Nippon Yusen to cut fleet expansion by 10 percent
Nippon Yusen K.K., Japan’s largest shipping line, will slash fleet expansion plans by 10 percent as it scraps some ships and returns others to owners amid slumping demand for transporting cars and containers. Nippon Yusen will expand its fleet to about 850 ships by the end of March 2011, compared with earlier plan of 940 ships Yasumi Kudo, president of the shipping line, said in an interview in Tokyo yesterday. It had 776 vessels at the end of March 2008.
Nippon Yusen, the world’s largest operator of ships for transporting cars, said last month net income probably fell 88 percent for the year ended March 31. Japan exported 64 percent fewer vehicles in February, the biggest drop since the Japan Automobile Manufacturers Association began keeping figures in 1973 as Toyota Motor Corp. and Honda Motor Co. slashed production.
“It’s a drastic change in their fleet expansion,” said Yoku Ihara, head of equity research at Retela Crea Securities Co. “This fiscal year will see a sharp bottom in their earnings.”
Nippon Yusen slid the most in two weeks to 438 yen at the close of trade in Tokyo today. It is down 20 percent this year.
Nippon Yusen last month said net income probably fell to 14 billion yen ($140 million) for the year ended March 31, after a record profit of 114 billion yen for the previous fiscal year. Operating profit was probably 139.5 billion yen, it said.
Reducing Container Ships
“Shipping demand has yet to rebound,” said Kudo. “Operating profit will be lower this fiscal year.” He declined to comment on the size of the decline in profit.
Nippon Yusen will cut planned capital spending by at least 10 percent over the three years to March 2011, Kudo said. The company had planned to spend about 1.37 trillion yen on new vessels. The shipping line will not cancel existing orders and the savings will come from orders that had not been placed, he said.
Nippon Yusen plans to reduce container ship capacity by 10 percent as early as this month, through a combination of laying up and scrapping ships, Kudo said.
Container Unit Loss
“Shipping rates have fallen too much,” he said. “We’re expecting another loss this fiscal year for our container business.”
The shipping line in January predicted a 19 billion yen pretax loss for its container unit in the fiscal year ended March 31, compared with an 11.5 billion yen pretax profit in the previous fiscal year.
Nippon Yusen has mothballed about eight vessels so far, where it has removed the crew from them. It is laying up about 20 container ships, including vessels where the crew have been removed and ones where a crew is still on board while the vessel is in dock.
“Even if we keep the crew on board we’re still saving on the fuel costs we would have to pay if we were operating the ships,” Kudo said.
Tighter lending and rising unemployment in the U.S., the world’s biggest auto market, led to a 37 percent decline in Japanese vehicle sales in the country last month.
Japan’s car exports will probably drop about 30 percent this year, to about 4 million cars, from 6 million last year, Kudo said.
Nippon Yusen, the world’s largest operator of ships for transporting cars, said last month net income probably fell 88 percent for the year ended March 31. Japan exported 64 percent fewer vehicles in February, the biggest drop since the Japan Automobile Manufacturers Association began keeping figures in 1973 as Toyota Motor Corp. and Honda Motor Co. slashed production.
“It’s a drastic change in their fleet expansion,” said Yoku Ihara, head of equity research at Retela Crea Securities Co. “This fiscal year will see a sharp bottom in their earnings.”
Nippon Yusen slid the most in two weeks to 438 yen at the close of trade in Tokyo today. It is down 20 percent this year.
Nippon Yusen last month said net income probably fell to 14 billion yen ($140 million) for the year ended March 31, after a record profit of 114 billion yen for the previous fiscal year. Operating profit was probably 139.5 billion yen, it said.
Reducing Container Ships
“Shipping demand has yet to rebound,” said Kudo. “Operating profit will be lower this fiscal year.” He declined to comment on the size of the decline in profit.
Nippon Yusen will cut planned capital spending by at least 10 percent over the three years to March 2011, Kudo said. The company had planned to spend about 1.37 trillion yen on new vessels. The shipping line will not cancel existing orders and the savings will come from orders that had not been placed, he said.
Nippon Yusen plans to reduce container ship capacity by 10 percent as early as this month, through a combination of laying up and scrapping ships, Kudo said.
Container Unit Loss
“Shipping rates have fallen too much,” he said. “We’re expecting another loss this fiscal year for our container business.”
The shipping line in January predicted a 19 billion yen pretax loss for its container unit in the fiscal year ended March 31, compared with an 11.5 billion yen pretax profit in the previous fiscal year.
Nippon Yusen has mothballed about eight vessels so far, where it has removed the crew from them. It is laying up about 20 container ships, including vessels where the crew have been removed and ones where a crew is still on board while the vessel is in dock.
“Even if we keep the crew on board we’re still saving on the fuel costs we would have to pay if we were operating the ships,” Kudo said.
Tighter lending and rising unemployment in the U.S., the world’s biggest auto market, led to a 37 percent decline in Japanese vehicle sales in the country last month.
Japan’s car exports will probably drop about 30 percent this year, to about 4 million cars, from 6 million last year, Kudo said.