[020213.EN.SEA] 'K' Line Posts US$108.6 Million Loss, But Revenue Up 9.5pc Thanks To Boxes

JAPANESE shipping giant "K" Line posted a nine-month year-on-year net loss of JPY42.1 billion (US$108.6 million) despite a 9.5 per cent increase in operating revenue to JPY802.4 billion.

Taken alone the container business posted a 9.7 per cent increase in revenues to JPY393.9 billion in the nine months to December 31, a reflection of higher freight rates, slow steaming and disciplined vessel deployment.

But the nine months "saw sluggish economy in Europe, afflicted by the prolonged sovereign debt crisis, a mildly recovering economy in the United States and decelerating economic growth in emerging countries including China and India", said the statement accompanying the results.

"Container freight rate recovery advanced, albeit variably due to seasonal factors. The car carrier business as a whole continued generally strong although Europe bound shipments of automobiles from Japan turned downward.

"The dry bulk market, meanwhile, remained sluggish under strong supply pressure generated by massive deliveries of new ships, in addition to slower global economies," said the statement.

Also problems cited were enduring high fuel prices and the continuing yen appreciation which served to make the business environment surrounding the marine transport "unstable", the statement said.

"The number of loaded container transported by 'K' Line Group during the period increased 22 per cent year on year on Asia-North America routes both eastbound and westbound," said the carrier's statement.

A year-on-year improvement in freight rates was made possible by "K" Line own efforts despite downward pressures in the last quarter mostly in Asia-US and Asia-Europe trades, the carrier said.

"We worked on structural reforms by pulling into service newly constructed large energy efficient containerships for improved navigation efficiency and implemented slow steaming as well as cutting back on off seasonal transportation services. As a result our financial performance improved from the same period of the previous year." the statement said.

"In the containership business we expect steady cargo movements for North America-bound transportation as the 'fiscal cliff' was averted in the US, albeit provisionally, and signs are appearing that the US housing market has hit bottom," said the statement.

But on Europe-bound routes, "K" Line continued to expect sluggish cargo movement for some time to come.

"Containership operators are therefore cutting back transportation services in keeping with off season demand. As required by slumping demand, the "K" Line Group will also reduce transportation services to cut down overall ship operating costs, expand slow steaming and push ahead with group-wide cost reduction to improve financial results," the statement said.

Source : HKSG, 020213.