OOCL parent powers on with $309 million earnings in first half

OOCL parent powers on with $309 million earnings in first half    Orient Overseas (International) Ltd., parent company of OOCL, reported Friday a net after-tax profit of $309 million for the first half of the year, up 15 percent on the $268 million earned during the first half of 2004.
   The Hong Kong-based company, one of the world’s most profitable container shipping companies, also raised its operating profit 16 percent to $351 million in the latest six-month period, from $302 million a year earlier. This represents an operating profit margin of 16 percent of revenues, the same as in the year-earlier period and nearly three times the 6-percent profit margin made by its competitor P&O Nedlloyd over the same period of this year.
   Orient Overseas (International) Ltd. said its revenue grew 19 percent to $2.2 billion in the first half. This resulted from a combination of a 12-percent higher container traffic volume and 7-percent higher freight rates, as well as increased activity in its marine terminals arm.
   “We have continued to experience strong market conditions during the first half of 2005,” said C.C. Tung, chairman of Orient Overseas (International) Ltd. “Volumes have continued to grow robustly and average freight rates have continued to improve compared with the same period last year.”
   He said this further improvement in overall performance has been due to the continued strong performance of OOCL — Orient Overseas (International) Ltd.’s main business — and to a significantly improved contribution from the company’s container terminals business.
   During the first half, a total of 1.14 million TEUs were moved through the company’s four marine terminals in North America, up 16 percent from the comparable period of a year ago.
   Orient Overseas (International) Ltd. said its business and administration costs have continued to fall as a percentage of revenue and on a per TEU basis when compared with the same period last year. However, other fixed and variable costs have risen “significantly” during the first half of the year, due mainly to the increased cost of bunkers, higher charter hire costs and higher inland costs, the company added.
   Commenting on the future of the Grand Alliance, of which OOCL and soon-to-be-acquired P&O Nedlloyd are both members, Tung said P&O Nedlloyd is expected to withdraw “sometime in February” as a result of its pending acquisition by Maersk-Sealand.
   But the remaining four members — Hapag-Lloyd, MISC, NYK and OOCL ' have jointly expressed that they will “continue to provide a high quality service to their customers,” he stressed.
   Tung said freight rates overall retain their strength and there appear to be “no specific factors looming which will fundamentally change the present supply and demand balance.” However, he noted that the ship capacity scheduled for delivery during 2006 is greater as a percentage of the current world fleet than has been delivered and deployed over the past few years.
   Provided demand remains as strong as in 2004, “it would be sufficient to maintain the supply and demand balance and alleviate any downward pressure on freight rates,” Tung suggested. Otherwise, there will be downward pressure on rates, he predicted.
   Tung cautioned however that volumes have continued to grow this year and freight rates so far have stayed firm.
   The Hong Kong company will increase its interim dividend to 12 cents per ordinary share, from 10.9 cents for the first half of 2004. The company is listed on Hong Kong stock exchange.