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(TOKYO) Nippon Yusen KK and Kawasaki Kisen Kaisha Ltd, Japan's largest and third-largest shipping lines respectively, forecast full-year losses as recessions in the US and Europe slashed demand. Nippon Yusen fell the most in more than 10 weeks.
Nippon Yusen expects its first unprofitable year in 23 years, forecasting a loss of five billion yen (S$76 million) for the year ending March 31, compared with an earlier net income forecast of 18 billion yen, it said in a statement in Tokyo yesterday.
Kawasaki Kisen forecast a loss of 31 billion yen for the same period, compared with an earlier profit prediction, it said separately.
The recession has choked demand for furniture, building materials and consumer electronics in the US and Europe, driving down shipping rates. Nippon Yusen has slashed its fleet expansion by 15 per cent and laid up container ships this year to stem declines in shipping rates as demand slumps.
'It's tough all round for the shipping lines,' said Osuke Itazaki, an analyst in Tokyo at Credit Suisse Group. 'The container segment is suffering and even though the dry-bulk market is rebounding, it's still below last year's levels.'
Mitsui OSK Lines Ltd, operator of the world's largest merchant fleet, lowered its profit forecast by 25 per cent to 30 billion yen for the period ending March 31, from 40 billion yen, it said in a statement yesterday.
Nippon Yusen shares fell 4.6 per cent to 399 yen as of the close of trading in Tokyo. Mitsui OSK declined 3.5 per cent to 599 yen and K-Line, as Kawasaki Kisen is also known, slid 4 per cent to 362 yen.
Japan's shipping lines have also been hurt by tumbling car exports as demand in the US, the world's largest car market, shrank to the least since 1981.
Nippon Yusen carried 51 per cent fewer cars in the first quarter, Mitsui OSK transported 56 per cent fewer and K-Line had a 57 per cent drop.
'The drop in the number of automobiles we transported was sharper than we expected,' Mikitoshi Kai, head of investor relations at the shipping line, told reporters in Tokyo yesterday.
Nippon Yusen posted a first-quarter loss of 18.9 billion yen, hurt by falling shipping rates and demand for cargo vessels as sales declined 44 per cent to 380 billion yen. K-Line had a first-quarter loss of 14.9 billion yen as sales plunged 45 per cent to 192 billion yen.
Mitsui OSK recorded a first-quarter loss of 13 billion yen as sales fell 41 per cent to 297 billion yen.
The Baltic index, a measure of commodity-shipping rates, tumbled 72 per cent on average last quarter. The index averaged 2,714 points in the three months ended June 30, compared with 9,751 points in the same three-month period a year earlier.
Shipments to the US from Asia fell for a 20th month in May, slumping 26 per cent, according to figures from the Japan Maritime Center.
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