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Mitsui OSK Lines reports 18% drop in first half profit hit by lower tanker rates

Mitsui OSK Lines reports 18% drop in first half profit hit by lower tanker rates
Japan “big three” shipowner Mitsui OSK Lines (MOL) reported a half-year net profit of JPY13.1bn ($116.4m) down 18.3% from JPY16.1bn a year earlier.

The fall in profits for the first half of FY2017 ended 31 March 2018 came despite a 14.8% rise in revenues to JPY818.9bn for the period compared to JPY713.5bn in revenues for the first half of FY2016.

MOL saw an improvement in the bottomline for its dry bulk and container shipping businesses, however, saw profits shrink for its energy transport business.

Dry bulk shipping reported a first half ordinary profit of JPY7.9bn compared to JPY5.4bn a year earlier. Container shipping remained in the red but losses narrowed to JPY4.4bn for the first half of FY2017, against a JPY21.3bn loss in the same period a year earlier. MOL’s tanker business saw profits reduce by 67.5% in the first half of FY2017 to JPY4.9bn compared to JPY15.3bn a year earlier.

MOL noted the low rate levels in the tanker market which had enjoyed a strong period in 2015 and 2016.

“The very large crude oil carrier (VLCC) market has remained at low levels due to factors that include permeating adverse effects of decisions by OPEC countries to reduce oil production along with arrival of the spring and summer low-demand period, combined with other factors such as a steady pace of new vessel deliveries,” MOL said.

“The product tanker market continued to proceed weakly from the first quarter due to factors such as a slowdown in cargo volumes between East and West along with pressures of supply arising from new vessel deliveries, despite a brief surge in the market brought about by a hurricane striking the US.”

MOL maintained a full year FY2017 net profit outlook of JPY12bn implying and unprofitable second half of the year.

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