Japan's NYK Line Sees COVID-19 Cutting Profit by $557M

Japanese shipping company Nippon Yusen KK expects the coronavirus pandemic to reduce its recurring profit by 50-60 billion yen ($464 million-$557 million) for the year to next March, an executive said on Monday.

"Our assumption is that the worst impact from the pandemic will be seen in the April-June quarter, with economic activity slowly picking up after that," Toru Maruyama, a corporate officer at Nippon Yusen, told a news conference.

Global container demand, which is currently down more than 20%, will likely drop more than 10% for the year to next March from a year earlier amid the COVID-19 crisis, he said.

The company may consider selling and scrapping car carriers, depending on demand, he said, adding the transportation volume of vehicles would likely drop around 50% in the April-June period.

"The dry bulk market is facing a historic low (in terms of prices), though shipments have not declined from a year earlier," Maruyama said. The market is expected to recover in and after the July-September quarter, but that will not be enough to compensate for the current deterioration, he said, forecasting a lower annual profit for the segment.

As for [cruise] ships, all cruises with return dates up to late August have been canceled, he said.

The company has largely secured 120 billion yen through long-term loans to pay most of the planned redemptions by the end of March while securing a credit line of 230 billion yen from banks, he added.

Nippon Yusen reported a 44.5 billion yen recurring profit in the year that ended March 31, turning around from a recurring loss of 2.1 billion yen a year earlier. It forecast no recurring profit for the year to next March.

($1 = 107.7100 yen)

 (Reporting by Yuka Obayashi; Editing by Mark Potter)