NYK’S OPERATING INCOME IS DOWN 25%

NYK’S OPERATING INCOME IS DOWN 25%    NYK Line, the largest Japanese shipping group, reported a 25-percent fall in its operating income for the fiscal year ended March 31, to 66 billion yen ($492 million), from Yen88 billion in the 2000/2001 fiscal year.
   Group revenue was up by 1 percent in local currency, to Yen1.1 trillion ($8.6 billion), but down when converted into U.S. dollars.
   Net income was Yen18 billion ($132 million) in the latest fiscal year, 51 percent lower on the Yen36 billion net result in the April 2000/March 2001 financial year.
   Commenting on its liner shipping business, NYK said that the downturn of the U.S. economy “impacted cargo movements on liner routes in no small measure.”
   “Because freight rates for outbound cargoes on the trunk routes to North America and Europe declined sharply, the earnings environment became very severe,” NYK said.
   The Japanese carrier said that it initiated “the first-ever large-scale lay-up of vessels” serving container routes last year to deal with the issues of falling freight rates and vessel overcapacity.
   “Even though we have thus continued and intensified our cost-cutting efforts, we could not achieve the original earnings target,” the Japanese group said of its liner shipping arm.
   Like fellow Japanese shipping groups “K” Line and Mitsui O.S.K. Lines, NYK cited lower container freight rates as a factor in the decline of its operating profit.
   NYK’s liner shipping business had revenues of Yen281 billion ($2.1 billion) in the April 2001/March 2002 financial year. Tramp and specialized carrier shipping activities contributed Yen317 billion ($2.4 billion) in revenue to the group, while tanker shipping had revenues of Yen143 billion ($1.1 billion) in the latest financial year.
   NYK commenced a corporate program last year to reduce costs and improve profits by about Yen20 billion ($150 million) over the next two to three years.
   NYK reported that lower air cargo traffic impacted its airfreight business negatively.
   The Japanese group’s logistics business posted a lower operating income of Yen700 million ($5 million) in the    April 2001/March 2002 financial year, on revenue of Yen197 billion ($1.5 billion), down 2 percent.
   NYK predicted that it will earn a lower group net income of Yen15 billion ($113 million) in the current fiscal year ending in March 2003, on revenue of Yen1.15 trillion ($8.6 billion).