MOL net income up despite container shipping loss

MOL net income up despite container shipping loss Japanese shipping group Mitsui O.S.K. Lines posted net income of Yen121 billion ($1 billion) in its 2006 fiscal year ended March 31, up 6.3 percent compared to Yen114 billion in the previous fiscal year.
   MOL’s operating income was down 2.8 percent to Yen168 billion ($1.4 billion) despite a 14.8 percent group revenue gain to Yen1.57 trillion ($13.3 billion).
   In the container shipping sector, MOL posted an operating loss of Yen2.9 billion ($24.3 million), compared to operating income of Yen34.5 billion a year before. Revenue from the division improved 16.5 percent to Yen569 billion ($4.8 billion).
   MOL’s operating income from bulk shipping increased 22.6 percent to Yen153.9 billion ($1.3 billion) with revenue up 16.6 percent to Yen789.2 billion ($6.6 billion).
   “Skyrocketing bunker prices and declining containership freight rates since the end of 2005 compressed our profits,” MOL said in a statement. “However, in our bulkship business, we have expanded our business and increased its competitiveness, and the market has been favorable. As a result, we were able to post profits close to the levels we forecast.”
   The Tokyo-based line transported 2.85 million TEUs worldwide in the 12-month period, up 21.2 percent over the previous fiscal year. On a global round-voyage basis, MOL achieved 74 percent vessel utilization, down one percentage point from the prior year.
   MOL spotlighted its trade flows in two major markets, the transpacific and Asia/Europe routes, which both highlighted the increasing trade imbalances.
   In the eastbound trade from Asia to North America, MOL shifted 492,000 TEUs with 90 percent vessel utilization, but in the weaker westbound leg it carried 284,000 TEUs, representing just 52 percent utilization.
   For the Asia/Europe market, MOL transported 413,000 TEUs westbound at 97 percent vessel utilization. Eastbound, the line achieved 57 percent utilization after moving 230,000 TEUs.
   For the current fiscal year, MOL forecast a 7.5 percent upturn to its group net profit at Yen130 billion ($1.1 billion) with revenue rising 8.4 percent to Yen1.7 trillion ($14.3 billion).
   “The company expects world economic growth to remain brisk in FY2007, which will lead to strong activity in ocean shipping, our main business. On the other hand, we see uncertainties such as an additional rise in bunker prices, changes in exchange rates, and increased interest rates,” MOL said.
   Looking at the prospects for the container shipping sector, MOL said: “While we anticipate increased trade and earnings due to an expanding fleet and route network, we expect the freight rate of key east-west route will be recovered. So, we expect the profits for FY2007 to increase compared to fiscal 2006.”