Japanese shipping giant MOL believes the current cross-sector shipping recession is without historical precedent.
Speaking Monday to mark the 128th anniversary of the company’s founding, President Koichi Muto said the company is facing a perfect storm of economic and market negatives.
“In the course of our 128-year history, we have faced our fair share of crises, including the devastation of World War II,” he said. “However, over the past few years, we have faced a challenging business environment unlike anything our generation has previously experienced.”
He said MOL is projecting a consolidated ordinary loss of 27 billion yen this year, the largest in its history. “To put this into perspective,” he explained, “we still generated consolidated ordinary income of 24.2 billion yen in fiscal 2009, in the depths of the global recession following the Lehman Brothers bankruptcy.”
He cited the strong yen, high fuel prices, the impact of the earthquake and tsunami in Japan last year, and the economic slowdown in developed countries as having “weighed heavily” on MOL’s performance. But he said the most significant factor is lackluster market rates that reflect the glut of vessels on the market in almost every vessel category.
“This year, we are forecasting mostly the same amount of deliveries of new vessels as last year,” he added. “Therefore, the delivery of new vessels will continue to negatively impact our operating results for some time.
“Market conditions in 2012 could be just as challenging, if not worse, as 2011, from the standpoint of the supply-demand dynamics for vessels.”
MOL, he said, would “ride out the crisis” by “relentlessly” cutting costs, mainly through slow-steaming, and “by scrutinizing all costs, without leaving any stone unturned.”
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