Nippon Yusen K.K. and Mitsui O.S.K. Lines Ltd., Japan's two largest shipping lines, boosted earnings as higher demand for coal, iron ore and grains more than offset hikes in fuel.
Nippon Yusen boosted net profit 55 percent to ¥44.4 billion in the three months to June 30, the company said in a statement Friday. Mitsui O.S.K.'s profit jumped 63 percent to ¥55.3 billion, it said separately.
The two companies are benefiting from China's demand for iron ore to fuel a building boom before the Beijing Olympics start next month. Stronger earnings at the two Tokyo-based companies contrasts with a 17 percent drop in profit for Kawasaki Kisen Kaisha Ltd., which gets more of its sales from shipping containers.
Bulk shipping accounted for 88 percent of Nippon Yusen's operating profit last business year. Mitsui O.S.K rented out 22 of its 100 large, capesize, bulk vessels at daily rates last quarter. It is able to quickly raise prices for these ships in response to fluctuations in demand. The other ships are contracted out for longer periods at fixed rates.
China has spent about $70 billion to build subways, sports stadiums and an airport terminal to prepare for this summer's Olympics, which will start on Aug. 8 and run through Aug. 24.
"Propped up by vibrant demand from emerging nations such as China and India, the dry-bulk carrier division experienced favorable transport volumes for iron and steel ores, coal, grains and other materials," the company said.
Higher fuel prices over the quarter limited gains in profits. The average price of 380 Centistoke marine bunker fuel, used by ships, surged 67 percent in the three months to March 31, to $579.07 a ton compared with $347.29 a year earlier, according to data compiled by Bloomberg.
Kawasaki Kisen, which gets about half its sales from containers, reported net profit dropped to ¥21.5 billion from ¥25.8 billion in the quarter due to the higher fuel prices.
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