Yang Ming losses double in tumultuous 2016

The Taiwanese ocean carrier reported a loss of 14.91 billion Taiwan new dollars (U.S. $492.1 million) for the full year in 2016 compared with TWD 6.46 billion the previous year, according to the company’s latest filing with the Taiwan Stock Exchange.    Troubled ocean carrier Yang Ming Marine Transport saw its losses more than double during a tumultuous 2016, according to the company’s latest filing with the Taiwan Stock Exchange.
   The Taipei-listed firm reported a loss of 14.91 billion Taiwan new dollars (U.S. $492.1 million) for the full year in 2016 compared with TWD 6.46 billion the previous year.
   Yang Ming’s loss per diluted share (EPS) widened from TWD 2.24 in 2015 to TWD 9.22 per share as revenues dropped 9.5 percent year-over-year to TWD 115.4 billion in 2016.
   Although the company does not comment publicly on its financial results, 2016 was a brutal year for the ocean shipping industry in general. Overcapacity on the major global trade lanes led to a bottoming out of freight rates, culminating in heavy losses and consolidation via mergers, acquisitions and the largest bankruptcy in industry history.
   Despite analyst speculation, however, Yang Ming has remained steadfast in it’s position that a merger or acquisition by a larger firm is not on the table.
   A report issued in January by the investment research arm of consulting firm Drewry, for example, expressed concern about the company’s high level of debt, leading some analysts to compare its situation to that of now defunct South Korean ocean carrier Hanjin Shipping, which has been liquidated after filing for court receivership back in August 2016. The report noted that Yang Ming has accumulated distributable losses of TWD 38.4 billion since 2009.
   Yang Ming responded by saying that although the company “has not been immune to the ongoing challenges the entire shipping industry has experienced this past year,” it has “proactively reorganized internally to effectively reduce its operating costs.”
   According to the company, comparing Yang Ming to its competitors would be misleading due to its unique ownership structure and the “unwavering support” of the Taiwanese government. Yang Ming is majority owned by the Taiwan Ministry of Transport and Communication (MOTC) of the Republic of China (Taiwan) and, as such, has access to a massive $1.9 billion aid package announced in November 2016.
   “We do not think Yang Ming is in a similar situation [to Hanjin], but we are worried about the company’s debt metrics,” Drewry said in the report, adding that since Hanjin’s collapse, Yang Ming now has the most leveraged balance sheet in the ocean shipping industry.
   “We believe the company will continue to be supported from the government should its financial conditions worsen and do not see a solvency event for the company,” Drewry said. “YMM will however have to raise cash through a combination of asset sales, sale-leasebacks, fresh equity and bring the debt levels down.”