Profits surge at Japanese shipping lines
The three main Japanese shipping groups boosted their net profits in their fiscal first-quarter ended June 30, heralding record results for their financial year to March 31, 2005.
Mitsui O.S.K. Lines increased its consolidated net income 109 percent in the April-June quarter, to Yen 23 billion ($212 million), from Yen 11 billion in April-June 2003. Operating income increased 79 percent to Yen 34 billion ($314 million) from Yen 19 billion. MOL’s group revenue increased 18 percent to Yen 277 billion ($2.6 million).
NYK raised its consolidated net income 89 percent in the latest quarter to Yen 17 billion ($157 million) from Yen 9 billion a year earlier. Operating income climbed 65 percent to Yen 33 billion ($304 million) from Yen 20 billion. NYK’s group revenue rose 14 percent to Yen 372 billion ($3.4 billion). The figures are for the group's bulk shipping, container shipping, logistics, terminal and other activities.
“K” Line recorded the largest percentage increase in profits of the three Japanese groups, as its net income nearly tripled to Yen 17 billion ($157 million) from Yen 6 billion. “K” Line’s quarterly operating income jumped 125 percent to Yen 27 billion ($249 million), from Yen 12 billion. Group revenue rose 14 percent to Yen 199 billion ($1.8 billion).
The total net income of the three groups increased 119 percent in the latest quarter to Yen 57 billion ($526 million) from Yen 26 billion a year ago, representing additional profits of about Yen 31 billion ($286 million) for the quarter.
Mitsui O.S.K. Lines provided specific figures on the results of its container shipping business. Its operating income from containerships soared about 350 percent in the quarter to Yen 9 billion ($83 million) from Yen 2 billion a year earlier. MOL’s container shipping revenue increased 14 percent to Yen 90 billion ($830 million), and its average freight rate increased 10 percent from $1,117 to $1,231 per TEU.
MOL said all routes of its container shipping business “saw a continuous upward trend” and both cargo volume and freight rates were higher than forecast.
MOL predicts it will earn net income of Yen 80 billion (about $727 million) in the current financial year ending in March 2005, up 45 percent from Yen 55 billion ($524 million) earned in the 2003-2004 financial year.
MOL added that all its shipping divisions continued to show steady growth in the quarter “thanks to a worldwide economic recovery and especially brisk trade in China.” But it warned that continued high bunker prices remain a negative factor.
MOL’s dry bulk shipping arm enjoyed a high spot market due to the increase in China’s iron ore imports that began last year. But the Japanese group said the spot market peaked in February and entered an adjustment phase before moving upwards again in June.
NYK reported rising demand on all routes and a tight supply and demand situation in liner shipping. It said these factors allowed it to restore freight rates on each route, thereby “considerably exceeding revenues and earnings from a year earlier.” NYK did not disclose its operating profit from liner shipping.
NYK predicts it will have a net income of about Yen 62 billion (about $590 million) in the year ending in March 2005, nearly twice the Yen 35 billion ($329 million) earned in the 2003-2004 financial year.
Despite negative factors, including the hike in ship charter rates, fuel prices and the trend towards a stronger Yen, “K” Line’s operating revenues and operating income in the latest quarter in the containership business “were far higher than in the same term of the preceding year,” the company said.
“K” Line recently increased its group profit forecast for its current financial year. It now expects a group net income of Yen 57 billion ($514 million) for the 2004-2005 financial year, up 72 percent from Yen 33 billion ($314 million) earned in the financial year ended March 31, 2004.
If all three Japanese groups achieve their profits forecasts for the 2004-2004 financial year, they will make net profits of $1.8 billion between them.