Giant Japanese shipowner NYK lifted its operating profits by 38.5% in the first half of 2022 and reported a 92.7% increase in recurring profit despite demand slowing in the liner sector.
NYK said its operating profit for the six months to the end of September rose to ¥163bn from ¥118bn in the previous year’s period, while its recurring profit was ¥765bn. Revenues rose ¥314bn to ¥1.366bn.
The group said ¥573bn in non-operating income was recorded from its share in Japanese liner conglomerate Ocean Network Express (ONE), although container shipping demand slowed due to inflation and high consumer goods inventories in Europe and the US.
Despite spot freight rates also falling recently, NYK said ONE maintained freight rates at high levels throughout the first half, with transpacific sailings voided as demand reduced and port congestion continued.
Weaker cargo demand also resulted in lower shipment volumes on Asia-Europe trades, and both liftings and utilisation declined as NYK said the business environment in which ONE operates is starting to change.
“However, although freight rates will likely fall further in the second half as transportation demand slows, full-year profit levels are expected to remain high,” it said.
Tanker earnings are expected to stay firm, while dry bulk markets underperformed last year, NYK added, with the group forecasting operating profits for the full year will lift to ¥270bn from a previous prediction of ¥250bn.
Dividends have been increased by ¥50 per share from the previous forecast to ¥1,050 per share as the group targets a consolidated payout ratio of 25%.
NYK president Hitoshi Nagasawa said: “We have designated the stable return of profits to shareholders as one of the most important management priorities.”
In the first six months, NYK said its dry bulk capesize operations temporarily recovered after a seasonal market correction that ended in late April plus increased vessel waiting times due to the lockdowns in China combined with more active shipments of coal.
But the unseasonal rise in market levels was subsequently followed by a rapid fall, and from June, increased concerns about slowing global economic activity caused the market to drop further to unusually low levels in August and September, NYK said.
Strong cargo volumes of grain and coal caused panamax markets to remain at levels exceeding the previous year until May, but levels declined in line with the deterioration in the capesize market after that, it added. Handymax and handysize segments performed similarly.
In the energy business, VLCCs rebounded off market lows from July, and after oil prices fell in mid-August following the release from the US strategic petroleum reserve it meant shipments from there and the Middle East rose to destinations in Europe and Asia.
The situation in Ukraine and Russia caused petrochemical and LPG supply-and-demand conditions to tighten, with markets trending at levels exceeding the same period last year on support from strong shipments to Europe.
An extraordinary loss was recorded in relation to LNG transportation involving the Sakhalin 2 project due to sanctions on Russia, but otherwise, LNG carrier results were steady based on support from long-term contracts.
Lower cargo volumes are also affecting the group’s ocean freight forwarding logistics and air freight businesses.
