Muto, in a speech to mark the 128th anniversary of the company’s founding, said MOL has been hit by a number of factors in the last fiscal year, which ended March 31.
“For fiscal 2011, we are projecting a consolidated ordinary loss of ($327 million),” Muto said. “To put this into perspective, we still generated consolidated ordinary income of (around $300 million) in fiscal 2009, in the depths of the global recession following the Lehman Brothers bankruptcy.
“This deterioration in our operating performance reflects the fact that the marine transport industry has faced numerous negative factors on an unprecedented scale. Despite the highly stable profits accumulated by MOL and cost savings from our concerted Group-wide cost-cutting drive, we were unable to avoid falling into the red. Certainly, the confluence of factors such as the strong yen, high fuel prices, the impact of the earthquake and tsunami last year, and the economic slowdown in developed countries has weighed heavily on our performance.
“However, the most significant factor specific to the marine transport industry was lackluster market rates, which reflected the glut of vessels on the market in almost every vessel category. This year, we are forecasting mostly the same amount of deliveries of new vessels as last year. Therefore, the delivery of new vessels will continue to negatively impact our operating results for some time.”
Muto said the economic crisis of the past few years has presented “a challenging business environment unlike anything our generation has previously experienced.”
He challenged his company to “relentless cut costs” yet “maintain customer confidence in our services.”
Muto stressed that there is some cause for hope.
“In the short term, we have started to see clear signs of an upturn in U.S. economic conditions, along with a precipitous correction in the abnormally strong yen since February,” he said. “In the Euro zone, we are seeing a sharp rebound in freight rates on the back of a recovery in trade volume, given the increased likelihood of a solution to the Greek sovereign debt crisis. Economic activity is constantly shifting directions in response to the complex interplay of various factors, with market rates for marine transport services moving in kind.”
