Nippon Yusen to Book $1.9 Billion One-Time Loss on Shipping Woes
Nippon Yusen KK, Japan’s largest shipping company by sales, will book a record one-time loss for its shipping and air-cargo divisions as freight rates remain depressed amid global overcapacity.
Nippon Yusen will record a 195 billion yen ($1.9 billion) charge to reflect a drop in the value of its assets and those it plans to own, according to a statement from the Tokyo-based company Oct. 7. The company is also considering revising its dividend payout and will announce any changes on Oct. 31, along with its fiscal second-quarter earnings, it said in the statement released after trading hours.
In a sign of the woes gripping the global shipping industry, South Korea’s biggest container mover Hanjin Shipping Co. filed for bankruptcy protection in late August, while its peers grapple with losses or shrinking profits amid a trade slowdown in the aftermath of the 2008 financial crisis. Nippon Yusen and Kawasaki Kisen Kaisha Ltd., Japan’s third-largest shipping line, are both predicting losses this fiscal year.
“A recovery in rates is taking longer than expected,” Kouichi Kitamura, a spokesman for Nippon Yusen, said by telephone. “So we decided to book a loss.”
Japan Credit Rating Agency put Nippon Yusen’s credit rating on negative outlook due to the one-time loss, it said in a statement. The company said it hadn’t accounted for the effects on its earnings in its previous forecasts.
“The extraordinary loss is equivalent to nearly 30% of the equity capital,” it said. That is “indicating that significant capital impairment cannot be avoided.”
