Sinotrans’ first half profits down after shipping loss
Losses in its marine transportation division cut first half profits for China’s largest forwarding group, Sinotrans Ltd., by 31.2 percent to RMB414 million ($52.1 million) from RMB498.7 million a year ago.
The marine arm’s revenue dropped 5.6 percent to RMB1.8 billion ($227.2 million) from RMB1.9 billion despite the number of containers shipped by Sinotrans rising 14.9 percent to 732,000 TEUs.
“The company’s operating profit decrease period-on-period is mainly due to the loss of ocean transportation business recorded for the first time,” Sinotrans said in a statement. “Freight rates for certain main lines fell as much as 20 to 30 percent, and costs of fuel and charter continued to increase, directly affecting the earning ability of the ocean transportation business of the company.”
“During the first half this year, exports growth in China obviously slowed down and fell by 7.5 percent. As a result of the severe imbalance between supply and demand, shipping freight rates slid significantly,” said Chairman Zhao Huxiang.
The group’s operating profit in the first half was down 25 percent to RMB490.6 million ($61.8 million) from RMB654.3 million recorded in the corresponding period in 2005.
Consolidated interim revenue increased 11.9 percent to RMB14.8 billion ($1.86 billion) from RMB13.2 billion in the first half 2005. Sinotrans’ core businesses of freight forwarding increased its revenue by 11.8 percent to RMB10.7 billion ($1.35 billion) from RMB9.6 billion, representing 71.1 percent of the entire group turnover.
The number of containers handled by Sinotrans’ sea freight forwarding services increased 11.9 percent to 2.45 million TEUs in the first half this year, compared to 2.19 million TEUs in the same period last year. The amount of air cargo handled by its air freight forwarding unit improved 23.2 percent to about 190,200 tons, up from about 154,400 tons last year.
Looking ahead to the rest of the year, Sinotrans’ President Zhang Jianwei expects “a mixed environment presenting with both opportunities and challenges.”
“The company will continue resources integration and optimization. While speeding up consolidation and optimization of the core business operations, Sinotrans will also extend service chain and raise operational efficiency, increase investment in target markets including contract logistics, project transportation logistics and exhibition logistics,” Zhang said.