Container shipping boosts China COSCO profits 31%

Container shipping boosts China COSCO profits 31%    China COSCO Holdings Co. Ltd., parent company of COSCO Container Lines and majority owner of port operator COSCO Pacific, said “robust conditions in international shipping and the global economy,” helped raise its consolidated profit 31.1 percent in 2005 to RMB 5.45 billion ($680 million), from RMB 4.16 billion in 2004.
   Operating profit in 2005 was up 39.8 percent to RMB 7.05 billion ($880 million) while revenue increased 21.7 percent to RMB 39.17 billion ($4.89 billion).
   COSCO Container Lines transported 4.53 million TEUs in 2005, up 19.7 percent over the previous year with significant volume growth in the Asia/Europe, transpacific and China markets.
   Volume in the Asia/Europe route, including the Mediterranean, increased 31.7 percent to 1 million TEUs. The revenue in that market jumped 24.5 percent to RMB 9.15 billion ($1.14 billion). The transpacific volume increased 18.3 percent to 1.18 million TEUs with revenue up 17.3 percent to RMB 12.53 billion ($1.57 billion).
   Volumes for mainland China improved 25.1 percent to 714,449 TEUs with revenue increasing 29.9 percent to RMB 1.48 billion ($185 million). COSCO’s volumes in the other international trades, including the transatlantic, were flat at 240,873, yet revenue still increased 13.3 percent to RMB 2.57 billion ($321 million).
   The ocean carrier’s total 2005 revenue of RMB 31.96 billion ($3.99 billion) is up 17 percent over 2004 and represents over three quarters of China COSCO’s consolidated revenue.
   In 2005, COSCO added nine new containerships with a combined capacity of just under 40,000 TEUs. It is the world’s seventh-largest carrier, just behind China Shipping, with a fleet of about 130 containerships pooling about 342,000 TEUs.
   As of Dec. 31, COSCO has committed to 23 new vessels with a combined shipping capacity of 180,000 TEUs, including eight 10,0000-TEU ships from COSCO KHI Ship Engineering Co. Ltd. (NACKS), a joint venture between COSCO and Kawasaki Shipbuilding Corp.
   COSCO Pacific, of which China COSCO owns about 52 percent, previously reported a 62 percent jump in net profit to $334.9 million from $206.6 million in 2004 with its throughput increasing 16.2 percent to 26.1 million TEUs.
   “We believe that container shipping demand and supply will be relatively balanced in the coming years and that the group is well positioned to benefit from continued growth in the Chinese and global economies. Global economic prospects and the China Factor add to our confidence,” said Wei Jiafu, COSCO Pacific’s chairman.
   “The group believes that the global economic environment will be positive in 2006. Although there is a great deal of new shipping capacity in the pipeline, a healthy world economy should continue to uphold demand for container shipping.
   “China’s growing role in international trade will continue to provide the group with opportunities to expand. As China’s macroeconomic policies help to cool an overheated economy, it should be possible for the Chinese economy and trade to sustain growth in 2006 and beyond,' Jiafu said.
   “In 2006, the group will execute strategies for both existing and emerging markets. It will seek to enlarge market share in the European and U.S. routes by deploying new vessels that are due to come on-line during the year. It will look for new opportunities in emerging markets to further expand its worldwide shipping network.
   “China COSCO is aware of the challenges ahead. The investor community has been concerned about a number of factors, including rising crude oil prices, revaluation of the RMB, demand and supply equilibrium of the global shipping industry, and Maersk’s takeover of P&O Nedlloyd. As one of the world’s major providers of integrated container shipping services, the group is fully prepared to undertake strategies to address each of these issues and developments,” Jiafu said.
   China COSCO listed on the Hong Kong Stock Exchange June 2005, although the state-owned COSCO group retains a controlling shareholding. China COSCO’s share price closed today at HK$3.625 (47 cents), still below the initial public offering price of HK$4.25 (55 cents).