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K Line profit shrinks
Profitability of Kawasaki Kisen Kaisha plunged through the first quarter of the financial year despite revenues in most business sectors rising.
K Line’s net income fell to JPY 4.3bn ($41.8m) for the three months to the end of June from JPY 7bn for the same period of last year despite operating revenues rising to JPY 319.8bn from JPY 295.7bn.
The third biggest Japanese shipowner operating a diversified fleet of 560 vessels of 41m dwt said it had been affected by the decline in the dry bulk freight market but benefited from a $22 a tonne fall in bunker costs to $615 a tonne.
The US dollar exchange rate however fell to JPY 102.4 from JPY 97.72.
K Line is predicting net first half income of JPY 11bn down from JPY 14.7bn through the comparable period of last year but a full year result of JPY 18bn up from JPY 16.5bn in 2013.
K Line reports that progress with a cost saving plan has allowed it to upgrade targeted savings for the current year of JPY 13.1bn to JPY 14.2bn.
The containership business saw increased cargo volumes on east – west trades with a “freight restoration” programme and cost savings delivering improved profitability.
But in the dry bulk sector markets continued to be depressed by excess capacity and an adverse supply demand balance.
K Line reports growth in Chinese iron ore imports benefiting the capesize market but a weaker coal trade hitting panamaxes.
K Line is hopeful that the capesize market will improve after the summer season but warns that over capacity will be more persistent in the panamax sector.
In both the tanker and gas carrier trades K Lines says profitability was stable aided by long and medium duration contracts. But spot trading tankers suffered.
Global car transportation demand continued to be steady with most markets up but export volumes from Japan down.
“In the business environment surrounding the shipping industry we saw some negative factors towards our operating results such as a continued shrinking trend in ex-Japan cargoes in car carrier business and declined freight rates market in dry bulk business. However we saw a positive trend in containership business where we saw an upward trend in freight rates for Europe bound routes that had long been low,” noted K Line in a commentary on the result.