NYK Line has become the latest of the big listed Japanese shipowners to post a sizeable decline in its financial performance for the first quarter.
The Takaya Soga-led shipowner posted a 78.6% decline in net profit for the first three months of the year to ¥73.4bn ($510m), figures released on Thursday show.
Revenue for the first quarter was down 15.7% to ¥567.5bn, while the shipowner’s operating profit dropped by 47.2% to ¥47.1bn.
“In the container shipping division … the weak global cargo demand and alleviation of port congestion caused spot freight rates to fall, which also impacted the service contract renewals, and profit levels fell,” NYK Line said.
“Within the main trades, liftings were generally unchanged compared to the same period last year in the North America trade, but they fell year on year in the Europe trade.”
In the bulker sector, NYK Line said efforts were made to reduce the impact of market volatility by managing exposure, but due to the delayed recovery in China’s economy, market levels for each vessel segment fell compared with the strong levels in the same period last year.
In the car carrier space, supply-and-demand conditions were described as “tight” as a result of robust transportation demand.
“Transportation volumes increased year on year through increased vessel utilisation resulting from optimised vessel deployment and operations,” NYK Line said.
In the energy segment, NYK Line said the VLCC market was strong and greatly improved from the low levels during the same period last year.
In the LPG sector, the shipowner said VLGC markets improved compared with the same period last year, as supply and demand for space tightened due to increased long-distance shipments.
Market outlook
Looking ahead, NYK Line has revised its interim and autumn-year profit forecasts up by 4.3% and 10% to ¥120bn and ¥220bn, respectively.
For the liner market, NYK Line said that although transportation demand is expected to recover to a certain extent from autumn, the extent of the recovery will likely be smaller than initially forecast, and profit levels are expected to fall slightly.
Elsewhere, NYK Line said transportation demand is expected to remain strong in the automotive business division following strong sales demand and the greater than initially anticipated recovery in finished car volumes due to improvements in the semiconductor shortage.
For dry bulk, NYK Line said the market assumptions from the second quarter have been lowered compared with the initial forecast due to ongoing uncertainty regarding the economy in China.
Meanwhile, in the energy business division, the VLCC and VLGC markets are expected to remain firm from the second quarter, while earnings in the LNG carrier business will also be steady based on its strategy of medium to long-term contracts, the shipowner added.
