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MOL posts $389m pretax profit

MOL posts $389m pretax profit
Mitsui O.S.K. Lines Ltd. is expected to post a 35 billion yen (US$389.76 million) group pretax profit for the year ending March 2010, down 83 per cent on the year.

Mitsui O.S.K. Lines Ltd. is expected to post a 35 billion yen (US$389.76 million) group pretax profit for the year ending March 2010, down 83 per cent on the year.

Japanese company Mitsui O.S.K. Lines Ltd. is expected to post a 35 billion yen (US$389.76 million group pretax profit for the year ending March 2010, down 83 per cent on the year and undershooting a previous forecast by 15 billion yen. Amid the global recession, container vessels carrying daily goods and electronics continued to slump, as did crude oil tankers.

Higher fuel costs and the stronger yen eroded profit as well. Sales are seen falling 28 per cent to 1.35 trillion yen, in line with an earlier projection.

A spike in crude oil prices is leading to higher-than-expected fuel costs, eroding margins. The company assumes that fuel will cost 410 dollars per ton in the second half, but the price is hovering at about 420 dollars now. The firm also assumes an exchange rate of 93 yen to the dollar. Each 1 dollar rise in the cost of fuel erodes pretax profit by 200 million yen a year, and each 1 yen depreciation by the dollar eats up 1.7 billion yen in pretax profit. Containerships bound for industrialized nations are facing sluggish demand. Their rates, which plunged in the April-June quarter, have entered into a recovery trend. But this is unlikely to offset the slump.

U.S. consumer spending woes have hit demand for crude oil tankers. And there are more such vessels than needed, contributing to a sense of glut. The business has already hit a bottom for automobile-carrying ships, but its recovery will be stymied by the yen's appreciation.

Meanwhile, bulk carriers for transporting iron ore and coal are faring well thanks to robust demand from China and other emerging nations.

www.TurkishMaritime.com.tr

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