Slow Steaming, Service Changes Narrow NYK Line Losses

NYK Line said the global economy and fuel costs will hurt its results this year

Nippon Yusen Kabushiki Kaisha (NYK Line) [TYO:9101] said that for the six months ended September 30, 2012 it narrowed its net loss to ¥4.1 billion ($52 million) on revenues of ¥944 billion ($11.8 billion), from a net loss of ¥12 billion ($150 million) on revenues of ¥911.1 billion (11.4 billion) for the same period last year.

NYK Line said it saved money through service reductions, route rationalisations, and cost-cutting efforts including slow steaming, in a period it said was characterised by a tepid U.S. economic recovery, a weakening European economy hindered by persistent uncertainty over the fiscal outlook, and slowing economic growth in China and India.

The price paid for bunkers during the period rose almost 7.3% to $688.70 per metric tonne (pmt) from $642.01 pmt in the period last year.

Looking ahead, NYK halved its recurring profits forecast for the year ending March 31, 2013 to ¥20 billion ($249 million), compared with the ¥40 billion ($498 million) it had predicted in July, saying "the global economic outlook remains clouded in the second half of the fiscal year."

"The severe environment surrounding the shipping industry is expected to continue while yen appreciation persists and bunker fuel prices remain high," it said.

The firm also revised up its bunker price forecast for its full year ending March 31, 2013 to $669.35 pmt, previously $666.70 pmt.

In the face of a supply-demand imbalance, the company said it will continue slow steaming, laying up vessels, and scrapping vessels, but it said the measures may not result in bottom-line improvements.

It has also been focused on improving fuel efficiency through efforts including optimising route planning, and vessel management in its liner trade.

Last month, the company said it will add four new Pure Car and Truck Carriers (PCTCs) that will improve per vessel fuel performance by about 30 percent.