NYK Expects Loss of $1.9 Bln
The Japanese shipping operator Nippon Yusen Kabushiki Kaisha (NYK Line) will book an ‘extraordinary’ loss totaling 195 billion Japanese yen (U.S. $1.89 billion) for the interim period of its current fiscal year, forced by a deep slump in the shipping market to write down the value of container ships and other assets.
A report in CNBC says the huge writedown is the latest sign of a slowdown in the container shipping sector due to low freight rates and oversupply and comes after the collapse of South Korea's Hanjin Shipping Co Ltd.
“In view of a prolonged slump in the shipping market, NYK Line impaired the operational assets it owns and reduced the acquisition value of assets it plans to own to their recoverable amounts,” the company said.
The extraordinary losses consist of an impairment loss of 160 billion yen and a provision for contract related losses of 35 billion yen. By asset type, NYK will incur an impairment of 100 billion yen for containership operations, 85 billion yen for bulk carrier, and 10 billion yen for cargo aircraft.
The company may revise its full-year financial forecasts, including its dividend, adding it would announce any revisions on Oct. 31 when it reports first-half earnings, says the report.
NYK Line, which was founded in 1885 and counts Mitsubishi Heavy Industries as a major shareholder said it had been selling off or returning surplus vessels and had been scrapping aging vessels, while adding that its subsidiary would take a loss on aircraft sales and lease contracts.
