Containers, bulk shipping lift MOL’s results
Mitsui O.S.K. Lines expects to earn net profits of about 94 billion yen ($902 million) in its fiscal year ending March 31, 70 percent higher than in the previous fiscal year, after reporting triple-digit increases in profits for the nine-month period ended Dec. 31.
Japan’s second-largest shipping group lifted its consolidated net income 113 percent to Yen84.4 billion ($810 million) in the latest nine-month period from Yen39.6 billion in April-December 2003. Operating income doubled to Yen127.6 billion ($1.2 billion) from Yen63.2 billion, including a stellar profit contribution from container shipping.
Group revenue rose 19 percent in the nine-month period ended Dec. 31 to Yen879.4 billion ($8.4 billion).
MOL’s container division boosted its operating income 153 percent to Yen42 billion ($403 million) in the latest nine-month period, reaching an operating margin of 14 percent as a percentage of revenue. This compares with an operating income of Yen16.6 billion and an operating margin of 6 percent in the year-earlier period. MOL’s container revenue rose 15 percent to Yen302.1 billion ($2.9 billion).
“Containership operations saw steady growth in both cargo volume and freight rates on all routes serving intra-Asia, Australia, South America, and Africa, as well as key east/west routes,” MOL said. Profitability recovered on the South American and African routes, which weathered tough conditions during the previous year.
“Routes serving North America and Europe continued to show somewhat increased profit,” the Japanese group said. However, on the North American routes, MOL noted increases in costs caused by congestion at U.S. West Coast ports.
MOL's containerships had an average utilization of 78 percent in the nine-month period, up from 75 percent a year earlier. Its load factors in the busy Asia-to-North America and Asia-to-Europe container trades averaged 93 percent and 96 percent, respectively.
MOL’s bulk division saw its operating income rise 81 percent to Yen80.6 billion ($774 million), with revenues up 25 percent at Yen447.3 billion ($4.3 billion). MOL reported positive spot-market conditions in the dry bulk trade, increased profits in car carrier operations and “solid profits” from tanker and liquefied natural gas activities.
MOL’s logistics arm moved into the black in the latest nine-month period, with an operating income of Yen 800 million ($8 million), compared to a loss of Yen200 million a year earlier. However, the operating margin of the logistics revenue was still below 2 percent in the latest period. Logistics revenue rose 10 percent to Yen44.5 billion ($427 million) in April-December.
For the full financial year ending March 31, MOL predicts operating incomes of Yen51 billion ($489 million) from container shipping and Yen110 billion ($1.1 billion) from bulk shipping, with a group-wide operating profit of Yen166 billion ($1.6 billion). If it achieves it, the operating income will be 80 percent higher than in the 2003-2004 financial year and four times the level of the operating profit earned in the 2002-2003 financial year.
Fellow Japanese groups NYK and “K” Line have also reported large increases in their revenues and, particularly, their profits, for the latest nine-month period.