Japan"s big three shipping companies all sank into the red in the first quarter of the year and both NYK and K Line are now forecasting full-year losses.
Japan"s big three shipping companies all sank into the red in the first quarter of the year and both NYK and K Line are now forecasting full-year losses.
For the first quarter of the financial year, April 1 to June 30, Mitsui OSK Lines reported a loss of Yen13bn ($137.2m), compared to Yen55bn profit a year earlier. NYK said it made a Yen18.9bn first-quarter loss against a Yen44.3bn profit in same quarter in the previous year and K Line reported a loss of Yen14.9bn for the first quarter.
Both NYK and K Line revised their forecasts for the financial year ending March 31, 2010 to a loss, with business conditions expected to remain tough, especially for container shipping and car carriers.
NYK said it expected to report a full-year loss of Yen5bn, and K Line cut its previous full-year profit forecast of Yen6.5bn to a Yen31bn loss.
Explaining the loss forecast, NYK said the product tanker market remained subdued and car carrier volumes were expected to significantly underperform the previous year. In container shipping, the company said it was striving to raise freight rates and reduce its fleet, but volumes were expected to ?take some time? to recover. Businesses such as logistics, terminals and air cargo had seen volumes slump, putting pressure on both revenues and costs.
?We are working to cut costs across the board and streamline our operations in all business segments, but we expect the environment to remain challenging,? NYK said.
Only MOL did not forecast a full-year loss, although the company does expect to be in the red for the first half of the year.
MOL revised its half-year forecast to a Yen5bn loss, compared to a previous forecast of a Yen24bn profit, but said it still expected to make a full-year profit of Yen50bn, revised down from an earlier forecast of a Yen80bn profit.
MOL said in the second quarter, July 1 to September 30, it expected freight rates to deteriorate, with a stagnation of the container trades, a delay in the recovery of completed car exports, as well as a substantial rise in bunker prices.
?These factors are expected to deteriorate profits significantly more than we expected in the previous outlook,? MOL said.
In the third and fourth quarters, the Japanese line said it did not expect external conditions to reverse the deterioration seen in the first half of the year.
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