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Japan's big 3 shipping lines post record full-year profits - outlooks guarded
12 May 2005

TOKYO (AFX) - Japan's big three shipping lines today all posted record earnings for the past year to March, as higher freight rates and cargo volumes more than offset the impact of rising fuel prices and exchange rate losses.

But all three shippers forecast more difficult conditions ahead, causing the share prices of two to fall in trading on the Tokyo Stock Exchange.

Industry leader Nippon Yusen KK said its net profit for the past year to March more than doubled to 71.3 bln yen, as revenue rose 15 pct to a record 1.606 trln yen.

'Both shipping volumes and freight rates stayed at high levels throughout the past year,' senior managing director Yukio Ozawa told a news conference.

Net profit at Mitsui OSK Lines Ltd, Japan's second-largest shipping company, surged 77.4 pct to a 98.3 bln yen, on a 17.7 pct jump in revenue to an all-time high of 1.173 trln yen.

Mitsui OSK posted record earnings even after booking a special loss of 20.3 bln yen to write down the value of assets to market rates, as all Japanese companies will be required to do, beginning this year.

'We benefited significantly from the enlarged scale of our fleet and sharp increases in freight rates amid buoyant shipping demand,' Mitsui OSK Lines executive officer Kenichi Yonetani said.

Kawasaki Kisen Kaisha Ltd, the third-largest shipping line, reported its net profit soared 80.3 pct to 59.8 bln yen, on a 14.3 pct increase in revenue to 828.4 bln yen.

'Thanks to buoyant handling volumes and the recovery in freight rates, we achieved a record-breaking performance,' managing director Mamoru Shozui said.

Kawasaki Kisen, commonly known as the K-Line, also posted record profit despite booking 11.5 bln yen in special charges to improve its balance sheet.

All three companies announced big dividend increases.

Nippon Yusen boosted its annual dividend payout per share to 18 yen from 10 yen in the previous year. Mitsui OSK hiked its payout to 16 yen per share from 11 yen, and Kawasaki Kisen raised its annual dividend to 16.50 yen from 10.00 yen.

Japanese shipping lines are benefiting from the growth in shipping volumes and strong rise in freight rates prompted by the outsourcing of manufacturing from Japan and high-wage countries in North America and Europe, to China and elsewhere around Asia.

But rising fuel costs and a strengthening yen are expected to cap gains this year.

Nippon Yusen, known as NYK Lines, expects its net profit for the year to March 2006 to rise 26 pct to 90 bln yen, in the absence of the 20.6 bln yen special loss booked in the past year to introduce market-price asset valuations a year early.

But operating profit is forecast to fall about 4 pct to 155 bln yen because of higher fuel costs and the stronger yen.

'The appreciation of the yen and surging bunker fuel prices, combined with an expected slowdown of growth in freight rates, should more than offset the positive impact of cost-cuts,' Ozawa said.

Nippon Yusen expects those three factors to cut its full-year current profit by 23 bln yen. It projects its current profit -- or profit before tax and extraordinary items -- will fall to 150 bln yen from 154.8 bln yen in the past year.

Nippon Yusen projects the price of bunker fuel will average 230 usd per ton this year, up from 193.84 usd last year. The dollar is expected to average 105 yen, compared to 107.46 yen last year.

Still, revenue is expected to rise 4.6 pct to 1.680 trln yen as shipping demand is forecast to remain buoyant due to global economic activity.

'Handling volumes are expected to remain solid in the new fiscal year, especially on China-bound services,' Ozawa said.

Mitsui OSK expects its net profit to rise 14.9 pct this year to 113 bln yen and operating profit to increase 2.4 pct to 176 bln yen, on revenue of 1.21 trln yen, up 3.4 pct.

Mitsui OSK said higher fuel costs, the stronger yen and rising rates on chartered ships are likely to cut current profit this year by about 24 bln yen.

It projects the price of bunker fuel will average 250 usd per ton, and the dollar to average 105 yen.

'Handling volume for container ships, bulk cargos and crude oil carriers will remain brisk, thanks to the sustained economic growth in China and the US,' Yonetani said.

'This, combined with the enlarged fleet and further rise in freight rates, will allow us to absorb the adverse impact of the appreciation of the yen and post some profit growth.

Kawasaki Kisen forecasts its net profit will rise 15.4 pct to 69 bln yen because of the absence of big charges booked the past year.

But it projects a 2.8 pct decline in operating profit to 105 bln yen, despite a forecast 8.6 pct jump in revenue to 900 bln yen.

'Surging bunker fuel costs, the appreciation of the yen and rising rates for chartered ships will weigh on profitability but, basically, we expect business conditions to remain favorable for us,' Shozui said.

'Global shipping demand will remain robust, led by strong demand in China.'

Kawasaki Kisen estimates those three factors will shave 30 bln yen from its current profit, which is expected to slip to 105 bln yen from 107.2 bln yen in the year just ended.

All three shipping companies are spending heavily on expanding their fleets on expectations that the double-digit annual increases in global shipping volumes over the past decade will be sustained.

Nippon Yusen plans to spend 1.38 trln yen to build 278 vessels over the next six years.

Kawasaki Kisen is spending 730 bln yen to build 181 new vessels over a five-year period to March 2009.

Mitsui OSK said it has decided to increase its capital outlay in the five years through March 2010. It now plans to spend 1.45 trln yen to build 287 ships, up from the original plan to spend 1.16 trln yen for 243 ships.

'The stronger-than-expected results in the year to March 2005 forced us to revise upwards the mid-term targets,' Mitsui OSK managing director Toshifumi Kato said.

Japan's big three shipping lines all said they expect their operations to be little affected by newly proposed merger of AP Moeller-Maersk and Royal P&O Nedlloyd, creating a European giant in the global container shipping market.

The shipping lines announced their earnings results for the past year, and financial forecast for the current year, around midday here.

In subsequent trading on the Tokyo Stock Exchange, Kawasaki Kisen closed down 3.3 pct or 23 yen at 667, and Nippon Yusen slid 1.6 pct or 10 yen to 619.

Mitsui OSK, the only line to forecast an increase in operating profit this year, rose 1.4 pct or 9 yen to 656.
 

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3 major shipping firms revise FY 2009 net balance estimates downward
27 July 2009
Kyodo News

TOKYO, July 27 -- Japan's three major shipping firms on Monday revised downward their group net balance projections for fiscal 2009, citing flagging container vessel traffic stemming from the global recession, lower fares and dwindling automobile trade volumes.

Nippon Yusen K.K. and Kawasaki Kisen Kaisha Ltd. said they now expect respective group net losses of 5 billion yen and 31 billion yen in the business year to March 31, 2010, in turnarounds from profits of 18 billion yen and 6.5 billion yen they forecast in their financial statements released on April 27.

But Mitsui O.S.K. Lines Ltd. forecast its net balance for the 12-month period will still show up in positive territory, although its net profit will likely shrink to 30 billion yen from 40 billion yen it projected on April 27.

In the preceding business year that ended March 31, the net profits posted by the three were 56.15 billion yen for Nippon Yusen, 126.99 billion yen for Mitsui O.S.K. and 32.42 billion yen for Kawasaki Kisen.

For the April-June period of 2009, all the three shipping firms said their net balances sank into the red with Nippon Yusen's loss coming to 18.9 billion yen on operating revenues of 380 billion yen, down 44.1 percent from a year earlier.

Mitsui O.S.K.'s net loss came to 13 billion yen with operating revenues of 297.4 billion yen, down 41.4 percent, while the net loss of Kawasaki Kisen came to 14.8 billion yen with its operating revenues at 191.9 billion yen, down 45.1 percent.

Mitsui O.S.K. operating officer Shugo Aoto told reporters, ''Flagging cargo traffic on container vessels and shipping fare falls took their toll'' in the three-month period to June 30.
 
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