NYK builds on bulker and container business momentum to triple third-quarter profits
NYK forecasted a full-year net profit of Yen450bn, which is an increase of Yen60bn from its previous calculation, as it banked on better-than-expected third-quarter performance and foreign exchange management to perform more strongly
The positive results were mainly driven by NYK’s gains from the liner business and the capesize segment of its dry bulk business
TOP Japanese line NYK reported more than tripling its third-quarter FY2024 profits to Yen129.5bn ($848.2m), while cumulative profits for the first nine months more than doubled to Yen395.4bn.
In contrast to its compatriot lines, which have previously reported their results, NYK seems sanguine on its full-year prospects, only warning about potential shortfalls in the very large crude carrier and very large gas carrier segments.
As a result, NYK forecasts a full-year net profit of Yen450bn, an increase of Yen60bn from its previous estimate, as it banked on better-than-expected third-quarter performance and improved foreign exchange management.
The results were driven by NYK’s gains from the liner business and the capesize segment of its dry bulk business.
Segment profit from the liner business rose more than five times from the previous corresponding nine-month period to Yen250.2bn as comparative handling volumes and freight rates were higher despite the container shipping market softening after peaking in the second quarter of 2024. NYK attributed this increase to the continued impact of strong cargo movements and the situation in the Red Sea on supply-demand conditions.
Likewise in the dry bulk business, segment profit rose by a third to Yen21.8bn on high market levels in the first half of last year, especially for capes, resulting in better comparative results despite the market softening in the latter half of the third quarter.
The energy segment is where the main impact of China’s slowdown has affected NYK’s business. Nine-month segment profit fell Yen700m to Yen 32.3bn as weak China demand in the third quarter of 2024 dragged VLCC markets lower.
The VLGC market fell on increased capacity from new vessels and decreased Panama Canal drought-induced demand compared to the previous corresponding period.
These drags on performance were balanced by NYK’s medium- to long-term liquefied natural gas carrier contracts.
While warning of a short-term freight rate decline towards the end of the current fiscal year, NYK still expects its liner business to post full-year segment profit of Yen262bn, beating its previous estimate by Yen57bn as third-quarter market levels and profits ended up being higher than expected.
In dry bulk, NYK expects full-year profit to be Yen2bn higher than previously forecast at Yen22bn, implying a 22% rise from FY2023 as it benefited from foreign exchange fluctuations in the third quarter.
And despite dark clouds hovering over the energy transport business, where lower China demand will hit VLCC market levels and increased capacity will impact on the VLGC market, NYK still sees a Yen2bn rise in the segment profit forecast to Yen44bn, although this will mean a Yen2.3bn drop from the previous year’s level of Yen46.3bn.
Traditionally stable earnings from medium- to long-term contracts will be aided by forex gains to boost LNG carriers’ segment profit.
Meanwhile in NYK’s strong car carrier business, firm transport demand bolstered by improving vessel utilisation will see segment profit rise Yen5bn above forecast to Yen115bn a 9% rise from FY2023.
