Tokyo, Japan-based ocean carrier, Kawasaki Kisen Kaisha http://kline.com (TYO:9107) – known as K Line – recorded a fall in revenues of Japanese Yen of 325,293 million down to JPY 836,731 million (US$7.5 billion) for the fiscal year ending March 31, 2019. In the wake of that news, several board members have been removed. K Line’s operating losses for the financial year were JPY 24,736 million and its ordinary losses were JPY 48,933 million. Losses attributable to owners were JPY 111,188 million.
Following the pages of red in the profit and loss, there has been a re-shuffle at the top. Director Jiro Asakura will retire as a director and will take up a role as a special executive advisor. Director Hiromichi Aoki will retire in June. Outside director Kiyoshi Hosomizo will also retire in June and will become the President of Japan Exchange Regulation. Also out are audit and supervisory board member Keisuke Yoshida and outside audit and supervisory board member Toshikazu Hayashi.
New appointees to directorships include Kazuhiko Harigai and Yukio Toriyama. New outside directors include Keiji Yamamda, an academic, and Ryuhel Uchida, a director of Effissimo Capital Management (ECM). ECM owns just under 39 percent of K Line’s shares. New audit and supervisory board members include Tsuyoshi Yamauchi and Kunihiko Arai. Also appointed to an outside audit and supervisory board member position is attorney Atsumi Harasawa.
Dry Bulk
Dry bulk shipping (typically grain, iron ore, coal) bucked the trend with a 10 percent increase in operating revenues for the fiscal year ended March 2019 to stand at 273.8 billion yen. The segment made a 4.4 percent profit.
K Line said that the segment experienced robust shipments in the first part of its fiscal year, but in the second half the year the market “dropped rapidly and stayed low” owing to a freight train derailment in Australia and the dam tragedy in Brazil. In the medium and smaller sectors, market rates fell due to declines in the capesize rates and restrictions on coal imports in China. Offsetting that were shipments of grain from South America and shipments of coal to India. The group hopes to improve its business performance by reducing operational costs and improving ship-operating efficiency.
Product logistics and logistics
Revenues and profits for the product logistics division fell dramatically, with a 44.8 percent decline in operating revenues to JPY441.0 billion in the fiscal year ended March 31, 2019 and a 55.0 percent fall in profits to minus JPY 49.2 billion.
The group said that although the volume of finished vehicles shipped increased because of high demand in the U.S. and Europe, there was a decline in liftings because of natural disasters in Japan and sales declines in South America and Europe. The group attributed the declines to new regulations on exhaust gas and fuel efficiency. Fuel costs and a deterioration in vessel operation efficiency adversely affected the company’s business performance.
The company’s logistics business experienced revenue and profit increases because of the “steady performance” of towage, sea-land integration transportation and warehousing. The group’s international logistics business experienced robust cargo movements related to semiconductors and increased demand from e-commerce. But the group experienced increased costs and so, although it experienced a year-over-year increase in revenue, its profit declined.
K Line is a contributor to box shipping company ONE, which was “considerably” affected by declines in liftings and space utilization. However, the group says that the “problems have almost been resolved.”
Looking forward
K Line expects the dry bulk market to improve due to a forecast improvement in the capesize sector and an improvement in the ship supply-demand balance through ship-scrapping. It hopes to secure “stable profit” in its energy business by securing mid- and long-term contracts. The car carrier business is “uncertain” because of tariff issues in the U.S. and Brexit in the European Unit.
The group “expects” to be profitable because of improvements in vessel allocation and operational efficiency. The logistics business is expected to be stable due to the “continued steady performance” of towage, sea-land integrated transport and warehousing. The international logistics sector is forecast to continue “performing steadily” due to “robust” cargo movements in semiconductors and e-commerce.