Earnings jump for MOL, NYK, "K" Line

Earnings jump for MOL, NYK, "K" Line

Japan's three major shipping lines reported sharply increased profits and revenues for the fiscal first quarter Thursday as rising cargo volumes and freight rates, triggered by robust trade with China, offset higher fuel costs.

Traffic on both the trans-Pacific and Asia-Europe routes expanded during the quarter ending June 30, aided by China's booming economy, and it prompted the two top carriers to revise upward their earnings forecasts for the current fiscal year to March 2005.

NYK Line, Japan's largest shipping line by capacity, said profit rose 95 percent in the quarter over the same period a year ago to 17.1 billion yen ($153.3 million). Sales increased by 14 percent to $3.3 billion over the same quarter last year.

Profit more than doubled from the previous year period for MOL and "K" Line, the second and third-largest Japanese shipping companies by capacity.

Like other Asian liner companies, NYK, MOL and "K" Line are benefiting from Asia's expanding trade as the economies of China, Japan, India expand. China, whose share of global trade has tripled to 7 percent over the past decade, has been importing more cars, machine tools, steel, oil and other raw materials while exporting textiles and appliances.

Japanese shipping lines are positioning themselves to take advantage of economic growth in China and India,'' said UBS Global Asset Management's Tokyo-based chief investment officer Hideo Ueki, who oversees $12 billion in Japanese equities.

"In terms of freight rates, we saw a major improvement not only in Asia-to-U.S. and Asia-to-Europe routes but also in Japan-to-Asia routes," NYK Senior Managing Director Yukio Ozawa said.

MOL's net profit more than doubled from a year earlier to $202.5 million on sales 18.1 percent higher at $2.5 billion.

"In the containership business, we expanded our North American and intra-Asia services to meet tremendous growth in the Chinese market," MOL said in a statement.

"K" Line said its quarterly net profit nearly trebled to $154 million, while sales grew 14.1 percent to $1.8 billion.

"Reflecting a strong increase in shipping volumes as well as rising freight rates on the North America-Asia and Europe-Asia routes, our profit is now growing at a faster pace than in the last fiscal year (to March 2004), when we posted a record high profit," "K" Line Managing Director Tetsuo Shiota said.

For the year to March 2005, NYK upped its forecast of group net profit by 12.7 percent to $556 million from $493 million it projected earlier.

MOL also boosted its forecast by 29 percent for net profit of $716.9 million from $555.7 million.

"K" Line left its net profit forecast unchanged at $510.8 million.