NYK, “K” Line see profit downturns
NYK, “K” Line see profit downturns
Two of the leading Japanese shipping groups, NYK Line and “K” Line, today both reported significantly lower profits for their 2006 fiscal year, which ended March 31.
NYK’s net income decreased 29.4 percent to Yen65 billion ($550.9 million), from Yen92.1 billion a year ago. Operating income for the year declined 25.3 percent to Yen104.9 billion ($889 million), compared to Yen140.5 billion in the previous fiscal year. NYK’s revenue improved 12.2 percent to Yen2.16 trillion ($18.3 billion).
In the container-shipping sector, NYK posted an operating loss of Yen9.8 billion ($83 million), which contrasts to last year’s operating profit of Yen16 billion. Revenue for the sector improved 6.5 percent to Yen574 billion ($4.86 billion).
“The freight market performed solidly on all liner routes, and a recovery of freight rates to a certain degree on European routes,” NYK said.
“As a result of strong performance in both vessel utilization rates and freight rates on Australian routes, in addition to described above, we successfully achieved our liner trade sales targets for the year.
“On the other hand, faced with persistently high bunker oil prices, we attempted to constrain our fuel costs through measures such as running vessels at lower speeds. However, due to the effect of the drop in freight rates during the winter of the previous fiscal year, as well as rising costs with respect to terminals, railways, trucks, feeder boats, and so forth, income before extraordinary items fell short of our target for the year, reflecting the harsh business environment facing shipping routes,” NYK said.
“K” Line posted annual net income of Yen51.5 billion ($436.4 million), down 17 percent compared with the prior year period, while operating income slipped 30 percent to Yen61.4 billion ($519.8 million). Group revenue rose 15 percent to Yen1.09 trillion ($9.2 billion), the first time the carrier has ever exceeded 1 trillion yen
“Due to negative factors such as historical hike in fuel oil price, and effect of freight rate drop in Asia/Europe containership trades, company profits significantly fell from the previous year,” “K” Line said.
Looking at their prospects in the current fiscal year, both carriers expect improved results. NYK forecast a net profit of Yen82 billion ($713 million) after revenue of Yen2.24 trillion ($19.5 billion). “K” Line expects net income of Yen63 billion ($548 million) with revenue of Yen1.2 trillion ($10.4 billion).