In the dry bulker business, the market is deteriorating to a new record low due to the imbalance of fleet supply and demand, along with stagnant cargo trade resulting from the slowdown in China’s economy since last fall, says Mitsui O.S.K. Lines, Ltd.
Regarding the containership business, cargo volume, mainly for Europe and emerging countries, hovered at low levels while a succession of newbuilding vessels came into service, keeping freight rates at historic lows.
Although the Company expects the market to recover to some extent, in light of its uncertainties it decided to implement structural reforms in these businesses to address the abruptly changing business climate.
In regard to dry bulkers, the Company is further reducing the number of free Capesize vessels, while withdrawing from offering excess tonnage in the free-vessel market for Panamax and other mid- and small-size bulkers.
Instead, the Company will focus on meeting the major transportation demands of our customers.
Also, in regard to the containership business, the Company will reinforce its business structure and forge ahead to improve the bottom line, centered on thorough efforts to capture more profitable cargoes, based on reducing fixed costs through rationalization, mainly on North-South routes, and fleet reductions focused on mid-size vessels.
As soon as the details of each measure are determined, the Company will separately announce them in accordance with timely disclosure rules.
The Company made a downward revision of its full-year FY2015 forecast for operating income and ordinary income from the previous forecast in consideration of a significantly weaker than anticipated dry bulker market despite the tailwind of lower bunker prices, as well as a delay in recovery of containership freight rates.
The Company also made a large downward revision of its forecast for net income/loss based on the plan to record costs for business structural reforms as described below, anticipating a loss of ¥175.0 billion.
