NYK Line Expecting $1.9 Billion in Extraordinary Losses

NYK Line has estimated extraordinary losses of about ¥195 billion ($1.89 billion).

Nippon Yusen Kabushiki Kaisha (NYK Line) says that, in the context of a "prolonged slump" within the shipping market, it has estimated extraordinary losses of about ¥195 billion ($1.89 billion) for the interim period of 2016 fiscal year.

The losses are said to include a ¥160 billion ($1.55 billion) impairment loss, along with a provision for losses of ¥35 billion ($340 million) related to contracts.

In terms of write downs on its assets, the extraordinary loss is said to consist of approximately ¥100 billion ($970 million) for container ships, ¥85 billion ($820 million) for dry bulk carriers, and ¥10 billion ($100 million) for cargo aircraft.

"Although the market is projected to recover in the first half of the fiscal year ending March 31, 2017, market indicators have not reached anticipated levels," stated NYK of the liner market.

"In that light, NYK Line has reassessed its outlook for the market from a conservative perspective, and, as a result, deemed it necessary to record an impairment loss as well as a provision for losses related to contracts in connection with its container ships."

NYK also pointed out that the dry bulk segment remains in a slump due to tonnage oversupply and weak demand.

"Against that backdrop, NYK Line has been working to cut costs by selling off or returning (in the case of chartered ships) surplus vessels, and implementing exhaustive measures for improving the operational efficiency of its fleet," explained NYK.

Shipowners' finances have come under increased scrutiny following the collapse of Hanjin at the end of August.