NYK president: 2Q loss to top $200 million
NYK President Yasumi Kudo said Friday he expects the Japanese carrier and logistics group to post a $211 million fiscal second quarter loss, after the company lost $300 million in the first quarter of 2009 (April through June).
Speaking at a ceremony marking NYK's 124th anniversary, Kudo said the company must focus on turning a profit by paring unnecessary costs, ridding itself of unproductive assets and focusing on its human capital to maximize its vast resources.
'It is therefore imperative that we extricate ourselves from this predicament as soon as possible,' Kudo said. 'I regard today's commemorative ceremony for our company's founding as a rally for strengthening our resolve to restore profit in the latter half of the current fiscal year.
'The liner, terminal and harbor transport, logistics, and air cargo transportation segments must emphasize the thorough disposal of unnecessary and excess assets, and the strengthening of on-site capabilities and look to resolve problems confronting customers by acquiring wide-ranging business knowledge,' Kudo continued. 'We have already disposed of many vessels and warehouses by returning them early to owners or having them demolished. Excess assets, such as airplanes, that have not been disposed of must be kept out of operation so as to reduce their operating costs. For the liner segment, we have pushed ahead with a cost-reduction campaign in all fields, and have employed other measures as well.'
Kudo said there are signs that western economies are rebounding, but that the positive signs shouldn't be overstated.
'In the United States, signs of the economy bottoming out have finally started to emerge, as shown by statistics on housing starts and sales of new cars,' Kudo said. 'However, the unemployment rate still remains high, and it appears that considerable time will be needed for full-scale recovery of personal consumption, which accounts for 70 percent of the U.S. gross domestic product.
'Meanwhile, in some countries in Europe, like Germany, the economic downturn is showing some signs of bottoming out due to implementation of business stimulus measures. However, anxiety still persists over the recovery of the financial system, and the pace of economic revival remains slow.
He said NYK should focus on the transport of resources to developing economies, like China and India, to provide the backbone for future growth. NYK has car-carrier, dry bulk and tanker divisions as well as its container division.
'On the other hand, China is already on the road to recovery, riding on the strength of a large-scale business stimulus package,' he said. 'Even so, the recovery of exports to western markets is a must for China's stable economic growth. If those markets remain slack, the Chinese economy may run out of steam.
'China, which imported an average of 37 million tons of iron ore per month last year, saw a decline that lasted until January 2009 as a result of the financial crisis last fall,' Kudo added. 'However, the country made a quick recovery, importing around 50 million tons per month, which is at the highest level in its history, since February. As a result, pickup has been in the latter half of the first quarter of fiscal 2009 in the dry-bulk carrier division of our bulk-shipping segment. On the other hand, stagnation continues in the tanker division, which is influenced by demand in developed countries.'
He detailed NYK's volume losses in its first quarter.
'During the first quarter of fiscal 2009, our container transport volume to Europe and the United States suffered a fall of about 30 percent from the corresponding period of the previous year, while our new-car transport volume from Japan plunged over 50 percent and our air cargo transportation volume posted a fall of 40 percent,' he said. 'So far in the second quarter, we have witnessed a rebound to some extent. Even so, this upturn is far from ideal.'
The liner division lost $211 in its first quarter, accounting for 70 percent of the company's total losses.