Japanese shipowners reap record profits

Japanese shipowners reap record profits    Buoyant market conditions and cargo volumes in the container, bulk and tanker shipping sectors helped all three of Japan’s major shipping groups report better-than-expected increases in profits and higher margins for the six-month period ended Sept. 30.
   Despite high fuel prices this year, Nippon Yusen Kabushiki Kaisha (NYK), Mitsui O.S.K. Lines (MOL) and Kawasaki Kisen Kaisha (“K” Line) said Thursday that each of their net interim profits exceeded $250 million, and promised their year-long net profits for their fiscal year ending March 31, 2005 would be substantially higher than their annual earnings in the previous fiscal year.
   NYK’s group net income rose 43 percent to Yen30 billion ($270 million) in the six-month period ended Sept. 30, from Yen21 billion in April-September 2003.
   Group net income at MOL soared 124 percent Yen47 billion ($423 million) in the half year, from Yen21 billion in the same period of 2003.
   Group net income at “K” Line, the smallest of the big three Japanese companies, climbed 113 percent to Yen34 billion ($306 million), from Yen16 billion, thereby overtaking the earnings of NYK for the same period.
   The combined net profits of the three groups for the April-September period jumped an average of 91 percent, to Yen111 billion ($1 billion).
   “During the first half of fiscal 2004, despite negative factors such as record high levels of fuel oil price and vessel charterage, we have achieved historical high records in each of operating revenues, operating income, and ordinary income, except for non-consolidated net income,” said Yasuhide Sakinaga, president of “K” Line, in a letter to stockholders.
   NYK’s group revenue increased 13 percent to Yen 768 billion ($6.9 billion) in the six months to Sept, 30, and its operating income rose 66 percent to Yen73 billion ($658 million).
   NYK’s revenue from liner shipping rose 15 percent to Yen221 billion ($2 billion) in the April-September period, up from Yen192 billion in the same period a year ago. NYK does not disclose the profit results of its liner-shipping arm.
   “As each route faced tighter supply and soaring demand, as well as restored freight rates, revenue on every route significantly exceeded the target,” NYK said about its liner shipping business.
   MOL saw its group revenue rise 17 percent to Yen564 billion ($5.1 billion) and its operating income go up 92 percent to Yen73 billion ($658 million) in the latest six-month period.
   Over the same period, “K” Line’s group revenue went up 14 percent to Yen414 billion ($3.7 billion) in the latest six-month period as its operating income climbed 76 percent to Yen60 billion ($541 million).
   “K” Line’s half-year results exceeded forecasts made in August “because of more freight rate restoration in container services, and (a) favorable freight market situation in bulker and tanker business, together with improvement in ship operating ratio and further cost curtailment than expected,” the company said.
   “K” Line said it has expanded its container shipping network to cater for increased cargo volumes.
   “Overall operating revenues in the containership business substantially exceeded those in the same term of the preceding year, due to the effects of increases in cargo movements and restoration of freight rates,” “K” Line said.
   MOL reported that its container shipping arm made a half-year operating income of Yen23.7 billion ($214 million), more than three times the profit of Yen7 billion earned in April-September of 2003. Over the same period, MOL’s container shipping revenue rose about 14 percent to Yen193.1 billion ($1.7 billion). The figures indicate that MOL’s liner shipping operating margin as a percentage of revenues increased to 12 percent from 4 percent a year earlier.
   “Our major business, ocean shipping — both containership and bulk shipping services — showed continuous strong trade movement, mainly in China … a steady freight rate market, (and) spurred our profits,” MOL said in a statement. It added that larger container ships and cost reductions also helped its results.
   MOL increased its container volume 17 percent in the April-September period to 1 million TEUs, while raising average freight revenue per TEU year-on-year by 8 percent to $1,272 from $1,183. MOL is proceeding with plans to introduce four boxships of 8,100 TEUs and eight of 6,350 TEUs from 2005 to 2008.
   NYK reported higher profits from shipping, terminals and logistics.
   The largest Japanese shipping group said the three key strategies of its “Forward 120” plan are: the expansion of its global logistics business, the global development of the bulk and energy transport business, and the stabilization of the profitability of its container transport division.
   MOL voiced concerns over several factors in the October-March half of its current fiscal year, citing high bunker prices, the appreciation of the yen and ship congestion of loading ports. However, it still expects the international shipping market to remain strong.
   MOL forecasts that it will make a group net profit of Yen92 billion ($878 million) in the fiscal year ending March 31, up from Yen55 billion in the previous fiscal year. NYK is expecting net earnings for the current fiscal year of Yen63 billion ($600 million), up from Yen35 billion in the previous year. “K” Line is counting on group net income of Yen58 billion ($552 million), as compared to a gain of Yen33 billion in the previous fiscal year.
   If all three shipping groups achieve their profit forecasts, they will net a record Yen213 billion ($2 billion) in earnings between them in the fiscal year ending March 31, up from $1.2 billion in the previous fiscal year.