MOL net profit falls sharply

JAPAN's shipping group Mitsui OSK Lines (MOL) saw its group net income climb 15.7 per cent in the 2005 financial year, although its container division experienced a sharp decline in profits, the company reports.

Consolidated net income increased by JPY15.5 billion (US$140.67 million) to JPY113.7 billion from JPY98 billion in the previous financial year. Consolidated revenue rose 16.5 per cent to JPY1.36 trillion from JPY1.17 trillion in the 2004 financial year.

However, profits at the containerships division fell by JPY18.15 billion (32.5 per cent), due to a steep rise in bunker prices and an increase in other costs, including those of inland transport, terminal costs and canal tolls, MOL says. Ordinary income was JPY37 billion, compared with JPY56 billion in financial year 2004.

Looking ahead to the financial year which began in April, the shipping group anticipates that the containerships division will again experience a large fall in profits, this time by JPY17.5 billion (46.6 per cent) to reach 20 billion. This is because, despite planned cost reductions, bunker prices are forecast to rise by US$60 per tonne and the yen is expected to climb by JPY2.29 against the US dollar.

Revenue in the division is expected to increase by 18.8 per cent to JPY580 billion, thanks to an increase in cargo traffic, the opening of new routes, and an anticipated recovery in freight rates.

The group as a whole expects net profit to decline by JPY8.7 billion (8 per cent) and ordinary income by JPY16.5 billion (9 per cent) in what it calls an adjustment phase. Nevertheless, it expects a JPY113.0 billion (8 per cent) increase in revenue due to fleet expansion in line with anticipated brisk cargo movement.