MOL POSTS 4% FALL IN HALF-YEAR OPERATING RESULT

MOL POSTS 4% FALL IN HALF-YEAR OPERATING RESULT    Mitsui O.S.K. Lines, the diversified Japanese shipping and forwarding group, posted a consolidated operating income of 37.4 billion yen ($313 million) for the six-month period ended Sept. 30, down 4 percent, and warned of a further deterioration of the shipping market.
   Following recent half-year result announcements made by NYK and “K” Line, Mitsui O.S.K. Lines is the third large Japanese shipping group to have posted a fall in operating result, in a context of difficult liner and bulk shipping markets.
   Net income increased sharply in the latest six-month period, to Yen14 billion ($117 million), from Yen7.6 billion in April/September 2000, due to the absence of special losses from lump-sum redemption of debt and unreserved retirement allowances, which affected the previous year’s results.
   Consolidated revenues increased by 5 percent, to Yen461.6 billion ($3.9 billion), from Yen440 billion in April/September 2000.
   “Compared to the same period of the previous year, the overseas shipping business, which is the company’s main area of operations, declined sharply as a result of severe conditions for liners, bulkers, and specialized carriers,” Mitsui O.S.K. Lines said in a statement. “This was due to a slowdown of cargo traffic because of the worldwide economic recession and a continuing imbalance in vessel supply and demand.”
   On the other hand, MOL benefited from the continuing weakness of the yen and stable prices for bunker price, which had risen steeply until last winter. “These factors, along with the company’s efforts to continue to strengthen sales performance and cost competitiveness, resulted in earnings that matched the previous year,” it said.
   Commenting on the financial results of its different activities, Mitsui O.S.K. Lines said that profitability of its liner division “inevitably declined compared to the same period of the previous year.” Freight rates fell in the wake of reduced demand for space and a worsening supply-demand imbalance resulting from the introduction of larger containerships. MOL also cited the slowdown of North America-bound cargo traffic because of recessionary trends in the U.S. economy.
   MOL’s bulk and specialized carrier operations benefited from efforts to get profitable new contracts and strengthen cost competitiveness, and from the weakness of the yen.
   Tanker and liquefied natural gas carrier operations increased profitability thanks to efforts to improve competitiveness, the launching of new vessels, and the yen’s weakness.
   MOL’s shipping agent and harbor/terminal operations faced a “continued severe business environment resulting from Japan’s ongoing recession and increased competition” that adversely affected operating income of the domestic distribution division.
   Freight forwarding and warehousing operations suffered a decline in cargo traffic and an operating loss of Yen200 million ($2 million). However, MOL said that its air freight operations marked continued progress in reducing costs.
   For the entire fiscal year ending on March 31, 2002, MOL expects consolidated revenue of Yen910 billion ($7.5 billion), up 2 percent over the previous fiscal year, and a net income of Yen15 billion ($124 million), up from Yen10.9 billion.
   “While uncertainty over the future of the world economy has increased as a result of events such as the September 2001 terrorist attacks in the United States, the business environment surrounding the overseas shipping of the company’s main business is still very severe, mainly as a result of declining liner freight rates, especially the Asia-North America and Asia-Europe routes, a recession in the bulk carrier market, and other factors,” the Japanese group warned.
   While MOL reported a 4-percent decrease in its half-year operating income, to Yen37.4 billion yen ($313 million), the other two main Japanese shipping groups posted larger falls in operating profits. NYK reported a 9-percent fall in operating income for the same half-year period to Sept. 30, to Yen41.2 billion yen ($345 million) and “K” Line recently announced a 15-percent drop in its half-year operating result, to Yen17 billion yen ($142 million). All three Japanese groups warned of continuing adverse trends in the international shipping markets.