Nippon Yusen Raises Annual Net Income Forecast on Container-Ship Rebound

(Corrects description of company in first paragraph.)

Nippon Yusen K.K., Japan’s largest shipping line by sales, increased its full-year net-income forecast as demand rebounded for container shipments to the U.S. and Europe.

The company expects a profit of 76 billion yen in the year ending March 31, compared with a previous forecast of 68 billion yen, it said in a statement today. Mitsui O.S.K. Lines Ltd., operator of the world’s largest merchant fleet, and Kawasaki Kisen Kaisha Ltd. also raised their operating-profit forecasts.

The three Tokyo-based shipping lines all posted first-half profits after year-earlier losses because of peak-season surcharges and increased shipments of electronics and building materials to the U.S. and Europe. Consumer spending in the U.S., the world’s biggest economy, rose more than forecast in August.

“They’re doing massively better than a year ago,” said Janet Lewis, an analyst at Macquarie Capital Securities (Japan) Ltd. “Container ships are doing fantastically.”

Mitsui O.S.K. expects an annual operating profit of 130 billion yen compared with a previous forecast of 120 billion yen, it said in a statement today. K-Line raised its operating-profit forecast to 69 billion yen from 57 billion yen. Both companies’ net income forecasts were unchanged.

In the half ended Sept. 30, Mitsui O.S.K. had net income of 48.3 billion yen, compared with a loss of 9.9 billion yen a year earlier. Nippon Yusen reported net income of 44.4 billion yen, from a loss of 29.4 billion yen. K-Line made a profit of 26.3 billion yen, rebounding from a loss of 43.3 billion yen.

Shipping Rebound

Shipments to the U.S. from Asia rose for an eighth month in July, gaining 14 percent from a year earlier, according to figures from the Japan Maritime Center. Nippon Yusen in June said it was planning to add an extra $200 per 20-foot container on Asia-North America routes through September.

Mitsui O.S.K. fell 1.4 percent to 511 yen at 12:58 p.m. in Tokyo trading. K-Line dropped 1 percent to 309 yen, while Nippon Yusen declined 0.6 percent to 335 yen. Mitsui O.S.K. has risen 4.5 percent this year, trailing a 17 percent gain for K-Line and an 18 percent gain for Nippon Yusen.

Japanese container shippers’ profit rebound has been limited by declines in the dollar against the yen.

The U.S. currency averaged 85.77 yen in the second quarter, compared with 93.58 a year earlier, and sank to a 15-year low last quarter.

Mitsui O.S.K. estimates that a 1 yen gain against the dollar would push down annual current profit by 1.4 billion yen.

The dollar is down 5.3 percent this fiscal year from the previous 12-month average. The Japanese currency has averaged about 87.91 yen to the dollar this fiscal year, versus 92.87 yen last year.

To contact the reporter on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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