* NYK Line may book losses as shipping slump slashes asset
* Latest sign of industry struggle, follows Hanjin
* NYK Line may cut annual profit, dividend estimates
(Recasts and adds analyst comments)
By Naomi Tajitsu and Keith Wallis
TOKYO/SINGAPORE, Oct 7 Nippon Yusen,
Japan's biggest shipper by sales, warned it would book a $1.9
billion hit to first-half income, after the industry's deepening
slump forced it to write down the value of container ships and
The shock writedown is the latest symptom of the dramatic
slowdown in the container shipping sector. Weaker global trade,
and in particular softer demand from China, has battered freight
rates and left hundreds of ships idle.
Chronic oversupply in the industry has already claimed one
high profile victim this year: South Korea's Hanjin Shipping Co
Ltd, the world's seventh largest container carrier
before it went into receivership.
Nippon Yusen, known as NYK Line, said in a statement it may
revise full-year financial forecasts and would reconsider
planned dividend payments. It will announce changes on Oct. 31,
when it reports first-half earnings in full.
"It's really a perfect storm - NYK is a very diversified
company with about 30 percent of their revenues coming from the
containers business and almost 40 percent from bulk
transportation," Ralph Leszczynski, head of research at ship
broker Banchero Costa in Singapore.
"In normal circumstances such diversification would be
beneficial for them. Unfortunately, this year has seen very
challenging market conditions pretty much across all sectors,"
NYK Line, which was founded in 1885 and counts Mitsubishi
Heavy Industries as a major shareholder, said it would
book an impairment loss of 160 billion yen, as it writes down
the value of container ships and dry bulk carriers - two of the
sectors that have seen the greatest increase in supply.
It also reduced the value of assets it is buying "to their
Only three months ago, the shipper revised its full-year
outlook to a net loss of 15 billion yen from an earlier
prediction of a 15 billion yen profit. It would be its first
annual loss in five years.
Analysts predicted more pain in the industry would be
"I suspect the carriers are in a weaker position than they
are admitting. The big question now is: can independent carriers
survive or will there be a push towards partnerships, if not
actual mergers?" said Richard Clayton, chief maritime analyst at
IHS Maritime and Trade.
The shipping industry has been hobbled by losses and debt,
with NYK among the most indebted with a $7.2 billion net debt
burden at the end of June.
The shipper said that within its bulk shipping segment, it
has been selling off or returning surplus vessels to their
owners and had been scrapping ageing vessels, while adding that
its subsidiary would take a loss on aircraft sales and lease
Prior to the warning, shares in the group had closed up 4.6
percent at 206 yen, giving it a market value of $3.4 billion.
(Reporting by Naomi Tajitsu and Keith Wallis; Writing by Clara
Ferreira-Marques; Editing by Edwina Gibbs)