NYK Line braces itself for $1.9bn in extraordinary losses

NYK Line braces itself for $1.9bn in extraordinary losses

Japan’s NYK Line has said it will report ¥195bn ($1.9bn) in extraordinary losses in its results for the second quarter 2016, due to the sustained downturn in liner and dry bulk shipping markets.

The extraordinary loss is comprised of an impairment loss ¥160bn ($1.5bn) plus a ¥35bn ($336.9m) provision for losses related to contracts, according to a filing.

NYK’s containerships will incur a ¥100bn ($962.7m) impairment, plus ¥85bn ($818.3m) for its bulk carriers and ¥10bn ($96.3m) for its cargo aircraft.

“Although the market is projected to recover in the first half of the fiscal year ending March 31, 2017, market indicators have not reached anticipated levels,” NYK said of its ailing liner business.

“In that light, NYK Line has reassessed its outlook for the market from a conservative perspective, and, as a result, deemed it necessary to record an impairment loss as well as a provision for losses related to contracts in connection with its container ships.”

The carrier chose to take a similarly pessimistic approach to its dry bulk business, reassessing its outlook in light of the market “picking up at a slower pace than originally expected, reducing the likelihood of a recovery in the first half of the fiscal year ending March 31, 2017”.

The company had not previously included the losses in its forecasts for its interim and full-year consolidated financial results.

NYK said its is also considering a revision to its planned dividend payments, which were announced on July 29 this year.

The company had expected to pay an interim and year-end dividend of ¥2 ($0.019) per share, respectively, for an annual dividend of ¥4 ($0.039) per share.

The revised dividend will be announced before October 31.

Holly Birkett

Holly is Splash's Online Editor and correspondent for the UK and Mediterranean. She has been a maritime journalist since 2010, and has written for and edited several trade publications. She is currently studying for membership of the Institute of Chartered Shipbrokers. In 2013, Holly won the Seahorse Club's Social Media Journalist of the Year award. She is currently based in London.

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