NYK replaces chairman after reporting loss of US$400m in 2018 FY
JAPAN's NYK Line has reported a loss of JPY44
JAPAN's NYK Line has reported a loss of JPY44.5 billion (US$400 million) for the financial year ended March 31, in wake of its disposal of its container shipping line to establish ONE line. The company responded to the heavy loss by replacing the chairman, president and representative directors immediately.
'These losses were recorded mainly due to the negative impact as well as extraordinary losses of the liner trade and air cargo transportation segment and due to related expenses for structural reforms of the dry bulk business. We are viewing the results of this year seriously,' the company said in a statement, reported New York's FreightWaves.
Former chairman Yasumi Kudo will now fill a 'special advisor' position. Former president Tadaaki Naito will take the chairman's role and will also be a director. Former executive vice-president Hitoshi Nagasawa has been appointed as the president.
Director Eiichi Takahashi has been made 'representative director' and still holds on to his senior managing corporate officer role. Chief outside director Yukio Okamoto is now out. Replacing Mr Okamoto in that role is Yoshihiro Katayama.
Revenues for NYK declined by 16.2 per cent from JPY2.18 trillion in the 12 months ended March 2018 to stand at JPY1.83 trillion by the year ending March 2019. Operating profit dropped by 60.2 per cent from JPY27.8 billion to JPY11.09 billion during the same period.
Liner trade revenues decreased by 58.6 per cent by the end of the financial year to stand at JPY286.3 billion. Air cargo revenues fell by 41 per cent to JPY56.7 billion. Logistics revenues rose by 2.6 per cent to JPY525.8 billion. Bulk shipping revenues grew by 5.8 per cent to JPY841.3 billion.
Commenting on the results, the group noted that in the container shipping division the newly established shipping line 'ONE' immediately suffered problems with a drop in liftings and slot utilization. That improved over the year but empty container repositioning costs owing to insufficient liftings 'placed pressure on the bottom line.'
Freight rates were described as being favourable, particularly on the North America trade. Bunker prices also negatively impacted the bottom line. There were also higher than anticipated expenses relating to the termination of the NYK Line container business.
With regards to the air cargo side of the business, volumes were badly hurt after the company was forced to ground all of its aircraft due to an air safety order from the Japanese Minister of Transport. The group said that there had been 'improper maintenance work conducted in the past' by a consolidated subsidiary.
The group's logistics division received a boost from urgent demand for air freight on account of stranded cargoes from typhoons. Ocean freight volumes were 'particularly strong' owing to the political friction between Washington and Beijing. Robust US demand and 'firm' volumes in Europe also helped.
Automobile shipping volumes were strong to north America and Europe but volumes elsewhere were 'sluggish' and total finished car volumes dropped. NYK worked to overcome the problems by 'slow-steaming' ships and by trying to expand logistics proposals.
Looking ahead, NYK foresees greater profitability on lower revenue as it expects business performance in the ocean liner and air cargo trades to 'significantly improve'.
NYK expects ocean box shipping company 'ONE' to recover liftings and slot utilisation that were lost immediately after the beginning of operations.
NYK adds that 'efforts will be made' to improve cargo volumes in air and ocean freight forwarding.
NYK is forecasting profits of JPY26 billion by the year ending March 31, 2020.