CONTAINER SLUMP HITS “K” LINE’S OPERATING INCOME

CONTAINER SLUMP HITS “K” LINE’S OPERATING INCOME

CONTAINER SLUMP HITS “K” LINE’S OPERATING INCOME

   “K” Line reported a 47-percent fall in its group operating income for the fiscal year ended March 31, to 19 billion yen ($143 million), largely because of deteriorating results from its container shipping activities.
   The operating result compares with an operating income of Yen 36 billion in the April 2000-March 2001 fiscal year.
   Consolidated revenues for the Japanese group, which also has bulk shipping, car carrier, tanker, coastal shipping and logistics activities, increased 2 percent in the latest fiscal year, to Yen 571 billion ($4.3 billion).
   Net income after adjustments of special accounts and tax increased to Yen 5 billion ($36 million), from Yen 2 billion in the 2000/2001 fiscal year.
   The decrease in the group’s ordinary income was “attributable to the remarkable fall in freight rates on the major containership service routes,” “K” Line said.
   Commenting on its container shipping activities in its fiscal year ended March 31, “K” Line said that transpacific cargo volume saw a larger-than-expected decline and “freight rates also dropped steeply due to a widening imbalance between supply and demand.”
   “In the Asia/Europe service, cargo movements also stalled,” it said. Rival companies rushed to put new ships into the market and to start new services, driving freight rates down, “K” Line added.
   The operating income of “K” Line’s containership business “fell significantly under the previous year due to a decline in ocean freight rates” despite attempts to cut costs, the company said.
   By contrast, “K” Line’s bulk shipping and tanker shipping arms posted better results in the 2001/2002 fiscal year. The group’s car carrier shipping business had a stable operating income.
   On its trading prospects for the current fiscal year ending in March 2003, “K” Line warned that the negative effects of the decreases in freight rates during the previous fiscal year “will significantly still remain.” However the group is engaged in a program to improve the profitability of its containership business.
   NYK and Mitsui O.S.K. Lines — “K” Line’s two main Japanese competitors — will announce their 2000/2001 financial results Friday.