MOL posts massive $1.51bn full year loss

Mitsui OSK Lines’ (MOL) $1.51bn loss of the financial year ended 31 March 2016, hit the costs of restructuring its dry bulk and container shipping businesses.

The JPY170.4bn ($1.51bn) loss in for FY2015 compared to a JPY42.3bn profit in the previous year. Revenues saw a decrease in FY2015 to JPY1.71trn compared to JPY1.82trn in the previous year.

The huge loss resulted from a previously announced JPY179.3bn loss taken in the fourth quarter of the related to the restructuring of its dry bulk and container shipping businesses, which includes the closing down of its MOLBC business in Singapore.

Looking ahead MOL said outlook for the dry bulk was a “severe situation” with little prospect of an increase in iron ore cargo volumes, further declines in Chinese coal imports and a continuing oversupply of vessels.

In the container shipping sector while cargo volumes on the transpacific are expected to be firm it also forecasts a further decline in spot freight rates. On Asia – Europe it said there was concern volumes could remain stagnant till the summer. On the Asia – South America corridor it is forecasting a “severe market environment”.

Looking at the tanker market MOL is forecast a growing gap between demand and supply in the VLCC sector driven by newbuilding deliveries. In the product tanker sector it forecast comparatively firm cargo volumes, especially in the Pacific, but a worsening of the demand and supply situation.

“In consideration of these prospects, we will work to recover our business performance through various means including more stringent cost reductions through improvements in operation efficiency, strengthening of our cross-divisionally coordinated, global sales capabilities to better serve customer needs, and steady implementation of business structural reforms in the dry bulker business and containership business,” MOL said.

The company is forecasting a JPY20bn profit for the financial year ended 31 March 2017, with revenues of JPY1.51trn.