Japan’s top ocean carriers report quarterly results

However, NYK, MOL and “K” Line see some improvement in the container shipping business.    The three major Japanese shipping companies – NYK, MOL and “K” Line – had lower revenues for their third fiscal quarter of 2016, which ended Dec. 31, compared to the same 2015 period.
   All three carriers operate on a fiscal year that begins April 1 and ends March 31.

NYK
   NYK had a profit attributable to owners of the parent of 5.7 billion yen (U.S. $50 million) for the third quarter of fiscal 2016, compared to a loss of 32 billion yen for the third quarter of fiscal 2015, the carrier reported. Recurring profit for the quarter totaled 26 billion yen, up from 13.3 billion yen from a year prior.
   NYK said it still expects to have a net loss attributable to owners of the parent company of 245 billion yen for the fiscal year ending March 31, “largely due to an extraordinary loss of approximately 200 billion yen comprised of an impairment loss and provision for losses related to contracts associated with container ships, dry bulkers and cargo aircraft.”
   NYK expects recurring profit for the fiscal year to break even.
   Meanwhile, NYK said, “Market conditions in container and dry-bulk shipping have been better than expected, and the company’s real estate division recorded a one-off profit in the third quarter. So our forecast for recurring profit improved considerably.”
   Revenues for the third quarter of the current fiscal year totaled 486 billion yen, down from 568 billion yen a year earlier.
   “In the global shipping industry, spot freight rates rebounded in the container shipping market as customers became more selective about shipping lines following the bankruptcy of the Korean shipping company (Hanjin Shipping) around the end of August 2016,” NYK said. “On the other hand, the gap between supply and demand continued to widen as the steady production of new ultra-large container ships contributed to an oversupply of tonnage. Consequently, the market is not projected to fully recover in the near future.
   “In the dry bulk shipping market, which has been undergoing an unprecedented slump, market conditions appeared to pick up from the beginning of autumn, largely due to increased volume of Chinese imports of coal and iron ore,” the carrier added. “Nevertheless, a full-fledged market recovery is expected to take time.”
   In the first nine months of the current fiscal year, NYK’s liner business had a loss of 11.3 billion yen, compared to a profit of 850 million yen for the corresponding period a year earlier. Revenues in its liner business for the first nine months of the fiscal year amounted to 430 billion yen, 21 percent less year-over-year.
   NYK confirmed plans first announced at the end of October 2016 to integrate its container shipping business (including its overseas terminal business) with those of MOL and “K” Line.
   The three companies are still planning to establish the new joint-venture company this July. NYK said it “has prepared its internal organization so that the new company can commence operations from April 2018.”

MOL
   MOL reported a profit attributable to owners of the parent of 3 billion yen for the third quarter of fiscal 2016, down from 13.5 billion yen for the third fiscal quarter of 2015.
   Revenues for the quarter totaled 368 billion yen, down from 412 billion yen a year prior.
   For the first nine months of fiscal 2016, MOL had a loss of 26.1 billion yen from its container business, compared to a loss of 18.4 billion yen in the same period a year earlier, while revenues from the containership business tumbled 20 percent year-over-year to 447.6 billion yen.
   “The spot freight market on Asia-North America routes fell to record low price levels in the first quarter, but from the second quarter onward largely maintained an upward trend having gained support from the summer demand period amid a scenario where cargo volumes from Asia grew at a pace exceeding record high volumes reached in the same period of the previous fiscal year,” MOL said.
   “Meanwhile, the considerable decline in one-year contract freight rates at the beginning of the fiscal year, notably on the Asia-North America routes due to the impact of stagnation in the spot freight rate in the previous fiscal year, weighed on the containership segment throughout the period,” the carrier added. “Under this business environment, the ordinary loss in the containerships segment deepened year-on-year despite efforts not only to reduce vessel costs through business structural reforms, and improve capacity utilization rates through stronger sales capabilities, but also to cut operation costs by continuously reducing the expenses of positioning empty containers through improved yield management.”

“K” Line
   Although “K” Line did not release its quarterly results, it did report a loss attributable to owners of the parent of 54.6 billion yen for the first nine months of fiscal 2016, down from a profit of 9.3 billion yen for the same period in fiscal 2015. Revenues for the first nine months of fiscal 2016 totaled 761 billion yen, a significant decline from the 978 billion yen for the corresponding period a year prior.
   Meanwhile, “K” Line’s containership segment’s operating revenues for the nine-month period fell 21 percent year-over-year to 381.4 billion yen. The containership business reported a loss of 23.9 billion yen for the period compared to a loss of 4.2 billion yen a year prior.
   “K” Line said its loss in the container business was “mainly due to low freight rate based on the vessel supply-demand gap, despite signs of a revenue pickup, such as improvement in the short-term freight market, particularly on East-West services.”