Mitsui O.S.K. Lines, Ltd. announces reversal of deferred tax assets and revision of FY2012 outlook
Mitsui O.S.K. Lines, Ltd. today announced a reversal of deferred tax assets, a revision of its consolidated business outlook for FY2012 ending March 31, 2013, costs of business structural reforms, and a revision of the forecast for its year-end dividend, as follows:
As a result of considerable deliberations about the realizability of deferred tax assets, reflecting unprecedented downturn in the dry bulker and tanker markets due to historically high numbers of newly built vessels coming into service, and the severe business environment surrounding the company, the company reversed some of its deferred tax assets and allocated ¥28.6 billion to deferred income taxes in the third quarter of FY2012 ended December 31, 2012. The reversal of deferred tax assets has no impact on the company's cash flow.
The company anticipates an operating loss of ¥18 billion, a ¥5 billion increase over the previous outlook, and a ¥28 billion ordinary loss, a ¥6 billion increase over the previous outlook, due to the slowdown in the dry bulker and tanker markets, a delay in improvement of profits in the containership market, and other factors, compared to the business climate assumed at the time the previous outlook was announced. The company anticipates a net loss of ¥177 billion, which is significantly greater than the previous loss outlook because some of its deferred tax assets were reversed as mentioned above, and the costs of business structural reforms during the fourth quarter of the year will be allocated even though the loss on write-down of investment securities decreased as a result of an improvement in stock market prices for the third quarter of FY 2012.
Particularly, the dry bulker and tanker markets have been in a severe downturn because the vessel supply-demand balance has worsened due to deliveries of many newly built vessels, which continued at a historically high level. Under this difficult market climate, the company will formulate a FY2013 management plan and initiate business structural reforms aimed at restoring its performance. Prior to these reforms, as the highest priority task, the company will carry out advanced initiatives to reform the dry bulker and tanker businesses during the fourth quarter of this fiscal year.
The company anticipates generation of about ¥101.0 billion mainly in extraordinary loss during the fourth quarter of this fiscal year due to the sale of vessels and assignment of the time charter contracts as it implements reforms in the dry bulker and tanker businesses. Through these reforms, the company anticipates an improvement of about ¥40 billion in profits for FY2013, ending March 31, 2014.
The company has revised its forecast for year-end dividend for the fiscal year ending March 31, 2013 from undetermined to none, reflecting a revision of the outlook as explained above, and in consideration of the company's financial condition.