Mitsui OSK Lines (MOL) has slashed its profit forecast for next year by almost 30% due to fears over an economic slowdown and the impact from the war in Ukraine.
Japan’s largest-listed shipowner expects full-year net profit to be around ¥500bn ($3.8bn), in figures released Thursday.
“In the fiscal year ending March 2023, there is a risk that our company's businesses will be affected by factors such as the risk of an economic downturn caused by increasing global inflation and fluctuations in transportation demand resulting from the Russia-Ukraine situation,” the shipowner said
“In the dry bulk carrier and energy transportation business, our company is mainly engaged in medium- to long-term contracts. Therefore, fluctuations in the business cycle and transportation demand are expected to have a relatively small impact on business performance.”
“However, fluctuations in market conditions and cargo movements are expected to have a certain impact on our business performance for some short-term contracts.”
“In the product transportation business including containerships, although the direct impact on cargo movement from the situation in Russia and Ukraine is limited, we anticipate that there will be a phase in which transportation demand will weaken due to the slowdown of the world economy or the impact on parts procurement and logistics,” it added.
MOL said the strong cargo movements and the historically high rates seen in the containership business at present are expected to soften during the second half of the fiscal year, due to the slowdown of the world economy and the easing of supply chain disruptions.
MOL said that while it expected the dry bulk market to also remain firm, supported by solid demand for steel raw materials, especially in China, and demand for the transport of grain, the Covid-19 pandemic and border control measures around the world including China associated with this are expected to continue to cause considerable volatility in the dry bulk market.
MOL said it would also need to monitor the car carrier business with regards to the impact that semiconductor shortages, worldwide lockdowns, and the deteriorating Russia-Ukraine crisis would have on sales.
News of the revised profit forecast for next year came as the company reported a net profit of ¥708bn for the 2021 financial year, a near eight-fold increase on the previous 12 months.
The shipowner said shareholders were in line for a year-end dividend of ¥900, taking the total payout to investors for 2021 to ¥1,200 per share.
