuildingMain Products• LNG carriers• LPG carriers• Container ships• VLCCs (Very Large Crude Carriers) and other types of tankers• Bulk carriers• High-speed vessels• Submarines• Maritime application equipmentLNG carrier CELESTINE RIVERSubmarine MOCHISHIO12
ANNUAL REPORT <strong>2008</strong>Percentage of Net SalesSales(Millions of yen)Orders Received(Millions of yen)Order Backlog(Millions of yen)9.4%150,000300,000500,000120,00090,00060,00030,00094,93987,081109,697108,849141,397250,000200,000150,000100,00050,000123,756155,832128,323135,600251,331400,000300,000200,000100,000193,705263,707289,227313,987414,17600 004 05 06 07 08 04 05 06 07 08 04 05 06 07 08Business ResultsDue to strong conditions in world shipping markets, globalorder volume for bulk carriers remained at a high level andnewbuilding prices were also high during fiscal <strong>2008</strong>. Amidthis operating environment, the Shipbuilding segment securedorders for 28 vessels: namely, two LNG carriers, three LPG carriers,22 bulk carriers, and one submarine. As a consequence,total orders received increased ¥115.7 billion, or 85.3%, to¥251.3 billion.Sales reported in fiscal <strong>2008</strong> rose ¥32.5 billion, or 29.9%,to ¥141.4 billion.The segment reported an operating income of ¥3.3 billion,which represented a ¥5.5 billion improvement from the ¥2.2billion operating loss reported in fiscal 2007. This rise in operatingincome was due to higher sales and an improvement inoperating margins.In newbuilding activity, the segment delivered 11 vessels in all:namely, two LNG carriers, two LPG carriers, one VLCC, fivebulk carriers, and one submarine.Outlookfrom small carriers with cargo tank capacities of 19,000m 3 tolarger carriers of more than 150,000m 3 . We have also developedand offer in our lineup a pressure build-up type LNGcarrier for short-distance and small-volume transportation. Inaddition, in fiscal <strong>2008</strong>, we developed a large-scale LNG carrierwith a cargo tank capacity of 177,000m 3 and received twoorders for this new vessel. Looking ahead, to respond tocustomer needs, we will draw on cutting-edge technologiesto develop new-type LNG carriers.Nantong COSCO KHI Ship Engineering Co., Ltd. (NACKS),which Kawasaki Shipbuilding Corporation established as ajoint venture with China Ocean Shipping (Group) Company,has now marked the 13th year of operations since its foundingand has become one of the leading shipbuilding companiesin China. To respond to burgeoning demand for theconstruction of large-scale vessels in China and elsewhere,NACKS began construction work on its second expansionaryphase in 2005. As part of this phase, NACKS began operationsat its second shipbuilding dock in May <strong>2008</strong>, and theconstruction of new vessels in this facility has commenced.In addition to the building of the second dock, NACKS hasexpanded and strengthened its capacity for internal fabrication,assembly, and painting in each of its facilities. Also,NACKS is working to expand its capacity substantially byextending the length of its outfitting quay.Kawasaki Shipbuilding Corporation, which is the core companyof this segment, has an extensive track record in buildinggas carriers and submarines, which require advanced designand construction technologies. Its vessels continue to win highmarks from customers for their performance and quality.Following the delivery in 1981 of the first LNG carrier built inJapan, we have established ourselves as a pioneer in this field.We offer a wide-ranging lineup of LNG carriers, extendingKawasaki Shipbuilding Corporation and its group of companies,including NACKS, are endeavoring to enhance their technologiesrelated to ship design, manufacturing, and qualityassurance to reinforce their ability to compete globally in termsof both quality and costs and thus sustain their developmentinto the future.13
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