ONE forecasts a staggering 884pc net profit hike to US$928m for FY2020
SINGAPORE-BASED Ocean Network Express (ONE) has forecast that although revenue at the end of the fiscal year, that ends in March 2021, will virtually remain unchanged at US$11
SINGAPORE-BASED Ocean Network Express (ONE) has forecast that although revenue at the end of the fiscal year, that ends in March 2021, will virtually remain unchanged at US$11.9 billion compared to last year, earnings before interest and taxes (EBIT) are expected to surge 288 per cent to $795 million.
Net profit is however forecast to jump an astounding 884 percent to $928 million, and the Japanese-owned shipping line is also expecting a bunker price per tonne of $352, down $89/tonne compared with FY2019.
Despite rising Covid-19 infections in major markets and the traditional slowdown in demand after January, the massive increase in profitability is contained in its FY2020 forecast, which is built on tight capacity management, rising demand, and lower bunker prices, and follows both Maersk and Hapag-Lloyd increasing their 2020 guidance.
The bulk of the full-year profitability by ONE - formed in 2017 by a merger of the container divisions of NYK, Mitsui OSK Line, and 'K' Line - was earned in the first half that began April 1 when there was a sharp recovery in cargo demand after the second-quarter lockdowns led ONE to a $682 million profit.
Even a dramatic slowdown in profitability in the second half will not be enough to stop the carrier closing the year with its best-ever result.
'The cargo demand is currently steady, but with Covid-19 still spreading globally, including in the largest consuming areas such as the US and Europe, the cargo demand and short-term freight market remains uncertain,' ONE said in its outlook. 'Additionally, the fourth quarter, following the Lunar New Year (Chinese New Year is on February 4, 2021), is usually a slack season. Considering these factors, the second-half forecast is $245 million in profit.'
The carriers are not the only ones predicting a good year. Drewry has upgraded its operating profit expectation for container shipping in 2020 by 16 per cent to $11 billion - a level not seen in a decade - following 'meteoric third-quarter rate increases', reports IHS Media.