NYK Line Swings to Profit

first_imgzoom Japanese shipping company Nippon Yusen Kabushiki Kaisha (NYK Line) wrapped up the first six months of the fiscal year 2018 with a net income of JPY 6.29 billion (USD 55.5 million), compared to a net loss of JPY 231.8 billion posted in the same period last year.From April 1, 2017, to September 30, 2017, consolidated revenues amounted to JPY 1.06 trillion, up from JPY 928.5 billion seen in the same period of the previous fiscal year.As explained, conditions in the maritime shipping market were positive overall during the first half of the fiscal year and the results exceeded the company’s previous forecast.In the container shipping market, shipping traffic was brisk along transpacific routes, but not enough to compensate for an increase in total shipping capacity for trades overall following the reorganization of alliances and commissioning of extra vessels by some shipping companies. Consequently, the upswing in spot freight rates largely came to a standstill. Meanwhile, robust demand for freight shipments along European shipping routes supported favorable conditions in the market, the company said.The NYK Group said it worked to limit fleet and operating costs by continuing efforts to boost cargo-loading efficiency, switch to new highly fuel-efficient vessels with capacity for 14,000 TEU, and optimize vessel assignment and economic performance in accordance with the circumstances of shipping routes.Meanwhile, overall handling volume at container terminals in Japan and around the world increased year on year. Owing to these factors, results in the liner trade segment as a whole improved substantially, with the segment posting a profit and higher revenues than in the same period of the previous fiscal year.As previously announced, NYK Line decided to integrate its container shipping business (including its terminal business outside Japan) with those of Kawasaki Kisen Kaisha (K Line) and Mitsui O.S.K. Lines (MOL). Following the integration, Ocean Network Express (ONE) was established as an operating company in Singapore on July 7, 2017. Preparations are currently underway for ONE to commence services from April 1, 2018.What is more, the group took advantage of robust demand for automobile shipments to North America, Europe and Asia by assigning vessels to those regions. As a result, the total number of new vehicles it shipped by sea increased, when compared with the same period of the previous fiscal year. In Europe, shipments by the group’s LNG-fueled pure car and truck carrier continued to be steady.In the dry bulk shipping market, cargo volume of iron ore, coal, and grains was up, but excess tonnage was not fully canceled out as more new ships were commissioned than the number of vessels scrapped. Nonetheless, the market continued to recover moderately after bottoming out in the second half of the previous fiscal year, according to the company.In the liquid transport market, conditions worsened across the board compared with the same period of the previous fiscal year, as the commissioning of new very large crude carriers (VLCCs) put strong pressure on supply despite brisk shipping traffic. However, NYK was able to secure “favorable conditions” in long-term contracts, providing a stable source of earnings from its fleet of LNG tankers.In addition, the group said that its operations of floating production storage and offloading (FPSO) vessels, drill ships and shuttle tankers contributed substantially to its offshore business.“Although demand in the container shipping market is projected to decline in the second half, which is the slack season, shipping traffic is expected to remain stable for both transpacific and European shipping routes,” NYK said in its forecast of full-year consolidated financial results.“The dry bulk shipping market is forecast to continue recovering moderately, supported by brisk shipping traffic. The liquid transport market is forecast to recover from the third quarter of the fiscal year when it enters a period of demand for shipments by tankers, and the company expects to continue securing stable profits from its LNG tanker and offshore businesses,” the company continued.“In the automobile transport market, NYK Line will take advantage of strong demand for shipments originating from Japan and mainly bound for Europe and North America, while working to boost profitability and optimize shipping efficiency,” NYK concluded.Separately, NYK revealed decision to acquire the common stock of Yusen Logistics through a tender offer in an effort to make Yusen a fully owned subsidiary of the group. The tender offer period is from November 1, 2017, to December 14, 2017.Image Courtesy: NYK Linelast_img read more