ôKö Line sees earning spike despite fuel, economic concerns
Japanese ocean carrier 'K' Line said Friday its profit for fiscal year 2007 rose 61 percent to $803 million despite the slumping U.S. economy and fuel prices that rose more than 30 percent.
Total revenue for the 'K' Line Group rose 23 percent to $12 billion, helped by a 20 percent increase in cargo movements to Europe (a 9 percent increase in tonnage that the carrier attributed to use of more 8,000-TEU ships). Somewhat surprisingly, tonnage increased 11 percent to North America, helped by two new services to the U.S. East Coast, though the carrier said transpacific volume slumped in the second half of the year.
'K' Line's car carrier business also saw a 9 percent jump in finished Japanese cars being transported to overseas markets.
'Though there was turmoil mainly in the U.S. and European financial and capital markets triggered by the issue of subprime lending in the U.S., it did not have material adverse effects on the real economy during the current fiscal year, except declines of housing sales in the U.S.,' the carrier said. 'Economies in the European countries grew firmly backed up by improved employment situations. In resource-producing countries, including BRIC (Brazil, Russia, India and China) and the Middle Eastern countries, economies continued to expand due to brisk capital investment and the growth in domestic consumption. The Japanese economy also showed a moderate growth, assisted by favorably growing capital investment and consumer spending in addition to strong exports to China and newly emerging countries.'
'K' Line also said that increased fuel costs between fiscal years 2006 and 2007 resulted in an additional $219 million in operating costs, based on an average rise of $88 per metric ton.
Looking ahead to 2008, the carrier said it expects services into and out of China to continue to provide growth, as well as intra-Asia and north-south services. But it said freight rates would rise in accordance with operating costs.
'Under the circumstances where various costs, including fuel costs, railway, truck and feeder charges, terminal-related expenses and environmental protection expenses rise, the company will make all possible efforts to reduce costs and raise freight rates,' the company said.
Over the next four years, 'K' Line plans to add 180 vessels to its current fleet of 499, including 43 containerships, 65 dry bulk carriers and 27 car carriers. ' Eric Johnson