Japan's MOL Sees Higher Q1 Earnings from Energy Transport
Japanese shipping company Mitsui OSK Line’s (MOL) energy transport business achieved a net income increase of 40% yr/yr in the three months to June 30 (Q1) thanks to favourable conditions in the overall tanker market and accumulated gains from long-term LNG carrier contracts, it said on July 31.
The energy business’ net income during the quarter was yen 8.4bn ($79mn) compared with yen 6bn in the same period of last year. MOL’s overall net income, however, dropped by 56% yr/yr while revenue decreased 11% yr/yr, the company said.
Commenting on the outlook for the energy transport business for the full year, MOL said that the LNG carrier division was expected to continue generating stable profit mainly through existing long-term charter contracts. Its LNG tanker fleet includes the Arc-7 winterised tankers used for the Yamal LNG project in Russia's far north.
Meanwhile, the company said that the offshore business division is likely to report considerable yr/yr decline in ordinary profit although it has been steadily accumulating stable profits for the past few years, because one floating regasification and storage unit went under a short-term contract between termination of the existing contract and commencement of the next long-term contract.
Regarding other offshore businesses, if the impact of Covid-19 and slump in oil prices last a long time, decline in utilisation rates and deterioration in the profitability of contracting parties could affect profitability, MOL said.
The very large crude oil carrier market is expected to weaken due to decreased shipments amid falling oil demand and output cuts, it said. These demand-side factors will be compounded by supply-side factors given that storage demand will supposedly fade, and over the coming nine months, the charter rate is likely to go up and down but maintain a general downward trend.