K Line has become the latest liner operator to forecast a massive fall in net profit in the next year as the liner market adjusts to the post Covid-19 era.
The Tokyo-listed shipowner forecasts net income of just ¥120bn ($891m) for FY2023 as freight rates are expected to settle down as supply chains normalise.
News of the drop in profit for next year came as the company announced a full-year profit of ¥695bn for 2022, just up from the ¥642.4bn seen a year earlier.
For K Line’s containership operation, it was a year of two halves with ordinary income dropping significantly in the third and fourth quarters.
The first half of the year saw it post ordinary income of ¥504bn, but only just over ¥103bn in the second half of the year.
“Ocean Network Express (ONE) showed strong performance in the first half thanks to high freight rates,” the shipowner said.
“Short-term rates fell in the second half of the year along with supply chain normalisation, which caused a recovery in the supply of ships and a decline in transport demand.”
It was a similar situation with K Line’s dry bulk arm where the second half of the year was weaker than the first.
“Although demand in the dry bulk market remained strong in the first half, it decreased in the second half. This stemmed from stagnating cargo movements caused by the zero-Covid measures in China,” K Line said.
“Towards the end of the fiscal year, the market conditions for both capesize and panamax and smaller sizes entered a recovery phase. This was based on expectations of an economic recovery after Chinaʼs zero-Covid policy was eliminated,” the shipowner added.
Late last month, Mitsui OSK Lines forecast a 75% decline in net profit for the 2023 financial year with the Japanese shipowning giant expecting net profit to come in at just ¥210bn.
