“K” Line swung to a loss of $503 million for the fiscal year ended March 31, a big drop from its profit of $380 million a year earlier, as it posted a heavy loss in its container business.
Like its sister Japanese carriers, MOL and NYK Line, “K” Line had predicted a loss for the full fiscal year when it reported a $173 million operating loss for the last calendar quarter of 2011.
The carrier on Friday reported an operating loss of $494 million on operating revenues that declined by 1.3 percent to $11.8 billion in fiscal 2011.
In its container business, “K” Line lost $520 million, compared to a profit of $360 million in fiscal 2010. Container revenues dropped 11 percent to $4.9 million from $5.5 billion in the prior year.
“K” Line attributed the loss to “weak market conditions, a strong yen and high fuel oil prices.” It said the Japanese economy started to recover from the downturn caused by the earthquake and tsunami, but prolonged appreciation of the yen and the floods in Thailand caused a further slowdown.
The container market was “sluggish” as a result of slumping cargo movements in the U.S. and Europe and an increase in the supply of containerships, the line said.
“K” Line said the outlook for the container business remains unclear, but that it expects demand to increase moderately. It expects a “substantial improvement” in earnings due to freight rate restoration, cost-cutting and enhanced slow-steaming.