NYK Line posts full year results

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Jan 2009

Nippon Yusen Kabushiki Kaisha (NYK Line) announces the following statement of accounts for the period from April 1, 2008 to December 31, 2008. For the third quarter (October 1, 2008–December 31, 2008), NYK Line posted consolidated revenues of 611.4 billion, compared with ¥680.7 billion for the same period last year, operating income of 36.5 billion, compared with 57.9 billion last year, recurring profit of 27.2 billion, compared with 56.5 billion last year, and net income for the quarter of ¥18.9 billion, compared with ¥38.1 billion for the same period last year.
Overview
Overall consolidated revenues for the nine months ended December 31, 2008, were ¥69.2 billion, or 10.2%, lower compared with the nine months ended December 31, 2007. This mainly reflects a decline in freight rates due to a steep drop in the dry bulk market as well as weakening container transport levels brought on by the global economic downturn and a reduction in volumes handled in the logistics, terminal and harbor transport, and air cargo transportation segments. Costs and expenses were down ¥45.4 billion, or 8.1%, compared with the year-ago period, but surging bunker oil prices and other factors put upward pressure on costs, and as a result, operating income decreased ¥21.3 billion, or 36.9%, compared with the year-ago period, and the ratio of operating income to revenues
decreased from 8.5% to 6.0%, a decline of 2.5 percentage points. Non-operating income worsened due to an increase in foreign exchange losses and a decrease in equity in earnings of unconsolidated subsidiaries and affiliates, and as a result, recurring profit decreased ¥29.2 billion, or 51.8%, and net income decreased ¥19.1 billion, 50.3%, compared with the year-ago period, both significant declines.
Segment Information
Three Months Ended December 31, 2008 (October 1, 2008 – December 31, 2008)
Liner Trade
Liner trade revenues were down substantially. Although freight rates improved on some routes, including North American and Latin American routes, average freight rates dropped substantially mainly on European routes as freight transport dipped into negative growth and freight volume decreased on container routes overall. Although we worked to reduce fuel consumption and streamline service operations, we were squeezed both revenue- and cost-wise by surging bunker oil prices and the yen’s rapid appreciation against other currencies, and consequently the liner trade segment substantially underperformed compared with the year-ago period.
Bulk Shipping
Car Carrier Division
We expanded shipping capacity by adding four newly constructed vessels, but carrier transport volume remained mostly flat compared with the year-ago period as the impact of the financial crisis spread beyond Europe and the U.S. and began affecting levels of transport bound for some emerging countries as well.
Dry Bulk Carrier Division
The dry bulk market fell precipitously to historically low levels as markets for commodities such as crude oil retreated rapidly in the face of fears of a global recession. Further, the world’s major steel makers and resource companies began to cut production levels as demand for iron ores dropped, which saw sea transport volumes plummet. As a result, the division recorded substantially lower profit compared with the year-ago period.
Tanker Division
Although demand for crude oil was clearly slowing and the market for crude oil carriers was soft, the market for petroleum product carriers was stronger compared with the previous fiscal year’s levels. As a result, the tanker division as a whole achieved higher revenues and profits compared with the year-ago period.
Revision of Earnings Forecasts
We have revised down our performance forecast for the fiscal year ending March 31, 2009, to revenues of ¥2,500.0 billion, operating income of ¥159.0 billion, recurring profit of ¥156.0 billion, and net income of ¥73.0 billion.
Crude oil prices are in decline, but private-sector capital expenditure and personal spending remain in the doldrums due to the deepening financial crisis in Europe and the U.S. and the economic slowdown.
We therefore expect transport volumes to drop markedly and freight rates to decline substantially in response. With little prospect for a recovery in demand for iron ores, particularly in China, we expect non-shipping segments such as logistics and air cargo transportation to be seriously impacted by the resulting downturn in the dry bulk market and the slump in electronics and automobile related industries.
We also expect the strong yen and other factors to make for a tough fiscal forth quarter. Given these factors, we have downwardly revised full-year forecasts as detailed above.
Basic Policy on Profit Distribution and Revision of Dividend Forecast
We consider the return of profits to shareholders one of its highest priorities, and sets dividends with due consideration given to its performance outlook, dividend payout ratio, and other factors in accord with a basic policy of maintaining a stable dividend payment. However, the impact of the current unprecedented global recession is now spreading rapidly in the fiscal fourth quarter, and sea transport operators face an extremely challenging business environment. We have revised our earnings forecast accordingly. In light of the revised forecast and our dividend payout ratio, and in the aim of maintaining sufficient internal reserves to withstand market volatility, we revised our year-end dividend forecast, previously issued on October 27, 2008, to ¥2 per share (total annual dividend of ¥15, payout ratio of 25.2%).

Source: NYK Line