K Line cites higher bunker costs as key reason for $173m loss

Average bunker price paid jumped 27 percent in Q1.

K Line's car carrier vessel, the Hawaiian Highway. Image credit: K Line

Updated on 31 Jul 2018 13:17 GMT

Kawasaki Kisen Kaisha Ltd (K Line) reports that the average bunker price it paid during the firm's first fiscal quarter (Q1), which runs between April and June, rose year-on-year (YoY) by $88, or 27.0 percent, to $414 per metric tonne.

In a sequential comparison with the previous quarter's (January to March) average of $391 per tonne, the result is $23, or 5.9 percent, higher.

K Line has now revised its forecast bunker price for Q2 upwards to $468 per tonne, which if reached would represent a quarter-on-quarter (QoQ) increase of $54, or 13.0 percent, and a YoY rise of $146, or 45.3 percent.

For H1, K Line has upped its $376 April prediction to $441 per tonne; the H2 forecast is now $91 higher than three months ago at $460 per tonne; whilst the full-year average estimate has been adjusted to $451 per tonne - $78 more than the last forecast.

According to K Line, each $10 change in the average bunker price will either add or subtract JPY 80 million ($0.7m) to the company's ordinary income.

In its key results for the quarter, K Line posted a loss attributable to owners of JPY 19.27 billion ($172.9m), compared to JPY 8.52bn last year. There was also an operating loss of JPY 13.37bn ($120.0m) and an ordinary loss of JPY 17.10bn ($153.4m).

Operating revenue fell YoY by 26.2 percent to JPY 212.20bn ($1.9bn).

K Line explained that it was steadily implementing measures to improve profitability, including reducing costs and improving vessel allocation efficiency, but higher bunker prices were cited as being a key reason for the decline in performance.

"Because of such factors as a rise in fuel oil prices and an increase in one-time expenses which arose during the period of the transfer of operations for the integration of the containership business, financial results deteriorated, with revenue declining year on year," K Line said.