Japan’s Mitsui OSK Lines (MOL) has inked a long-term contract to ship coal for compatriot utility company Shikoku Electric Power.
Accordingly, a 140,400 dwt bulk carrier has been ordered from Imabari Shipbuilding, for delivery in the first half of 2020. The ship will be dedicated to the contract.
MOL, Japan’s largest shipping line, said that the bulk carrier, which will have a length of 274.9 m and a width of 47 m is being designed to be compatible with Shikoku Electric Power’s discharge ports.
Shikoku Electric Power supplies electricity to the four prefectures of Shikoku, one of Japan’s four main islands.
The shipping contract is expected to supersede an ongoing contract that is being serviced by Tachibana, a 2000-built 154,324 dwt bulk carrier.
The contract value and ship price were not disclosed. Similar newbuildings have been contracted in South Korea for over USD43 million.
For the first quarter of fiscal year (FY) 2016, MOL’s net profit fell 89% year on year to JPY1.4 billion (USD13.65 million) as freight rates in many shipping segments weakened. In view of the chronic market contraction, MOL has cut its profit forecast for FY 2016 from JPY20 billion to JPY15 billion.
The company, led by Junichiro Ikeda, also slipped into a working capital deficit of JPY7.3 billion in the first quarter of FY 2016 from a JPY13 billion working capital in the year-ago period.
MOL’s gearing level ratio of 2.4:1 was also somewhat high, with long-term debt of JPY1.1 trillion against equity of JPY458 billion. However, it is not uncommon for Japanese corporations to be highly leveraged.