MOL declares loss in H1 11

Mitsui O.S.K. Lines has revised its financial forecast for the first half of its financial year ending September 30, 2011 from a profit to a loss. Revenue is expected to be higher, from JPY 720 billion to JPY 725 billion (USD 9,452 million), but an operating loss (EBIT) of JPY 9,000 (USD 117.5) million is now expected instead of a profit of JPY 3,000 million.

Ordinary income (before tax) is expected to change from a profit of JPY 3,000 million to a loss of JPY 14,000 (USD 182.8) million and the bottom line result is predicted to fall from a profit of JPY 1,000 million to a loss of JPY 17,000 (USD 222) million.

The revision is said to be necessary because of ‘a significant deterioration in profits due to about JPY 8 billion in extraordinary losses stemming from a write-down of investment securities that form part of its owned shares because of the decline in stock market prices, and such factors as falling container freight rates in the Asia-Europe and Asia-North America routes, a downturn in the tanker market, and the appreciation of the yen’.

MOL is now reviewing the consolidated business outlook for FY2011, ending March 31, 2012 (April 1, 2011-March 31, 2012), and plans to issue an updated outlook when announcing the consolidated financial results for the first half of FY2011 (scheduled for October 31, 2011).

MOL's result demonstrates that it is not just the container industry that is in financial difficulty, as its ordinary income from container operations (JPY 38.9 billion) only represented 32% of the Group's total in its last financial year. During the period the Group's revenue reached USD 18.5 billion, out of which an operating profit (EBIT) of USD 1,484 million was extracted, giving it a return on sales of 8%. Net profit climbed to USD 700.9 million. <Korea Shipping Gazette>