OOCL parent triples its half-year net profit

OOCL parent triples its half-year net profit    Continuing a series of meteoric profit result announcements across the liner shipping industry, the parent company of Hong Kong-based Orient Overseas Container Line today reported a 239-percent jump in its net profit for the first half of the year to $268 million from $79 million in the first six months of 2003.
   Orient Overseas (International) Ltd., whose main business is OOCL, saw its group revenue rise 31 percent in the first half, to $1.9 billion, as its container volume increased 24 percent.
   Group operating income soared 226 percent to $293 million from $90 million in the first half of last year. The operating profit margin as a percentage of revenue reached 15 percent in the latest six-month period, a very high level by industry standards.
   Earnings per share amounted to 48.4 cents in the first half up from 14 cents last year. Orient Overseas (International) Ltd. said it will pay an interim dividend of 12 cents (HK94 cents) per ordinary share.
   “This substantial further improvement in overall performance has been due almost entirely to the continued strong performance of the group’s core international container transport business,” said C.C. Tung, chairman and chief executive officer of Orient Overseas (International) Ltd.
   He cited the continuing strong growth of container volumes and “a solid level of freight rates” resulting from the favorable supply and demand balance.
   “The combination of the processes of containerization, globalization and outsourcing of production and assembly, together with strengthening global economic growth, has resulted in container volumes increasing at unprecedented rates,” Tung noted.
   In the first half, OOCL increased its volume 17 percent in the transpacific trade, 35.5 percent in its Asia-to-Europe services and 13 percent in the transatlantic. For OOCL’s intra-Asia and Australasia services, the increase in volume was 29 percent.
   The company said it has also kept a tight control over costs. Business and administration costs have continued to fall as a percentage of revenues and on a per-TEU basis.
   However, the group’s Global Terminal in New Jersey continued to suffer from poor volumes in the first half. Improved throughput at the terminal is expected during the second half of 2004.
   At Deltaport and Vanterm in the port of Vancouver, throughput volumes rose 3 percent compared with the same period last year and average revenues per box increased slightly due mostly to the weakening U.S. dollar. Howland Hook terminal on Staten Island, N.Y., has continued to improve its performance “after many years of significant underachievement,” the Hong Kong-based group said.
   Orient Overseas (International) Ltd. said it sees no signs of change to the fundamental supply and demand balance on the container shipping market. “The unprecedented length of the shipyard orderbook, which fixes the supply of new tonnage capacity into what is now possibly 2008, and the demand side strength in container volume growth give us confidence as we move towards and into 2005,” Tung said.
   During the first half of the year, OOCL took delivery of four “SX class” 8,063-TEU containerships.