MOL, “K” Line lower expectations after 1st-quarter profit drops

MOL, “K” Line lower expectations after 1st-quarter profit drops

MOL, “K” Line lower expectations after 1st-quarter profit drops

   Japanese shipping lines MOL and “K” Line both reduced their annual profit expectations after softer rates and higher costs in container shipping lowered their profits in their fiscal first quarters ended June 30.
   “K” Line reported that its net income dropped 37.4 percent to Yen 9.7 billion ($84.5 million), compared to Yen 15.5 billion posted in the same period last year. The carrier’s operating income was down 58.2 percent during the April 1 to June 30 period, to Yen 10 billion ($87.1 million), compared to Yen 23.9 billion in the previous year’s quarter. “K” Line’s operating revenues improved 14.1 percent to Yen 252.3 billion ($2.2 billion), from Yen 221.1 billion.
   Discussing its container shipping unit “K” Line said: “While our operating revenue in this business increased against the same period last year, profits declined on a year-on-year basis affected by declining market freight rates in some services and hike in operating costs including fuel oil prices, despite brisk cargo movements.”
   MOL’s consolidated net income dropped 8 percent in the quarter to Yen 23 billion ($200 million), from Yen 31 billion in April-June 2005. Operating income decreased 15 percent to Yen 32 billion ($279 million) from Yen 46 billion a year ago. MOL’s group revenue increased 62 percent to Yen 371 billion ($3.2 billion) from Yen 308 billion.
   MOL’s operating income from container shipping dropped 14 percent in the quarter to Yen 2 billion ($174 million) from Yen 12 billion a year earlier. MOL’s container shipping revenue increased 29 percent to Yen 133 billion ($1.16 billion).
   Looking ahead, MOL said its “east/west route freight rate will be difficult to restore to initial assumption” and has reduced by 7 percent its full year profit expectations from container shipping to Yen 540 billion ($4.7 billion) from its earlier Yen 580 billion ($5.05 billion) prediction. It has also lowered its consolidated net income prediction for the 2006 fiscal year from Yen 105 billion ($915 million) to Yen 100 billion ($871).
   “K” Line said it now expects Yen 40 billion ($348) net income for the full year, about 10 percent below its previous outlook.