COSCO: Profit, revenue rise, container revenue dip

COSCO: Profit, revenue rise, container revenue dip China COSCO Holdings Co. Ltd. said it had third quarter profit of 5.9 billion China Yuan Renminbi ($861 million), 15 percent more than the same 2007 period, but that container revenue was off even as volume increased.
   Profit attributable to shareholders was 5.6 billion RMB ($812 million), up 18 percent. Revenue was 33.2 billion RMB ($4.9 billion), 27 percent more than the third quarter of 2007.
   “The shipping sector experienced high volatility, which was mainly attributable to a number of unfavorable factors including the worsening global financial crisis, restrictions during the Olympic Games and decrease of trading in bulk commodities due to the problems with letters of credit and decreasing prices,” the company said.
   “All the aforementioned factors added fuel to the high volatility of the container shipping and dry bulk shipping markets. Especially for the dry bulk shipping market, the Baltic Dry Index (BDI) dropped significantly to 3,217 points as at Sept. 30, as compared to 9,589 points as at the end of second quarter, a decrease of 66.5 percent.”
   The BDI has continued to fall since the end of the third quarter. Wednesday it hit 925.
   “Against the unfavorable market conditions, the group has consistently adopted a prudent operating strategy to generate favorable results through the measures of strengthened marketing, stringent control of costs and continuously implementing its key client strategy,” COSCO added.
   The company noted its container business handled 1.5 million TEUs in the quarter, a 3.3 percent increase over the same period of last year. But revenue from container shipping operations fell 7.8 percent to 10.3 billion RMB ($1.5 billion).
   The company said its container business “recorded slight increases in shipping volume in different routes. However the loading rate decreased slightly, which was mainly affected by various factors including the sub-prime crisis and restrictions during the Olympic Games.”
   In the dry bulk business, the company boasted it “adopted a prudent and nimble operating strategy and achieved leading profitability among peers.'
   It noted the third quarter “is a down season for the dry bulk shipping market,' but noted the business was roiled by several factors: “restrictions during the Olympic Games, negotiations on iron ore price, and a decrease in trading (due to letter of credit problems and decreasing commodity prices). Meanwhile the decrease of BDI triggered a crisis of confidence and chain reactions.”
   It said its dry bulk shipping business “continued to record growth. Shipping volume in the quarter increased 9.7 percent to 71.6 million tons.
   As at Sept. 30 COSCO operated 462 dry bulk vessels, with a total of 36.2 million deadweight tons of capacity. Of these, 206 vessels were owned with 13.3 million dwt capacity; 256 vessels were chartered, with 22.9 million dwt capacity.
   For the first three quarters in 2008, the company said its logistics business “maintained a stable development trend” with home appliances and chemicals achieving “significant growth” of 35.7 percent and 35.3 percent, respectively over the same period the prior year.
   For the third quarter, container throughput at the group’s terminals reached 12.2 million TEUs, 19.5 percent higher than the same 2007 period.