Japan's big three look to a recovery after heavy losses

JAPAN’S “big three” ocean carriers, Mitsui OSK Lines (MOL), Nippon Yusen Kaisha (NYK) and K Line, have seen their financial results suffer in the nine months from April 1, 2009.

Tokyo-based MOL managed to stay out of the red despite its overall results being much lower than the same period last year.

The ocean carrier recorded a revenue decline of 37% to US$10.6bn in the nine months ending December 31, 2009. Its operating profit plunged 98.8% to $25.9m, while net income plummeted by 99.4% to $23.9m.

MOL wasn’t the only carrier to take a beating. K Line’s overall revenue declined by 41.8% to $6.6bn, its operating income fell from $994m in the first nine months of 2008, a loss of $573m in the same period last year. Meanwhile, K Line’s net income fell from $451m in 2008 to a deficit of $673m.

NYK recorded a 39% fall in revenue to $13.4bn, compared to the same period in 2008. Its operating income fell dramatically from $1.9bn in 2008 to a loss of $348.6m. The carrier’s net income fell from $1.2bn in 2008 to a deficit of $289m.

All three carriers remained confident, despite experiencing heavy losses.

MOL said: “Not only did China, India, and other emerging countries propel the recovery of the global economy, but economic growth of developed countries, in Europe and North America, also turned upwards after significant negative growth in the first half of 2009.

“This and other factors lead us to expect that we have entered a period of economic recovery around the world.”

K Line said that recovery in cargo movements will continue, “despite seasonal adjustments”. The company expects its earnings to improve through its cost cutting measures and reduced sailings.

Meanwhile, K Line has expanded its logistics and forwarding division with the acquisition of a 26% share in Air Tiger Express Companies (Atec). The group has an option to buy an additional 25%.

New York-based Atec offers international forwarding services through its subsidiaries: Air Tiger Express (US), Air Tiger Express (Asia) and Shenzhen Airport ATE International Freight Co.

K Line believes: “participation in Atec will bring both enhancement of business area and profit opportunity.”

Source: Lloyds