CSCL profit down / China Cosco profit soars 183pc


CHINA Shipping Container Lines (CSCL) first half profit fell 97 per cent to CNY19.1 million (US$2.9 million), drawn on revenues of CNY15.9 billion, a decline of 8.1 per cent year on year.

CSCL profit down 97pc to US$2.98 million as revenue declines 8.1pc
CHINA Shipping Container Lines (CSCL) first half profit fell 97 per cent to CNY19.1 million (US$2.9 million), drawn on revenues of CNY15.9 billion, a decline of 8.1 per cent year on year.

The CSCL decline was attributed to weak freight rates on Asia-Europe and Mediterranean trade lanes and excess capacity that depressed revenue. 

"Freight rates for Asia-Europe trade lanes hit record lows under the impact of new shipping capacity put into market amid a weak economic growth momentum in the eurozone," said CSCL.

China Shipping's adjusted its capacity in a bid to cope with declining international container volumes in the first half. By the end of June, CSCL had carried nearly four million TEU, up one per cent year on year.

That increase was attributed to a 12.2 per cent rise in intra-Asia trade where the carrier transported one million TEU. 

All other trades suffered declines. CSCL carried 743,647 TEU on Asia-Europe and 614,021 TEU on the transpacific.

Low oil prices and currency factors affected operating costs. Container and cargo costs fell 9.2 per cent, mostly because of a weaker yuan. Vessel and voyage costs declined 10.7 per cent and cheaper oil brought down the costs of logistics 28 per cent.

But CSCL's outlook was gloomy: "In second half, international trade still won't be cheerful. With the massive influx of new shipping capacity, shipping market will face even more uncertainties." 

CSCL told investors that the industry is gradually developing towards scale expansion, intensive operation and supply chain integration. 

"Thresholds of market entry and service standards will continue to rise along with the increasing scale of container liners, innovations in large vessel operations and in service concepts," said the company statement.

In the filings to the Hong Kong stock exchange, no mention was made of the ongoing discussions between CSCL and Cosco on merging the two container divisions. The shares of CSCL, China Shipping Development, China Cosco Holdings and Cosco Pacific remain suspended as the merger talks continue.



CHINA Cosco Holdings posted a 183 per cent increase in first half net profit to US$295 million, drawn on revenues of $4.6 billion which declined 7.9 per cent year on year.

China Cosco profit soars 183pc to US$295 million as revenue declines 7.9pc
CHINA Cosco Holdings posted a 183 per cent increase in first half net profit to US$295 million, drawn on revenues of $4.6 billion which declined 7.9 per cent year on year.

China Cosco benefited from $600 million in subsidies from Beijing for scrapping older vessels without which the state-owned enterprise would have ended the first half in the red.

Most of China Cosco's revenue came from the Asia-US trade that grew 20 per cent to $1.3 billion. Asia-Europe fell seven per cent to $819 million.

Volumes carried by China Cosco's container unit Coscon in the first half increased 6.8 per cent year on year to 4.8 million TEU, with revenue per TEU falling 1.7 per cent to $677.

China Cosco had 185 container vessels with a capacity of 879,070 TEUs, up 10.7 per cent year on year.

China Cosco said it had benefited from lower bunker costs during the first half.

China Cosco operates a fleet of 220 bulk carriers with a total capacity of 22.15 million dwt and a further 40 bulkers with 3.47 million dwt combined capacity on order. It also has 185 containerships with a total capacity of 879,070 TEU and another 10 units of 117,960 TEU in capacity on order.

In the filings to the Hong Kong stock exchange, no mention was made of the ongoing discussions between CSCL and Cosco on merging the two container divisions. The shares of CSCL, China Shipping Development, China Cosco Holdings and Cosco Pacific remain suspended as the merger talks continue.



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