The second quarter financial results of ocean carriers NYK, MOL and “K” Line reflected a weak Asia-Europe market and strong supply pressure.
The three largest Japanese ocean liner companies — NYK, MOL, and “K” Line — all reported better results for their first fiscal quarter ending June 30 than they had a year earlier. All three companies have financial years that run from April 1 to March 30.
The carriers have interests in many sorts of shipping. Results of their liner units reflected the weak volumes and rates between Asia and Europe, but benefited from low fuel prices, according to the companies’ most recent financial statements.
NYK
NYK had a net income attributable to the owners of the parent company of 43.1 billion yen ($348 million) in the first quarter ending June 30, 2015, more than four times the 10.2 billion yen earned in the first quarter of fiscal 2014. Recurring profit was 21.5 billion yen in the first quarter compared with 12 billion yen in the same 2014 period.
Revenues were 588 billion yen in the first fiscal quarter this year, a 1.1 percent increase over the 582 billion yen recorded in the first fiscal quarter in 2014.
NYK’s liner trade business had recurring profit of 3.9 billion yen in the first quarter of the current fiscal year compared with a loss of about 100 million yen in the the first quarter of fiscal 2014. Liner revenues were 184.1 billion yen, 10.4 percent more than the 166.8 billion yen recorded in the first quarter of last year.
“The introduction of new built tonnage in the container shipping business exerted extremely strong supply pressure, driving down spot freight rates on some routes to unprecedentedly low levels. Amid the generally severe environment surrounding the dry bulk carrier division, market conditions were stagnant owing to a decrease in lifting volumes bound for China,” said NYK.
The company said it “continued efforts to improve profitability by decreasing costs through heightened fleet assignment rationalization and reduced fuel consumption.”
In the liquid division, market conditions remained favorable and performance improved over the previous fiscal year.
“In non-shipping businesses, the air cargo transportation and logistics segments continued to perform favorably despite the impact of harbor congestion on the West Coast of North America that was resolved at the beginning of the fiscal year” with the signing of a contract between employers and the International Longshore and Warehouse Union.
“Group earnings overall received a boost from cheaper bunker oil and the weaker yen, causing earnings to increase substantially over those in the previous fiscal year,” NYK added.
MOL
MOL had a profit attributable to owners of the parent company of 12.8 billion yen ($104 million) in the first quarter ending June 30, 2015, compared with 8.5 billion yen earned in the first quarter of fiscal 2014.
Revenues were 449 billion yen in the first fiscal quarter this year, compared with 444 billion yen in the first fiscal quarter in 2014.
MOL’s containership business reported a loss of 5 billion yen in the first quarter of the current fiscal year, smaller than the 7.2 billion yen loss experienced in the first quarter of the fiscal 2014. Liner revenues were 195 billion yen, 3.8 percent higher than the 187.8 billion yen recorded in the first quarter of last year.
“On Asia-Europe routes, cargo volumes from Asia declined considerably, while the gap between vessel supply and demand expanded due to deliveries of large vessels. As a result, the freight market suffered a record fall,” said MOL. “On transpacific routes, although cargo volumes were firm because disruption caused by labor negotiations at ports on the West Coast was almost wholly resolved, the freight market fell.”
“Freight markets on Asia-South America routes and Intra-Asia routes also slumped as the cargo volumes were weak year on year,” added MOL.
The carrier said it recorder the loss even though bunker prices fell and it cut operation costs by cancelling some sailings and implementing slow steaming in order to address the decline in demand.
“K” Line
“K” Line had a profit attributable to owners of the parent company of 10.2 billion yen ($83 million) in the first quarter ending June 30, 2015, compared with 4.3 billion yen earned in the first quarter of fiscal 2014.
Revenues were 335.5 billion yen in the first fiscal quarter this year, compared with 319.8 billion yen in the first fiscal quarter in 2014.
“K” Line’s containership business had a profit of 4.1 billion yen in the first quarter of the current fiscal year compared with 2.2 billion yen profit in the first quarter of the fiscal 2014. Liner revenues were 171.7 billion yen, 8.4 percent more than the 158.4 billion yen recorded in the first quarter of last year.
“During the three-month period, cargo volume loaded on the Asia-North America service for round-trip voyages increased by around 9% year on year, supported by the economic recovery trend in the U.S.,” said “K” Line. “On the Asia-Europe service, however, the overall cargo volume loaded for round-trip voyages declined by around 11% year on year, due to decline of space demand owing to uncertainty over consumption trends, and consequently cargo space provided in our service was reduced.”
As a result, “K” Line said overall liner cargo volume loaded including the Intra-Asia and North-South services decreased by around 3 percent year-over-year.
“Freight rate market on the Asia-Europe and Asia-South America was dull due to increase of supply by the delivery of new large-sized vessels,” the company said. “However, the rates on the Asia-North America service were stable year on year, and as a result of slow steaming and other cost-saving measures in addition to the effect of the decline of fuel oil prices, the Group recorded year on year increases in both revenues and income for the three-month period.”
