K Line’s annual report for the year to March 31, 2023 showed a 24.5% increase in operating revenue to JPY942,606m and and 8.2% increase in profit to JPY694,904m for the financial year.
For its dry bulk business, 2022 began with a tight supply/demand balance due to ongoing COVID congestion, a situation that eased during the year bringing rates lower. China’s zero-COVID policy weighed on China-bound demand over the same period, said K Line.
“Towards the end of the year, market rates increased due to the expectations for the recovery of demand for steel through the economic stimulus package implemented after the end of [the-zero COVID] policy,” the company’s earnings release said.
The dry bulk story was different in the medium and smaller vessel segment, with declining rates early in the year as port congestion eased in China, India’s coal demand slipped and Europe took less steel products.
“However, the market stayed generally firm as well as the Cape-size sector after January this year. Under these circumstances, the Group strived to manage the market exposures appropriately and reduce operation costs and improve vessel operation efficiency,” said K Line.
For the financial year, the Dry Bulk Segment recorded a 12.9% increase in revenue but profit fell by 9.0%.
In its forecast for the dry bulk segment, K Line listed negatives for the sector including inflation, high interest rates, fears of recession and the war in Ukraine, but said that despite all that: “the market is expected to stay firm due to the tightening of the vessel supply-demand balance against the backdrop of the recovery of economic activities in China and limited building of new ships.”
For its car carrier business, K Line said car sales in 2022 were affected by the war in Ukraine and semiconductor shortages impacting parts production, but post-pandemic recovery continued. The outlook for car carriers was positive, as shipments were expected to rise with greater supply of parts. Risks to the segment were seen as similar to those in dry bulk, with geopolitical and global economic pressures holding the potential to limit consumer demand.
K Lines container operations are covered by Ocean Network Express, which issued its results in late April.
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