China COSCO’s profits drop 64% in 2006

China COSCO’s profits drop 64% in 2006    China COSCO Holdings Co. Ltd., parent company of COSCO Container Lines and majority owner of terminal operator COSCO Pacific, saw its profits slide 64 percent in 2006 to RMB 2.03 billion ($262.6 million), down from RMB 5.58 billion in the previous year.
   Operating profit for the year declined 53 percent to RMB 3.36 billion ($434.6 million), from RMB 7.05 billion. Group revenue increased 6 percent to RMB 51 billion ($6.59 billion), compared to RMB 48 billion in 2005.
   “China COSCO realized relatively stable operating results amidst challenging environment in 2006,” said Wei Jiafu, China COSCO’s chairman. “We are pleased to witness the world shipping market maintained its rapid growth during the year, with the shipping market facing increasing demand from global trading.”
   COSCO Container Lines transported 5.11 million TEUs worldwide in 2006, up 13 percent from 4.53 million TEUs in 2005. Revenue from container shipping increased 6 percent to RMB 40 billion ($5.17 billion), thanks to volume and sales growth in the Asia/Europe, transpacific and domestic Chinese markets.
   Volume in the Asia/Europe route, including the Mediterranean, increased 21 percent to 1.2 million TEUs with revenue in that market up 6 percent to RMB 9.74 billion ($1.26 billion).
   COSCO’s transpacific volume increased 10 percent to 1.3 million TEUs. Revenue in the trade was up 7 percent to RMB 13.37 billion ($1.73 billion).
   Volumes for mainland China improved 18 percent to 842,418 TEUs with revenue increasing 10 percent to RMB 1.57 billion ($203.1 million).
   COSCO’s volumes in the other international trades, including the transatlantic, were up 7 percent to 256,513 TEUs, yet revenue dropped 3 percent to RMB 2.51 billion ($324.7 million).
   In 2006, COSCO added seven new containerships with a combined capacity of less than 64,000 TEUs. It is the world’s seventh-largest carrier, just behind compatriot China Shipping Container Lines, with a fleet of 139 containerships pooling about 400,000 TEUs as of Dec. 31, representing a 24 percent increase over the end of 2005.
   COSCO has committed to 26 new vessels with a combined shipping capacity of 166,320 TEUs, including eight 10,0000-TEU ships from COSCO KHI Ship Engineering Co. Ltd. (NACKS), a joint venture between COSCO and Kawasaki Shipbuilding Corp., to be delivered over the next few years.
   COSCO Pacific, of which China COSCO owns about 52 percent, previously reported an 11 percent jump in net profit to $398 million in 2006 with its annual throughput increasing 26 percent to 32.8 million TEUs.
   China COSCO said it is “cautiously optimistic” about its fortunes for 2007. “It is anticipated that the global container market will still maintain its booming trend while demands will still be strong in 2007,” the group said in a statement.
   “However, it should also be noted that despite the risks with the successive operation of new vessels of the global major shipbuilders and fluctuation of oil prices, port congestions and increase in inland transportation rates in the U.S., we remain cautiously optimistic about the global container shipping market.”
   China COSCO listed on the Hong Kong Stock Exchange in June 2005, although the state-owned COSCO group retains a controlling shareholding. China COSCO’s share price closed Thursday up 0.84 percent at HK$7.24 (93 cents).