Japan's K-Line Sees Lower Q1 Income from Energy Transport

Japanese shipping company Kawasaki Kisen Kaisha’s (K-Line) energy transport business generated an ordinary income of yen 1.6bn ($15mn) during the three months to June 30 (Q1), down 11% yr/yr, it said on August 5 in a statement.

K-Line said that income dipped owing to a decline in market rates in the offshore support vessel business. Mid and long term contracts, mainly for thermal coal carrier and LNG carrier businesses, contributed to stable profits, it said. The energy transport segment’s operative revenue during Q1 dropped 6.2% yr/yr to yen 19.2bn.

Overall, K-Line witnessed a negative ordinary income of yen 1bn in Q1 compared with a positive net income of yen 2.7bn in the same period of last year. Total operating revenue for the quarter was yen 152bn, down from yen 183.3bn in the year ago period. “The spread of novel coronavirus (Covid-19) led to lower transport volume, resulting in lower revenues and a loss,” the company said.

For the rest of the year, K-Line expects results to be impacted by the severe business environment caused by the spread of Covid-19. “Although a moderate recovery is expected in the second half, it will be necessary to carefully monitor the situation,” it said.

Due to the decline in operating revenues, the company expects an operating loss of yen 27bn and an ordinary loss of yen 28bn for the full year. The energy transport segment is forecast to see a full year profit of yen 4bn compared with yen 9.9bn in the previous year.

“Energy resource transport segment results are expected to deteriorate overall. While LNG carrier and tanker businesses are delivering stable profits, the offshore energy E&P support business is worsening and operational rates in thermal coal carrier business are declining due to a temporary demand decline,” K-Line said.