Poor year for NYK as ONE was plagued with one-time costs
JAPANESE shipping giant NYK suffered a net loss in its fiscal year ending March 31 of JPY44
JAPANESE shipping giant NYK suffered a net loss in its fiscal year ending March 31 of JPY44.5 billion (US$398.3 million) from revenues of JPY1.82 trillion, which fell 16.2 per cent year on year.
Shorn of its operational container role after joining domestic rivals MOL and 'K' Line, to form the Ocean Network Express box line in 2016, NYK nonetheless shared in the profits and losses of the ONE operation.
In a statement accompanying the results, NYK said: 'In the container shipping market, the high level of new supply remained ongoing from last year, but spot rates were favourable on the back of strong shipping volumes.'
'In the container shipping division, the newly established shipping line ONE started offering service from April 1, 2018. However, teething problems occurred immediately after the commencement of service in April, resulting in a drop in liftings and slot utilisation. The service disruption was resolved in the first quarter, and from July, both liftings and slot utilisation greatly improved on the outbound voyages.
'The higher empty container repositioning costs as a result of the insufficient liftings on the return voyages (North America to Asia and Europe to Asia) placed pressure on the bottom line, but liftings on the return voyages started to recover from the second half. Freight rates were favourable, particularly in the North America trade,' said the NYK statement.
Bunker prices placed downward pressure on earnings, said the company but synergistic effects of the business integration have emerged steadily as the company continued to work to improve the bottom line by reducing costs.
At NYK Line, higher than expected one-time costs required to terminate the container shipping business occurred mainly in the first quarter, but these costs largely declined from July. The handling volume at container terminals in Japan and overseas increased, and earnings were steady.
As a result of the above, the liner trade segment as a whole recorded a loss. Also, revenues greatly declined compared to the previous consolidated fiscal year due to the fact that the revenues of ONE, which is accounted for by the equity method, are no longer included.