K Line expects to ride out China volatility in FY2024, announces change of chief executive
The major management succession announcement comes after Yukikazu Myochin’s highly respected run at the head of K Line since 2019
K Line warned that there were causes for concern, such as uncertainty over trade policies under the new US administration and the continuing impact of the situation in the Middle East
K LINE expects to see better full-year profits for FY2024, despite a softening in the capesize market towards the end of last year.
The softer market was due to a slowdown in the Chinese economy, which caused a decline in iron ore cargo movements and a growing sense of excess vessel capacity, K Line said in a press release.
This will mainly be driven by the gains from steady market conditions from the beginning of the first quarter, which continued through the first nine months of the year.
In addition, although the panamax and minor bulks segment slipped into overcapacity in the third quarter due to a decrease in grain shipments from South America, this was balanced by steady demand for coal and steel transport.
K Line’s FY2024 profit is expected to more than double to Yen300bn ($1.9bn) from Yen132.7bn in the previous corresponding period. Third-quarter profit saw a dramatic improvement rising more than 10-fold to Yen101.4bn from Yen10.8bn in the third quarter of FY2023, driven mainly by short-term freight rate rises in the containership business at Ocean Network Express.
Dry bulk segment profit is expected to more than quadruple to Yen14.5bn on the improvement in the cumulative results up to the third quarter. This saw a Yen14.6bn rise in segment profit to Yen16.2bn in the first nine months of the year.
However, K Line warned going forward that “there are causes for concern such as uncertainty over trade policies under the new US administration and the continuing impact of the situation in the Middle East.” It added that “market conditions are expected to remain firm against the backdrop of limited delivery volume for new vessels.”
The smallest of the major Japanese lines saw its energy resource transport segment manage to secure stable profits backed by medium- to long-term charter contracts.
Segment profit rose Yen1.8bn to Yen6.3bn in the first three quarters, from Yen4.5bn in the previous corresponding period.
Looking ahead, K Line warned that although this business secured stable profits backed by medium- to long-term charter contracts, income decreased year on year due to temporary factors and this would result in a Yen1bn fall in expected segment profit to Yen6.5bn.
K Line separately announced that chief executive officer Yukikazu Myochin would become chairman and current senior managing executive officer Takenori Igarashi would take over as chief executive, subject to approval at a board meeting after March 28.
The major management succession announcement comes after Myochin’s highly respected run at the head of K Line since 2019.
He will be ably succeeded by Igarashi, another company veteran that has been with K Line since 1991 and became the general manager of the corporate planning group in 2016 before making progress in the C-suite over the eight years till his latest promotion to the head of the company.