March 7, 2019
Japanese shipping major K Line is to launch a significant structural reform in order to improve its profitability from fiscal year 2019.
Namely, the company plans to cancel charter contracts for containerships and small and medium sized dry bulkers worth around JPY 50 billion (USD 447 million) and reduce its market exposure.
As part of its next medium-term management plan, the company intends to improve profitability by concentrating on four business pillars, namely the Dry Bulk, Car Carrier, Energy Resource Transport, and Logistics and Affiliated businesses.
With this implementation of the business structural reforms and changes of other extraordinary income or losses, the company now expects to record a net loss of JPY 100 billion (USD 895 million) for the year ended March 31, 2019, compared to a previously expected loss of JPY 20 billion (USD 179 million) for the period.
K Line revised the forecast of consolidated financial results ending March 2019 because of provision for losses regarding chartering in operating loss, reflection of impact by dry bulker’s weaken market conditions, extraordinary losses related to cancellation of chartering contracts, as well as the change of the timing implementation for extraordinary profit by assets’ sale such as fleets to subsequent period, which results in expansion of net loss attributable to owners of parent.
As to the cost of the business structural reforms, K Line estimated around JPY 65 billion followed with provision for loss related to containerships chartering to Ocean Network Express (ONE), as well as chartering cancellation of containerships and dry bulkers.
K Line determined to record the provision for losses of around JPY 15 billion, as rationally estimable amount, regarding loss related to containerships chartering as well as to carry out cancelling chartering contracts for some of uneconomical containerships and small and medium sized dry bulkers to reduce the exposure to risks from market fluctuation.
Source: (World Maritime News)