Business results of the Japanese shipping majors K Line, NYK Line and MOL for the second quarter and the first half of the fiscal year 2018 sustained a significant blow from deteriorating problems stemming from the launching of the Ocean Network Express (ONE).
MOL reported the strongest results of the three with an ordinary profit for the second quarter of the year, covering April-September, standing at JPY 10.2 billion (USD 90 million). The profit is lower from last year’s equivalent of JPY 17.3 billion. Revenue was also down year-on-year standing at JPY 619 billion (USD 5.4 billion) compared to JPY 819 billion a year ago.
For the full year, MOL downgraded the forecast for ordinary profit and net income due to a deterioration in ONE’s profit for the first half, due mainly to lower-than-anticipated liftings and utilization, which are still on the way to recovery even in the second half of the year.
As a result, the company expects its ordinary profit for the year to be 45 pct lower reaching JPY 22 bn.
NYK Line reported a loss of JPY 9.8 billion for the six months ended September 30, much lower from previously forecast JPY 3 billion profit.
For the full year, NYK Line’s forecasts revenues of JPY 1.81 trillion, up from previous JPY 1.765 trillion, a recurring loss of JPY 13 billion, down from JPY 10 billion profit and a loss attributable to owners of the parent of JPY 6 billion, down from the anticipated JPY 12 billion profit.
Finally, K Line booked a half-year loss of JPY 24.5 billion ( USD 216.4 million), reversing from last year’s profit worth JPY 13.1 billion.
The company expects full year losses to reach JPY 20 billion, down from previous JPY 5 billion profit, which was forecast in July 2018.
ONE booked a USD 311 million loss in the first half of the year ending September 30.
“We are recovering from the initial negative impact of reduced liftings and a drop in the loading factor in Q1 due to teething problems during the start-up period. However, liftings were lower than our target level. In addition, we experience higher costs for returning empty containers to Asia as the result of a larger impact due to a slower recovery on the non-dominant leg,” the joint venture said.
As explained, the annual integration synergy of USD 1.05 billion is steadily emerging. The containership business estimates that as of FY 2018, it will reach 75% against originally budgeted 60%, which is 5% less than the forecast of 80%.
ONE added that customer service issues were fully resolved in Q1, and that it was in the process of making a full recovery of lifting volume.
Nevertheless, cost-saving effect in bunker and others did not reach the original targets.
“As a result, we expect a –USD 600 million net loss, –USD 710 million from previous forecast of USD 110 million profit,” ONE said.
World Maritime News Staff