NYK’s profits up 29%, expects downturn for shipping

NYK’s profits up 29%, expects downturn for shipping    Tokyo-based Nippon Yusen Kabushiki Kaisha, Japan’s largest shipping group, saw its net income jump 29 percent to a record Yen92 billion ($783.7 million) in its 2005 fiscal year ended March 31, compared to Yen71.3 billion in the previous fiscal year.
   NYK’s operating income dropped 13 percent to Yen140.5 billion ($1.2 billion), from last year’s record Yen161.4 billion. Group revenue was up 20 percent to Yen1.93 trillion ($16.4 billion), from Yen1.60 trillion in the previous fiscal year.
   NYK’s liner shipping arm increased its revenue 18 percent to Yen539.2 billion ($4.6 billion) from Yen457 billion.
   “The largely solid freight market continued from the previous fiscal year. Amid intensified competition, our active sales efforts in each shipping route bore fruit to a certain degree in terms of freight rate recovery, and we successfully achieved our sales target for the fiscal year,” NYK said.
   “However, this was adversely offset by the effect of rising vessel operating cost reflecting surging bunker oil prices and increased inland transport cost in North America, and resulted in earnings that underperformed the previous fiscal year. Departure of some Grand Alliance partners during the fiscal year did not affect the high quality of our service which was maintained by tie-ups with other alliance networks and fleet rearrangement.”
   Revenue for NYK’s “other shipping” unit, which includes bulker and specialized carrier operations, as well as tanker operations, increased 18.5 percent to Yen677.7 billion ($5.8 billion) from Yen571.7 billion.
   NYK saw its logistics business increase revenue 19.4 percent to Yen426.4 billion ($3.6 billion).
   “NYK Logistics saw a dramatic improvement in business performance, helped by solid North American demand for vertically integrated import transport and domestic transport services, and the start of operations of the European logistics service network,” NYK said.
   Looking ahead, NYK predicted lower net profit but higher revenue for its current fiscal year due to end on March 31, 2007. It expects net income of Yen89 billion ($809 million), down 3.3 percent from the latest result and revenue of Yen2 trillion ($18.4 billion), up 4.7 percent compared to the 2005 fiscal year performance.
   “Solid freight market is expected in the liner trade markets, which nevertheless will be affected by continued high costs including bunker oil prices hovering at high levels. Also, market softening is anticipated in bulker and specialized carriers business and tanker business, despite support by medium- to long-term contracts,” NYK said.
   “In the logistics segment, we expect further growth in business performance helped by continuous efforts to improve operations and to entrench our cross-divisional, customer oriented service approach.”