COSCO profit slips 40% in 2008
China COSCO Holdings Co. Ltd. said it had profit attributable to equity holders last year of RMB11.62 ($1.7 billion), about 40.4 percent less than in 2007.
Revenue in 2008 increased 16.6 percent to RMB130.87 billion ($19.17 billion).
The company said results were “satisfactory” given both the slowdown in international trade in the second half of the year and natural disasters, such as blizzards and earthquakes that roiled China last year.
Looking forward, the company said, “The shipping market in the first quarter of 2009 was extremely weak. The global shipping companies are facing a tough operating environment.”
COSCO said its container operations moved 5.8 million TEUs last year, about 1.5 percent more than in 2007. Revenue from container operations slipped 4.3 percent to RMB43.8 billion ($6.42 billion).
The company said it increased the number of vessels and reduced speed on 17 routes throughout the year, achieving a 14.1 percent increase in capacity but a 3.9 percent decrease in fuel consumption as compared to 2007.
It also said it “seized the opportunity arising from the fluctuation in Renminbi exchange rates” and expanded domestic capacity 6.2 percent during the year. It also was able to increase utilization in return routes from Europe and North America to Asia by 10 percent.
During 2008 COSCO said it reduced capacity in the major east/west trades across the Atlantic, Pacific and between Asia and Europe, and increased capacity on more profitable routes to parts of Europe and the Mediterranean, Central America, Central Australia, South Africa and South America.
At the end of 2008, COSCO said its container fleet comprised 141 container vessels with a total capacity of 496,317 TEUs, 14.1 percent more than at the end of 2007. Its order book stood of 59 container vessels with a total shipping capacity of 444,752 TEU at year end.
In 2009, COSCO said it expects to take delivery and use nine newly built vessels with a total capacity of 60,411 TEUs, including four 5,100-TEU and one 10,020-TEU owned vessels, and one 4,506-TEU and three 8,495-TEU chartered-in vessels.
“Considering the market conditions, the group is negotiating with ship owners to postpone delivery of the three 8,495-TEU vessels to 2010,” the company said.
The company’s dry bulk shipping operations moved 293 million tons of cargo in 2008, 10.7 percent more than in 2007. Revenue was up 34 percent to RMB 71.6 billion ($10.5 billion).
At year end it owned, operated and controlled 443 dry bulk vessels, with a total capacity of 34.4 million deadweight tons; 210 ships were owned and 233 were chartered. The company has 58 bulkers on order for delivery over the next few years, but it said it is negotiating with shipyards for the possibility of delaying or canceling some of those orders.
COCSO said it was continuing to grow and build its brand in the areas of third-party logistics, shipping agency and freight forwarding. It said project logistics revenue increased 38 percent last year and that it handled 58.6 million units of home appliances in 2008, representing a 35.7 percent increase over 2007. It said its chemical logistics business grew 10.7 percent.
COSCO Logistics handled 2.2 million TEU of cargo last year, 2.7 percent more than in 2007. Bulk cargo rose 0.5 percent to 141.6 million tons.
The number of terminal joint venture companies in which COSCO Pacific had equity interests in increased from 27 companies with a total of 140 berths in 2007 to 28 companies with 146 berths in 2008. It said Drewry Shipping Consultants statistics places COSCO Pacific’s share of the container terminal business at about 5.5 percent.
The company said its container leasing business has a fleet of 1.6 million TEU, 6.7 percent more than the prior year and a global market share of about 13.6 percent.
Looking ahead to 2009 COSCO said, “International trade is likely to reduce substantially in 2009,” citing forecasts by the International Monetary Fund that developed economies are likely to shrink 3 percent to 3.5 percent and developing countries will have growth of only 1.5 percent to 2.5 percent.
“China's export environment is harsher, and weak demand will intensify the imbalance of supply and demand in international shipping markets,” the company noted. “Main container liners routes will be more competitive upon the delivery of mega container vessels. The prospect of dry bulk shipping market remains dim due to weak demand. The markets of logistics and terminals will also suffer accordingly.”
But the company said it believed that “in the long run, the trend of globalization will continue. The alliance and reliance among countries will further strengthen and the globalization which is based on technology innovations and global productivity re-allocations will not be reversed.”