Home » Breaking News, Maritime » ‘K’ Line consolidates 2 subsidiaries, outlines recovery plan

Kawasaki Kisen Kaisha Ltd. (“K” Line) announced it will merge two of its subsidiaries as it seeks a return to profitability and strives to comply with global pressure for companies to minimize their environmental footprint.

The merger of Taiyo Nippon Kisen Co., Ltd. and Escobal Japan Ltd. is to take place on July 1, 2017. The new entity is tentatively scheduled to be renamed “K” Line RORO and Bulk Ship Management Co., Ltd. on April 1, 2018.

The merged unit will be 100% owned by “K” Line, the group said in a statement.

The Japanese shipping line said the merger aims to “achieve synergy for all members of society by making continuous efforts to ensure safe and reliable navigation.”

It added that the merger will “insure a success of the reorganization of the structure of the group’s ship management system to a further and higher level by consolidation.”

This, it further stated, will “successfully realize more secure and environmental-friendly services that will meet the day-by-day increasing demand for reduction of environmental load toward a sustainable and livable world.”

Following the merger, “K” Line said it will then have three “deeply specialized and highly experienced” ship management companies.

“K” Line Ship Management Company Ltd. will be dedicated to containerships, tankers and gas carriers; “K” Line LNG Shipping (UK) Limited will focus on LNG carriers; and Taiyo Nippon Kisen Co., Ltd. will be managing car carriers and dry bulk carriers.

New policy directions

Last April 28, “K” Line announced a new management policy and medium-term management plan under its “Revival for Greater Strides – ‘K’ Line Value for our Next Century.”

The new policy will run for three years from April 2017 to 2019, and is “in response to the big business environment change in marine transportation industry.” It aims to rebuild the group’s management base, “allowing us to grow consistently,” said the carrier.

Essentially, the plan calls for a return to profit from full-year 2017 by maximizing the company’s strengths to ensure competitiveness, transforming its business portfolio to reduce influence from market volatility, and achieving growth through technological and business model innovation.

On the same day, the shipping group likewise said it was cutting further the salary of its executives, a year after a 10% to 20% reduction in their pay was executed in July 2016 compared to 2015, in consideration of the “severe business environment persisting from last year.”

In a release, “K” Line said: “Taking into account the business results for 2016 fiscal year which have been announced today [April 28, 2017], we have decided to reduce remuneration further by 5% from April this year in order to clarify our management stance towards recovery of our business performance during 2017 fiscal year.”

“K” Line in a separate announcement said it sustained for the fiscal year 2016 (April 1, 2016-March 31, 2017) an extraordinary loss of JPY65.1 billion (US$586.4 million).

The figure consists of a loss of JPY50.9 billion for the containership business, JPY9.6 billion for heavy lifers, and JPY4.6 billion for its offshore support vessel business.

“K” Line earlier agreed to establish a new joint-venture company with the two other big Japanese carriers, Nippon Yusen Kabushiki Kaisha and Mitsui O.S.K. Lines Ltd., to integrate their container shipping businesses amid fierce competition and overcapacity in the maritime transport sector.

Photo: Hummelhummel

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