Japan’s Big Three Wrap Up FY 2015 in Losses

Japanese big three shipping companies Mitsui O.S.K. Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK Line) and Kawasaki Kisen Kaisha (K Line) have resumed their string of losses now summed up in their full yearly reports for the fiscal year ending March 31st, 2016.

The worst hit was Mitsui OSK Lines (MOL) which booked a full-year loss of JPY 170.4billion (USD 1.5bn) mainly due to extraordinary loss resulting from business structural reforms in the fourth quarter.

MOL’s revenue decreased 5.8% year-on-year to JPY 1.8 trillion against JPY 1.7 trillion.

For the remainder of fiscal year 2016, the company expects the world economy to resume its recovery but at a gentle pace, forecasting its return to profit targeting JPY 20 bn in profit and JPY 1.5 trillion in revenue.

With dry bulk market expected to resume being in the dumps along with severe environment in the container shipping market, MOL said it would continue with its stringent cost reduction measures, focusing in particular on structural reforms in the dry bulk and container shipping businesses.

MOL’s counterpart K Line also closed the year in the red with JPY 51.1bn ( USD 457m) net loss.

As a result of severe market conditions, operating revenues for the fiscal year were JPY 1.2 trillion, while operating income was JPY 9.427 billion down 80.4% year-on-year.

The losses were also ascribed to business structural reform aimed at reducing the risk of exposure to market conditions and further accelerating the reduction of fleet scale, focused on small- and medium-size vessels, in the dry bulk business.

For the fiscal year ending March 31, 2017, K Line is projecting operating revenues of JPY 1,100 billion, operating income of JPY 17 billion and net loss of JPY 35 billion.

Finally, NYK’s net profit reached JPY 18.2bn (USD 167m) versus JPY 47 bn, a full-year net profit drop by 61.7%.

The company’s revenue for the full year dropped by 5.4% to JPY 2.4 trillion and its operating income was down by 26% year-on-year.

“Despite an extraordinary income from the sale of North American-based Crystal Cruises, NYK Line recorded an extraordinary loss from impairment losses on dry bulk carriers, which contributed to a year-on-year decrease in net income attributable to owners of the parent company of JPY 29.3 billion, or 61.7%,”  the company said.

In the fiscal year ending March 31, 2017, the management of NYK Line expects its operating environment to remain extremely challenging. Although cargo volume is projected to increase in the container shipping market, the oversupply of tonnage is forecast to persist due to the entry of newly built ultra-large container ships, and spot freight rates are expected to remain stagnant.

In the dry bulk transport market, while steady growth is projected, the market is expected to weaken as newly built tanker vessels are launched.

Management forecasts solid performances by the group’s car transport business as well as its LNG and offshore businesses. Strong results are also expected in the logistics segment as well.

As a result, revenue and income are forecast to decrease year on year in the current fiscal year, with net profit reaching JPY 15 billion and revenues totaling in JPY 2.1 trillion.

World Maritime News Staff