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MOL bucks downward profit trend

MOL bucks downward profit trend

Tokyo: Unlike its competitors Kawasaki Kisen Kaisha ("K" Line), NYK and Hanjin Shipping, Mitsui OSK Lines has declared an increase in profits for the fiscal year ending March 31 2007. The Japan-based shipping giant saw a 7% increase in net profits to ¥121bn ($1bn) on a turnover of ¥1.568bn ($13bn) - up 14.9%. In drastic comparison, NYK saw a 32.6% decline in profits to $541m ($766m the year before), "K" Line saw a 17.4% profit decline to $428 (from $519m) and Hanjin dropped 4.6% to $496m (from $520m).

Although all four key shipping companies have revealed similar negative market trends such as unfavourable currencylow freight rates in the container sector and increased operating costs due to rising fuel costs, MOL saw improved profits by taking advantage of the dry bulk boom - particularly in the capsize sector.

It attributed the "major increase in profits" to revenue earned through a combination of long term contracts and high spot market rates by its fleet of 650 vessels, which included 37 new vessels- mainly handymax and iron ore carriers.

The other companies, which also declared profits from their dry bulk sectors, anticipate a stronger year ahead on firmer freight rates. A dry bulk analyst said, "The way ahead for shipping companies is in dry bulk. The Baltic Dry Index is the highest it has ever been and if congestion in Australian ports continues the way it is right now and Chinese demand stays consistent, this market will continue to be profitable. I even think there will be enough demand to absorb all the extra tonnage that's due to come out next year."

However, predictions for the tanker market are less optimistic, with Hanjin saying, "We expect the tanker spot markets will decline in 2007 with massive new building additions and limited scrapping.