ONE Drags Down NYK Line Earnings
Container line joint venture Ocean Network Express (ONE) dragged down NYK Line in the first half of 2018 ended September 30 with with Japanese shipping group in the red.
NYK Line reported a loss of JPY 9.7 billion for the six months ended September 30, compared with a JPY6.2 billion profit a year earlier. The consolidated revenues amounted to JPY 915.6 billion, down from JPY 1,064.2 billion in the same period of the previous fiscal year.
The new shipping line ONE, which was established with the aim of integrating the container shipping business with those of Kawasaki Kisen Kaisha, Ltd. and Mitsui O.S.K. Lines, Ltd. started offering service from April 1, 2018.
However, immediately after the start of the business, a disruption to the service occurred, causing a drop in loading volumes and slot utilization.
"The impact of this resulted in a loss being recorded," said the Japanese shipping major.
In addition, NYK Line incurred significant one-time costs following the termination of the container shipping business mainly in the first quarter. In the Air Cargo Transportation segment, the company’s consolidated subsidiary Nippon Cargo Airlines Co., Ltd. grounded all 11 of its aircraft from the middle of June in order to confirm the soundness of the aircraft.
Also, an extraordinary loss was recorded due to an impairment loss on some of the aircraft and spare engines owned by the company. On the other hand, in accordance with the policy of reducing the strategic shareholdings, some of the securities held by the company were sold, and the gain on sales of investment securities was recorded as an extraordinary income.