5 February 2024 (Lloyd's List) - NYK Line and K Line have joined their Japanese peer Mitsui OSK Lines in forecasting a slump in full-year earnings, amid a sharp correction in container shipping markets.
But NYK, the largest of trio sharing similar business portfolios, noted the Red Sea crisis since late last year has provided some lift. It expected net profits for fiscal year ending March 2024 to reach ￥200bn ($1.4bn) , compared to the year-ago level of more than ￥1trn.
K Line, the smallest, predicted a surplus of ￥105bn, down nearly 85% year on year.
The two also forecast a 10.6% and 2.6% drop in full-year revenue to ￥2.3trn and ￥940bn, respectively.
Both cited weakened box shipping rates, which boomed during the pandemic, as a main reason for the decline.
“Although new ships continue to enter service, the demand for space has increased recently due to the impact of the situation in the Red Sea,” said NYK, adding this has been incorporate into its forecasts.
The three Japanese shipping groups, parents of Singapore-based container line, Ocean Network Express, last month decided to halt ship entry into the Red Sea amid escalating attacks from the Houthis against merchant ships.
NYK and K Line pointed to robust car shipping as a bright spot. Other segments like bulkers, tankers and gas carriers should hold steady owing to thin orderbooks or decent demand.
“Despite concerns about global economic stagnation, geopolitical risks and other factors for the automobile sales market worldwide, vehicle production and shipments are expected to continue recovering from the previous fiscal year,” said K Line.
For the third quarter between October and December, NYK’s net profits dipped 75% to ￥40.1bn, while K Line’s slid 86.3% to ￥10.8bn.
