News / Earnings better than forecast for ONE's final quarter, despite slowdown

Jeremy Nixon MD ONE

ONE’s more-effective capacity management, along with a tailwind from expiring contract rates, has resulted in better-than-expected earnings.

The Japanese carrier’s net profit for its Q4 – its reporting year runs from April to March – came in at $1.2bn, an improvement on its January forecast of $940m.

Tighter supply through more blanked sailings and the continued strategy of diverting some Asia-Europe and Asia-US east coast backhaul vessels via the longer Cape of Good Hope route, helped.

And judicious capacity control improved load factors across ONE’s major trades, with Asia-US headhaul vessel utilisation recovering to 90%, from 80% in the previous quarter, and Asia-Europe sailings up to 95%, from 90%.

ONE’s full-year revenue was $29.3bn, compared with $30.1bn the previous year, for a profit after tax just shy of $15bn, versus $16.8bn for 2021.

However, the carrier’s profit in its second half contributed only 26% of the total, as consumer demand slumped and freight rates were dragged down. It said: “A decline in demand became more pronounced against a backdrop of a high goods inventory ratio in the US and falling consumption in Europe, due to rising inflation.”

ONE added that the slowdown was “reinforced, particularly from Asia to North America and Europe”. Its liftings to the US fell from 2.35m teu in 2021 to 2.07m teu, while Asia-Europe headhaul carryings dropped from 1.7m teu to 1.5m teu.

Beside the two major tradelanes’ 53%, intra-Asia traffic accounts for 23% of ONE’s business, with 24% attributed to other services.

Over its year, ONE saw its ship operating costs decrease $413m, thanks to easing port congestion and blanked sailings in the second half, resulting in a reduction in its bunker costs. However, it reported higher costs associated with inland transport and charter hires.

It said that it would return surplus containers to leasing companies and reduce costs connected with equipment repositioning.

CEO Jeremy Nixon said that, in terms of a pick-up in exports to the US and Europe, it would be “at least June and July before we see any discernible green shoots”.

Nevertheless, for other routes he was more optimistic, adding: “In terms of recovery, volumes have generally been somewhat more resilient on intra-Asia and north-south routes.”

However, with so much geo-political and economic uncertainty clouding the outlook, ONE is reluctant to predict its earnings for the current financial year. It said: “It is extremely difficult to announce a reasonable business forecast at this time.”

ONE is currently the seventh-largest carrier, in terms of capacity, with a fleet of 205 ships for a capacity of 1.54m teu. It has an orderbook of 40 vessels, with a combined capacity of 556,000 teu, including ten 13,700 teu ships ordered in March.