Japan's 'Big Three' container lines suffer

Japan's 'Big Three' container lines suffer

Japan’s three largest container lines all reported dismal financial results for fiscal 2015 on Thursday, with Mitsui O.S.K. Lines and "K" Line slipping into the red, although the country’s top carrier, NYK Line, remained profitable.

The three Japanese carriers all saw their revenues sink in fiscal 2015 amid stubbornly sluggish market conditions. Lower fuel costs and a weaker yen against the U.S. dollar were offset by slumping freight rates and cargo volumes amid oversupply and stagnant demand. The lines all expect another tough year ahead.

MOL suffered a net loss of 170 billion yen ($1.57 billion) in fiscal 2015, compared with a net profit of 42.3 billion yen in fiscal 2014, as it booked an extraordinary charge of 179 billion yen resulting from the disposal of vessels in the container shipping and dry bulk divisions.

It is MOL’s first full-year net loss in three years. MOL’s revenue shrank 5.8 percent year-over-year to 1.71 trillion yen in fiscal 2015.

As for fiscal 2016, MOL predicted that its revenue will tumble 11.5 percent year-over-year to 1.51 trillion yen, but the company expects to swing back into the black with a net profit of 20 billion yen.

Container volumes on Asia-North America routes will remain firm on the back of relatively strong growth in the U.S. economy, while those on Asia-Europe routes might remain stagnant until the summer demand season, MOL said.

“K” Line also incurred a net loss of 51.4 billion yen in fiscal 2015, compared with a net profit of 26.8 billion yen in fiscal 2014, as it booked an extraordinary charge of about 50 billion yen stemming from structural reforms in the dry bulk business.

“K” Line’s structural reforms are to accelerate the rationalization of its fleet size, mainly small- and medium-sized vessels. “K” Line’s revenue declined 8 percent year-over-year to 1.24 trillion yen in fiscal 2015.

As for fiscal 2016, “K” Line, which is heavily dependent on container shipping, predicted that its revenue will plunge 11.6 percent year-over-year to 1.1 trillion yen and its net loss will total 35 billion yen.

“K” Line said it would take time for supply and demand to rebalance and its financial performance to improve.

NYK Line’s revenue slid 5.4 percent in fiscal 2015 from a year earlier to 2.27 trillion yen as net profit plummeted 61.7 percent year-over-year to 18.2 billion yen.

NYK Line predicted that its revenue will be 2.2 trillion yen in fiscal 2016, down 4.1 percent from a year earlier, while its net profit will be 15 billion yen, down 17.8 percent.

Contact Hisane Masaki at yiu45535@nifty.com.