[211119.EN.SEA] ONE Back In The Black But Misses Out On Revenue And Profit Forecasts

JAPANESE carrier Ocean Network Express (ONE) almost hit its target for profitability in the second quarter of its fiscal year, which ended September, posting a positive result of US$121 million, compared to a loss of $192 million in the second quarter of 2018.

Second quarter revenue increased by five per cent compared to the same period last year to $3.11 billion.

After the first six months of the financial year, ONE is in the black to the tune of $126 million, earned on revenue of $5.98 billion, a 4.9 per cent increase on the same time period last year. The profit $126 million is a massive swing back into the black from the $311 million loss recorded in the first six months of its 2018 financial year.

ONE missed its half yearly revenue forecast by $105 million and missed its profit forecast target by two million dollars.

Commenting on its results, ONE remarked in a statement that freight rates were below expectations for the Asia-North America trade. It also noted that the Asia-Europe trade was "sluggish as there was no peak season rate hike due to [a] deteriorated supply-demand balance".

The company said that it had reduced variable costs owing to cargo portfolio optimisation and cost-saving.

Unfortunately, the company did not meet its liftings targets for the intra-Asia and Asia-North America trades. However, liftings nonetheless increased across all trades owing to "service stabilisation".

Liftings on the Asia-North America route (eastbound) stood at just over 1.44 million TEU and utilisation ran at 90 per cent. Meanwhile, westbound liftings on the same route stood at 660,000 TEU with a 42 per cent utilisation rate.

On the Asia-Europe route, westbound container liftings stood at 947,000 TEU with a utilisation rate of 97 per cent. Eastbound liftings stood at 651,000 TEU and had a utilisation rate of 64 per cent.

However, the outlook is rougher weather for the carrier. ONE said it now expected to report a loss of $66 million in its trading in the second half of the year and has downgraded its full-year profit forecast by $30 million, to $60 million.

The shipping company said it expected deterioration in spot rates and expressed concerns over a further slowdown in the global economy.

The forecast also assumes that the additional costs for compliance with IMO 2020 will be recovered in full by its OBS (One Bunker Surcharge) mechanism, adding that its "customers' awareness" of the regulatory compliance was increasing. It also said that the installation of exhaust gas cleaning scrubber systems on its vessels was "under study" for some of its larger ships.

Source : HKSG.