K Line has reported a return to profit in the second quarter, but it was not enough to generate a year-on-year improvement in its half-year result.
The company made net income of ¥10.6bn ($101.6m) for the three months ending on 31 October, reversing the first-quarter net loss of ¥1bn.
However, the first-half performance of ¥9.6bn could not match the ¥16.3bn achieved in the corresponding period in the 2019 fiscal year.
K Line’s dry bulk business posted a second-quarter loss of ¥9.2bn as revenues fell by almost 25% year on year to just over ¥88bn.
“While market conditions of the capesize, panamax and smaller size vessels saw recovery trends in the second quarter … market conditions in the first quarter due to Covid-19 impacted on the voyages completed in the second quarter,” it said.
In contrast, K Line’s product logistics segment, which includes car carriers and containerships, saw a year-on-year improvement of 80% in net profit to ¥18.7bn.
“While the car carrier business struggled due to a plunge in transport volumes, the business recovered faster than expected and results surpassed earlier forecasts,” K Line said.
Strong improvement in profitability
“In the containership business, Ocean Network Express (ONE) posted a strong improvement in profitability as freight-rate market conditions remained firm in addition to flexible vessel deployment in line with cargo volume and cost-saving initiatives.”
K Line's energy resource transport segment also reported a weaker first-half performance, with net profit down 26% to ¥3.4bn.
While the tanker, thermal coal carrier, and LNG carrier businesses were described as "stable overall", the offshore support vessel market remained weak due to decline in oil prices, the shipowner said.
K Line plans to implement cost cutting and other measures to raise profitability for the second half of the year.
Looking ahead, K Line said that while the second half business environment is expected to remain severe due to the spread of Covid-19, global economy activity was expected to gradually recover.
For the dry bulk sector, K Line said there are "signs of a recovery" in the supply-demand balance as nations implement economic stimulus measures. However, a full-scale recovery is expected to take time, it said.
The shipowner has forecast a full-year net profit of ¥20bn, up from its previous forecasts made in the first quarter of breaking even.
