One-Time Costs and Charter Contract Losses Related to the Integration of the Container Shipping Business
First written in FY2017. 5 of 12 entries say "Mitigated", first in FY2018. Latest entry: FY2021.
Kawasaki Kisen moved to the "Worse" side of this theme in 2017.
1 other company's latest entry also says "Mitigated".
- FY2021MitigatedAnnual report
「Although ONE continued efforts to mitigate disruption by deploying additional vessels and improving operations, earnings improved significantly year on year as freight rates remained high amid a short-term market surge.」
ONE continued deploying additional vessels and improving operations in response to post-integration service disruptions. While ONE's performance improved significantly, new supply chain disruptions, including container shortages and congestion at terminals and in inland transport, were also noted. - FY2021-Q1RestatedAnnual report
「Although global cargo movements declined as the COVID-19 pandemic spread, ONE implemented flexible capacity reductions in line with demand and worked to improve profitability by reducing operating costs through optimal vessel operations and reviewing its cargo portfolio. As a result, profit increased year on year and the containership business as a whole returned to profitability.」
For ONE after the integration, we reconfirmed that it advanced capacity reductions, optimal vessel operations and a review of its cargo mix even amid COVID-19, resulting in higher profit year on year and a return to profitability for the containership business as a whole. - FY2020MitigatedAnnual report
「In the second half, cargo movements weakened after the Chinese New Year, triggered by the COVID-19 pandemic. At ONE, efforts to improve profitability, including flexible capacity reductions in line with demand, resulted in lower revenue than in the previous fiscal year but a narrower loss.」
In addition to post-integration profitability improvement measures, ONE implemented flexible capacity reductions in response to the decline in demand caused by COVID-19, narrowing its loss despite lower revenue. The disclosure did not state that integration-related risks had been eliminated. - FY2020-Q3RestatedAnnual report
「In the containership business remaining with us, revenue declined year on year, but the loss narrowed due to a decrease in one-time costs associated with the business transfer.」
The loss in the containership business remaining with us narrowed due to a decrease in one-time costs associated with the business transfer. Similar mitigation was disclosed in the previous quarter, so this was not a new milestone. - FY2020-Q2RestatedAnnual report
「In the containership business remaining with us, revenue declined year on year, but the loss narrowed due to a decrease in one-time costs associated with the business transfer.」
One-time costs associated with the post-integration business transfer decreased, narrowing the loss in the containership business remaining with us. Similar improvement was also disclosed in the previous quarter, reconfirming the trend toward mitigation of integration-related risks. - FY2020-Q1MitigatedAnnual report
「Although freight rates on European routes declined from the beginning of the fiscal year, OCEAN NETWORK EXPRESS, our equity-method affiliate (hereinafter, “ONE”), increased revenue year on year and returned to profitability due to successful rate increases under long-term contracts on North American routes, firm cargo movements to the United States and efforts to improve profitability. In the containership business remaining with us, revenue declined year on year, but the loss narrowed as one-time costs associated with the business transfer decreased.」
The deterioration in ONE’s performance after the integration was reversed, with ONE returning to profitability in the first quarter under review, while the loss in the containership business remaining with us narrowed as one-time costs associated with the business transfer decreased. - FY2019MaterialisedAnnual report
「Meanwhile, ordinary profit and loss deteriorated due to the decline in cargo volumes caused by service disruptions immediately after ONE began operations and a provision for losses related to vessels chartered to the company. In addition, to fundamentally improve earning power from the following fiscal year onward, we cancelled charters for uneconomic vessels, including some containerships and some small and medium-sized dry bulk carriers exposed to market conditions, and recorded an extraordinary loss.」
ONE’s service disruptions, decline in cargo volumes, provision for losses related to chartered vessels and charter cancellations for uneconomic vessels materialized as losses for the full fiscal year. - FY2019-Q3MitigatedAnnual report
「In the third quarter, the disruptions had largely subsided and cargo movements remained firm, resulting in particularly resilient westbound North American freight rates. ONE continued efforts to improve profitability.」
The service disruptions after the integration were described as having largely subsided by the third quarter, following declines in cargo volumes and load factors in the first half. However, ONE continued to work on improving profitability, and the disclosure did not state that all integration-related risks had been eliminated. - FY2019-Q2MaterialisedAnnual report
「Compared with the results announced at the time of the first-quarter financial results, the performance of OCEAN NETWORK EXPRESS, our equity-method affiliate (hereinafter, “ONE”), declined in revenue due to factors including a temporary drop in cargo volumes caused by service disruptions at the start of operations. Although synergies from the business integration are steadily emerging, profit after tax deteriorated mainly as a result of higher operating costs, including container repositioning costs, primarily for Asia, and fuel costs. In the containership business remaining with us, revenue declined year on year and a loss was recorded due to one-time costs associated with the transfer of the business.」
The decline in cargo volumes caused by service disruptions after the integration, higher operating costs including container repositioning and fuel costs, and one-time costs associated with the business transfer actually occurred, worsening the results of ONE and the containership business remaining with us. Meanwhile, we stated that integration synergies were steadily emerging. - FY2019-Q1MaterialisedAnnual report
「The performance of OCEAN NETWORK EXPRESS, an equity-method affiliate of ours (hereinafter, “ONE”), deteriorated versus the initial budget due to the temporary decline in cargo volumes during the ramp-up period and higher fuel oil prices.」
After ONE began its services, the decline in cargo volumes during the ramp-up period and higher fuel oil prices led to an actual deterioration in performance. One-time costs also increased at the time of the transfer associated with the integration of the containership business. - FY2018MitigatedAnnual report
「As new information became available through progress in the business restructuring plan and other developments, more precise estimates became possible, so we changed an accounting estimate.」
As the business restructuring plan related to the containership integration progressed, we revised the provision estimate. The provision for losses related to business restructuring fell from an expense of ¥47,889 million in the previous fiscal year to no expense in the current fiscal year, and the balance also decreased. - FY2017MaterialisedAnnual report
「In connection with the integration of the containership business, we recorded ¥11,448 million in one-time costs related to organizational restructuring and other matters and ¥36,441 million in losses related to charter contracts, together as an expense for the provision for losses related to business restructuring.」
One-time costs and charter contract losses associated with the integration of the 3 companies were incurred, and a total of ¥47,889 million was recorded as an expense for the provision.