Bloomberg News

Mitsui O.S.K. Falls to Lowest Since 2003 on Loss Estimate

October 03, 2011

(Updates with Kawasaki Kisen earnings in third paragraph.)

Oct. 3 (Bloomberg) -- Mitsui O.S.K. Lines Ltd. led declines among Japanese shipping lines, dropping to the lowest in more than eight years in Tokyo, after predicting a net loss for the fiscal first half.

The operator of the world’s largest merchant fleet dropped 7 percent to 279 yen at the 3 p.m. close in Tokyo trading, the lowest since March 2003. Nippon Yusen K.K., Japan’s largest shipping line by sales, fell 4.3 percent to 202 yen, and Kawasaki Kisen Kaisha Ltd., the third-largest, declined 4.9 percent to 155 yen.

Mitsui O.S.K. projected a 17 billion yen ($221 million) loss for the six months ended Sept. 30, compared with a previous forecast of 1 billion yen net income, amid a decline in shipping rates and a stronger yen. Kawasaki Kisen today estimated it had a net loss of 16 billion yen in the fiscal first half, according to a preliminary earnings statement, compared with an earlier forecast for a 2 billion yen loss.

“Until we see some positive economic signs, the slump in shipping lines is unlikely to stop,” said Ryota Himeno, an analyst at Mitsubishi UFJ Morgan Stanley Securities Co. “It’s difficult to predict a turnaround this year.”

Consumer spending in the U.S., the world’s largest economy, slowed in August and incomes unexpectedly dropped for workers, damping the earnings outlook for shipping lines, according to government reports on Sept. 30.

The Baltic Dry Index, a benchmark for commodity-shipping rates, fell 0.7 percent to 1,899 points on Sept. 30. The index has slumped 22 percent in the past year.

Mitsui O.S.K. announced its loss estimate Sept. 30 in a filing to the Tokyo Stock Exchange after the market closed.

--Editors: Dave McCombs, Garry Smith

To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Gearoid Reidy at greidy1@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net.


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